We’ve all heard tales of businesses who have got into trouble with debt.
If you’ve been considering whether your own business needs a loan, you may already have been warned off and cautioned by friends, colleagues or loved ones. And at Contributor Capital we actually agree that it’s wise to be cautious about debt. However, there may also be an opportunity cost to not doing so and times when a Business Loan is a very smart move, indeed.
So what are the smart reasons for taking on a Business Loan?
- You need to invest in more equipment or new technology – Elon Musk made an interesting point recently about the future of business growth. Stating that the key to competitiveness was that speed at which we could innovate and adapt. At Contributor Capital we certainly agree that staying ahead of the curve, or at the very least keeping up with it, is a sensible strategy. So do your research, understand your market and if you can see a clear path forward, a business loan may well pay for itself.
- You have more work than you can handle, future revenue will go up, if only you can meet the demand. You need to recruit more staff but it’s a costly process, there’s the outlay of advertising, recruitment and early employment set-up processes but if you don’t find that extra capacity you may lose business or market share to those who can respond more quickly. This is a great example of when a business loan is a smart choice.
- Location, location, location! If you have an opportunity to expand into an area that will generate more revenue or perhaps you need premises with more storage space or can accommodate more staff? If you have insufficient working capital for your expansion a business loan can bridge your cash flow problem.
- You need to anticipate fluctuating market demand with more inventory, maybe because of seasonal changes or a new trend? A business loan can increase your financial flexibility allowing you to buy stock ahead of the demand, often before prices increase.
Contributor Capital are a business finance company based in the Channel Islands. We support companies, predominantly across Jersey and Guernsey to thrive and expand.