Business lending through 2020 grew to unique levels thanks to Covid-19, with the total amount borrowed during the year’s first three quarters more than double the 2019 figure.
Much of this was driven by so-called “coronavirus loans”, of course, which were provided by the government to help firms cope with the fallout from Covid-19 and subsequent business interruptions.
But how could a small business loan impact positively on your venture? Here are some considerations to keep in mind:
#1. Use a Loan to Buy Key Business Equipment
Business expansion must be underpinned by a growth mindset, so it’s important to spend capital in a way that benefits your venture and allows you to increase its commercial growth.
For example, if your business requires specialist equipment to operate and create tangible value, you may want to procure this upfront and assume ownership rather than entering into costly lease agreements.
This may require a secured business loan, as you can borrow an exact amount and ensure that this is spent precisely on items that can drive your venture forward.
#2. Optimise Your Businesses Cash Flow
One of the main reasons that new businesses fail is a lack of working capital or cash flow, and a short-term or unsecured business loan can help in this regard.
For example, you could visit a bank or non-traditional lender to borrow capital against the value of booked orders, enabling you to pay for their completion and simply repay the loan once the agreements have been fulfilled.
Similarly, you may want to consider invoice financing, through which you sell your accounts receivable to a third-party before settling this debt once your clients have settled their invoices.
#3. Expand Into a New Location or Market
When it comes to business expansion, one of the most common steps is to move into a larger location or new marketplace.
Both goals require significant funding, whether you secure a long-term lease agreement at a new premises or target a new consumer demographic with a newly developed range of products or services.
#4. Recruit Top Talent to Fulfill Working Requirements
On a final note, you may need to launch a recruitment drive in instances where your workload increases and far greater demands are placed on your teams.
However, acquiring or recruiting new employees is around six-times more expensive than retaining existing staff members, so you’ll need to make an investment in your workforce to ensure that this is fit for purpose.
Just try to determine the precise number of employees that you’ll need to boost your workforce, while ensuring that your teams are organised strategically to optimise productivity.
