When Is the Right Time to Get a Business Loan?

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Small and medium businesses have been struggling more since the pandemic started. Some are not fortunate enough to keep their business open. According to the Washington Post, over 100,000 small businesses closed down permanently as the pandemic continues.

If you are a struggling business owner who is on the verge of closing your business down, maybe it’s time to get a business loan. Here are some guides that you can follow on when to get a business loan.

If you’re thinking of pivoting your business

Pivoting your business basically means changing your business when you realize that your sales are not as good as before. Its main goal is to help your business survive and recover.

Many entrepreneurs think that pivoting their business means changing it completely. However, this is not always the case. It does not necessarily mean that you should throw all your hard work in the past.

If there’s too much competition and if your business is not getting a lot of response from the market, it’s time to consider pivoting.

You can always check and re-assess the things that you could reuse in pivoting your business. This way, you can lessen your expenses, save time and energy.

If you’re thinking of expanding or relocating your business

Expanding or relocating your business can sometimes be necessary, depending on your situation. Expanding usually means that your business is doing good, and you will have to create more space conducive to working.

Overcrowding in an office location can cause more stress to you and your employees, and you don’t want that. While your business may be ready for expansion, that does not mean that you have the financial capability for it.

This is where a loan will come in handy. Some companies offer mortgage loans and will help you with your business expansion.

A loan may also come in handy if you’re thinking of relocating your business to improve your sales further.

If you need more pieces of equipment and inventory

All business owners will agree that purchasing new equipment for the business is always for good. But depending on the nature of your business, the cost of new equipment may be a lot.

Equipment upgrading, replacing, and repairing will allow you to provide better services to your clients. If you are not familiar with an equipment loan, this is similar to a car loan. The equipment itself can serve as collateral for the loan.

Inventories may be one of the biggest expenses that a company may handle. If you have a good credit score with your bank, they may consider giving you a loan. This is most beneficial to businesses that are seasonal in nature.

If your business needs help with the overall capital

Capital is needed in your business, especially if you own a small one. If you have a good credit score, you may apply for working capital. Sometimes, it may take a while to reach your target earnings, and you may need help with your business’ daily operating costs.

Being a business owner means that you bear a lot of responsibilities and obligations. This can be quite overwhelming, and you may think of getting more employees to take on different roles. You may consider allocating some of your capital to look for new talents to help your business grow.

If you are planning on getting a bigger loan in the future

A short and small loan, in the beginning, would be easier to pay on time. And this may allow you to build a good credit score and relationship with your bank or lender.

This mostly applies to young small businesses as they often get rejected in larger loans. So it would be best to start with a short term loan and make regular and on-time payments. Consistency is the key here.

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Running a business during a pandemic isn’t a walk in the park. That is why you may need additional funding to keep your business running and developing. But be careful with this. You should first think thoroughly if you can handle paying a loan on time, even if it’s a small one.

One late payment and that may cause you more harm, ruin your credit score, and may even lead you to bankruptcy. In times like these, it’s important to know that your business is helping not just yourself but also many people, especially if you have employees. So you should be careful with the actions you take. Follow these guides on when to get a loan to improve your business.

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