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Is The Time Right for a Small-Business Loan?

AUTHOR: Kevin Jaskolka

Whoever coined the phrase “timing is everything” was really on to something. This is applicable to many facets of life, from determining the best moment to take chocolate chip cookies out of the oven, to the right time to leave the office to beat the afternoon bumper-to-bumper traffic rush. Mere fractions of a second can be too little, too late.

The expression is especially appropriate when it comes to your company and determining when you should apply for a business loan - not to mention the proper amount.

Here are a few scenarios in which taking out a business loan may be appropriate so you can get your company where it needs to go.

1. You’re looking to expand

Whether your current location is far too small with so many new hires aboard. or are unable to satisfy demand without building another facility in the next town over, growth is both encouraging and reassuring. However, knowing you need to expand and actually doing it are two entirely separate things, as you may not have the available cash flow to pay for the project. A small business loan can provide you with the capital you need to purchase, build or rent a new office place.

2. You’re low on cash flow

Here’s another phrase that rings true: Money makes the world go ‘round. That is certainly the case for business owners, as the almighty dollar is ultimately what enables you to keep the doors open, the lights on, your employees paid and your shelves stocked. However, more than 80% of small business failures are attributable to cash flow mismanagement.

How to properly manage cash flow is a subject for another day, but without revenue, your company can’t survive. If your clients are consistently not paying their bills by the dates their due or it’s the off-season and traffic has dwindled, a business loan for cash flow purposes can make a lot of sense and may help take some of the pressure off.

3. Your equipment isn’t cutting it anymore

From whipping up that next batch of made from scratch pizza dough to adding another workspace to your accounting office, there are certain types of equipment that you simply can’t do without. Given that advancements in technology and performance expectations are in a perpetual state of growth, the equipment that may be state-of-the-art now won’t be for long. If money is tight and equipment needs are significant, a small-business loan can give you the resources to purchase the appliances, hardware and machinery that are indispensable to ongoing productivity.

4. You want to build up credit

Especially as a business owner, you know how important it is to maintain a good reputation. It’s a reflection on what your customers can expect when they go to you for a product or service.

Your credit score is the financial equivalent of your reputation, as it enables creditors to determine your money management capabilities and that you pay your bills off on time. If you’re brand new to managing a business or you’re still getting your feet wet, you probably don’t have much credit to speak of. Taking out a loan can help you establish a credit profile. Ensuring that you make your monthly payments by their due dates is an effective means of becoming more creditworthy. In doing so, you’ll be able to take advantage of lower interest rates and be eligible for higher loan amounts.

That said, it’s important to ensure that you apply only for the amount of money that you know for certain you’ll be able to pay back. Financial experts point out that even one missed payment can be a major setback - thus negating the very purpose you took out a loan for originally.

5. A chance of a lifetime has presented itself

You know what they say about when opportunity knocks at the door - open it up! Whether it’s landing a new deal with an investor or partnering with a third-party services provider that can help you more effectively meet demand, opportunities don’t come around every day. The problem is you may not have the means of answering the door when it comes around knocking.

Business opportunities are like the golden tickets found in Wonka Bars in the classic children’s story “Willy Wonka and the Chocolate Factory”: There aren’t many of them, but if you’re fortunate enough to get one, you can’t let it get away. A small-business loan can provide the funding that gets you to places you’ve never been to before.

No one knows your business better than you - and no one understands small-business financing like the experts at Select Funding. Whether your money needs are modest or major, or need cash fast without a moment to spare, Select Funding can get you over the hump, across the finish line or atop the mountain. We can make it happen in as little as 24 hours.

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