The following article is a guest post.
New entrepreneurs that found startups face financial challenges on their road to business maturity. It is a sad fact, but more than 80% of new startups end up failing within their first year of starting.
When asked as to the reasons for startup failure, most entrepreneurs cited the inability to find funding for their operations. A lack of funding can lead to cash flow problems and issues with creditors. That can result in a downward spiral of trying to catch up with the bills just to keep the doors open and the lights on.
If you have founded a new start up, here are five reasons why taking a small business loan will help you cover your business operations and give you the opportunity to grow in a competitive and challenging business environment.
1. Take Advantage of Opportunities.
As an entrepreneur handling the affairs of a small business, you need to stay flexible in an ever changing business landscape.
Having cash on hand to take advantage of new opportunities to grow your business by purchasing a new hot product that will sell quickly. Or launching an ad spend campaign that will triple your money in a short period.
2. Cash Flow Coverage.
Do you struggle to balance your cash flow? It’s the number one reason why small businesses fail. Covering your interim cash flow needs with an affordable loan will allow you to keep your head above water if you have slow paying customers or need to cover unforeseen operational expenses.
3. Working Capital On-Demand.
Many retail businesses find that certain product lines sell faster than others. However, if your money is tied up in stock, then you won’t have the necessary funds to settle your supplier before placing another order. This scenario could end up costing you lost sales and even lost customers as they visit other businesses to find the product they need.
4. Equipment Purchases.
Do you need new tools or machines for your business? Has your laptop failed unexpectedly and your need to replace it as soon as possible? Equipment purchases can be costly items. Buying them with cash is practically impossible when cash flow is wearing thin.
5. Leverage Other Loans.
Institutional lenders will not lend money to startups, without some form of collateral to insure the risk. However, small business loans from micro lenders do not carry the same demands and will freely lend to businesses with low credit scores.
Use the opportunity to build your credit score for future large loans.
Choose Professional Loan Services.
If you think that your business could benefit from a loan, then the next step is to choose a financial provider that has a good market reputation. Avoid fly-by-nights and predatory lenders that charge extortionate rates. Some reputable lenders will lend to businesses with no credit score and still offer you a competitive rate. Visit smallbusinessloans.co and speak to one of their professional loan consultants about structuring a customized deal that you can afford.
The Final Thought
The only time that a small business loan will not be able to help your business is if you are experiencing extreme financial stress within the company. Adding to your debt load is not the answer in this case. Consult with your lawyer and accountant to structure a financial plan to recover from your setbacks.