Best Small Business Loans
Getting the best business loans or best business lines of credit is all about understanding your needs as a borrower. Some businesses just need a one-time influx of capital while other businesses need to borrow on a regular basis. Some need a large amount for a big purchase, some need a little here and there to make it through their "off-season." So when you're searching for a business loan, the only criteria for what can be considered the "best" is what is best for your business situation.
5 Ways to Use Small Business Loans
1. Physical Expansion
If you are constantly running out of space for your employees to work, or if your inventory has surpassed the amount of space you currently have to store it, it may be time to consider a loan to cover the cost of expansion.
Before you sign your loan contract, you should consult with a financial advisor on whether expanding your space will allow you to cover your loan costs and still make a profit. Forecast your revenue with your current balance sheet to see how an expansion would benefit your bottom line. If you’re considering another location, make sure you do plenty of research to make sure the area is a good fit for your company.
2. Purchasing Equipment
Sometimes, purchasing equipment is for an immediate need — sometimes it’s just for an upgrade. In the case of an immediate need, your options may be subject to the immediate viability of your business and could put you in a pinch. This is a situation where having a small business line of credit can be beneficial, as you use it and repay it only when necessary. Before applying for the best business loan for an equipment purchase, make sure you know the purchase will directly improve your bottom line.
3. Purchasing Inventory
Inventory is one of the most common reasons business owners borrow money. This is especially true if you operate a seasonal business, when there are times a loan may be necessary to purchase inventory before making a profit off of it during your busy season. To best determine whether a loan (such as a line of credit) would be a good move for your business, create a sales projection based on the past few years of sales from the same time period. Compare the cost of the debt to your projected sales, and remember that sales figures can vary from year to year.
4. Opportunity Outweighs Debt
Part of being a business owner is identifying and taking advantage of opportunities when they’re presented to you. These opportunities can come in many different forms; maybe it’s a great deal on buying bulk inventory at a discount, or you find a bargain for new space or a piece of equipment. If the potential return on your investment outweighs the debt, then go for it! Just make sure you’re basing your decision on sound projections and not just your gut instinct.
5. Hiring Extra Help
As the owner of your business, you probably wear a lot of hats. Delegating responsibility doesn’t always come easily. If you have a need to fill in your team, you should seize the chance to bring in some help. Many successful businesses make talent a top priority in their business, believing it will keep their company competitive and innovative. It will pay off if that hire can provide direct and measurable value to the company.
No matter the reason you’re considering a business loan, be sure to do your due diligence in determining the best small business loan for your company. If the loan is likely to improve your bottom line, go ahead and apply. If not, determine when a good time would be to reassess the situation.
Headway Capital's True Line of Credit™
If you're looking for the best small business loan for your business, our True Line of Credit™ could be an ideal solution. A revolving line of credit gives you the power to draw funds whenever you need, up to your available credit limit. As you pay back over time, those funds become available again for you to draw. You can use a True Line of Credit™ for things like purchasing inventory, hiring additional staff or whatever else you need to do to grow your business.
12, 18 or 24 months
Weekly or monthly
*Your terms may vary based on your application information.
1We will not perform a hard credit pull until after you have submitted the application and signed the contract.