This is an overview of what you should plan to expand your business.
6 Ways to Use a Business Personal Loan to Expand Your Business. When it’s time to scale up, most small and mid-size businesses may need to borrow money. Getting a business loan from traditional banks can be quite challenging or asking money from family or friends can get quite embarrassing. But now, there are more fundraising options than ever —personal loan for business, business line of credit, remortgage, credit cards, angel investors, and crowdfunding platforms.
Why loan is a good finance option?
The best reasons for taking a loan to expand your business are:
- When you take a loan or a line of credit, you don’t have to give up a stake in your business and sacrifice its future value.
- Making repayments towards the loan boosts your company’s credit profile, thus making future borrowing cheaper.
- A fixed-term loan with monthly repayments at a set rate is easier to manage.
6 ways a personal loan for business can help you scale up
1. Getting the business off the ground
Most entrepreneurs bootstrap when they launch their business. They try to be frugal so that they do not need to borrow from banks or other external sources. A personal loan for business can be used to finance the early stages of your business.
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2. Purchasing new equipment
Equipment improves business productivity. Borrowing money to invest in buying equipment is a sensible reason to borrow. A personal loan for business can be taken to make big purchases like vehicles or machinery. Some loans are secured, which means the equipment you buy is used as collateral in case of a default on loan.
3. Renting or leasing premises
A business loan can help you rent or buy the right premises for your business. If you’re planning to buy a new property, the loan can help you with the deposit amount towards the purchase.
If you already have a place, but you feel that you have outgrown it, you can consider renovating it or buy something else. For both the options, a personal loan for business can give you the finance you need.
4. Managing cash flow
When you have just begun your entrepreneurial journey, you may not have enough funds to cover all the essential business needs. A business loan can provide you working capital needed for your business to function smoothly. It can also be used for unforeseen or emergency expenses, buying raw materials, or hiring resources.
5. Covering the soft costs
Soft costs are the expenses, which are essential for the smooth functioning of the business, but they do not directly help create a product or service. Soft costs include professional fees, legal fees, licences, marketing campaign costs, etc. A business loan can help take care of these costs.
6. Adding new technology to business
Technology plays a significant role for most businesses of today in making their daily operations more efficient. You can use a loan to invest in technology infrastructure to gain a competitive edge and keep pace with growing digitalization.