5 Ways You Can Use A Small Business Loan

Not everyone can weather the storm of financial challenges that comes with starting and growing your own business. 82 percent of small businesses that fail do so due to cash flow problems. That’s a staggering number that could be much lower if more merchants took advantage of small business loans. Here are five key areas where you can use them today.

1. Pay Off Your Expenses

Some owners struggle to make ends meet simply because the cost of running their business outweighs the income it generates. They have to make a choice. Either increase their revenue or reduce their expenses. But, what if certain expenses are fixed and raising income requires time? A small business loan can help you get out of the red. The loan can provide enough breathing room until your business is self-sustaining.

2. Purchase Inventory

Running low on merchandise? Heading into a busy shopping or holiday season? Expecting shipment delays? Stocking up on more inventory is one of the most popular uses for a small business loan. If you qualify, you can use a small business loan to prepare today without missing out on valuable sales opportunities tomorrow.

Many entrepreneurs may not realize that there are lines of credit and loans specifically available for inventory purchases. Do your due diligence. Seek out the inventory funding options that are suitable for businesses in your position. Take the loan amount and its APR into consideration. Pay attention to the minimum qualifications necessary for both you and your business. These include your personal credit score, annual company revenue, and the amount of time you have been in business.

3. Hire More Staff

As you expand your small business, your list of responsibilities is likely to grow. It may be a good idea to use your small business loan to hire talented employees. In the current job market, where low unemployment and strong competition for talent dictate the rules, it makes sense to use some money to attract quality candidates.

When you decide to hire more employees, don’t rush into hiring too many all at once. Take a look at your revenue and departments where you need the most help. Bring on what you know you can afford. This means providing competitive salary and benefits, too.

Keep your team lean from the start, just in case there is a lull in business. A lean team will also be adept at wearing many hats and helping out with more aspects of the startup beyond their initial department. You may also consider using a portion of your loan to outsource payroll management. Or, you may decide to bring someone in-house to help out.

4. Grow Your Marketing

The worst thing you can do with a small business loan is to take it out and not be able to repay it. This drives your business into debt and, if you have not incorporated the company, puts your personal and professional assets at risk.

Strategize how you may spend your loan on marketing efforts. You may consider allocating some funds to areas like local TV commercials, press, direct mail, or social media campaigns. This allows you to target your customer base and draw them to your business with messaging that focuses on how you can meet their needs. It can be within your community as well as outside of it — the reach potential goes far and wide!

5. Invest in Equipment

It’s helpful to use a small business loan to invest in necessary equipment to run the business. This could mean anything from devices required to launch your business to a long overdue upgrade to your current devices. Making this investment truly helps your business in the long run. You’ll be more efficient now, so you can meet customer needs, and will not have to spend as much money later.

There are ample opportunities available for entrepreneurs to use a small business loan. Keep your short and long-term goals in mind when it’s time to decide on the loan that is right for your business. This will ensure this investment continues to make a difference long after you pay it off.

Andrey Bobrovskiy is a Content Specialist at TransNational Payments, an industry-leading payments technology company providing credit card processing, online payments and mobile payment solutions. Andrey covers a variety of topics, including mobile payments, payment security and best payment practices across industries. Connect with TransNational Payments on Facebook and LinkedIn or follow @goTNpayments on Twitter to learn more!