You need money to power your small business, whether you’re just getting started or ready to scale things up. And if you don’t have the cash on hand, you’ll probably need to take a small business loan.
But there are a few important things to establish before you look into what applying for a small business loan entails. The first item on that list is deciding exactly how you’ll spend your capital infusion, followed closely by how you’ll repay it. Without a well-thought-out strategy for how you’re going to use that money, it’s unlikely to help you achieve your goals.
1. Purchasing inventory
31 percent of businesses use Square Loans to fund inventory purchases. Over 60% of shops used their funds in this manner, making this percentage much higher. A good approach to deal with seasonal slumps, restock stock, or test out new goods is to use capital to buy inventory.
2. Purchasing equipment
Small firms frequently require a loan to pay for such large items. Making capital purchases of equipment is the second most common reason why firms use Square Loans. This is how 30% of businesses use money from Square Loans.
3. Continual Expenses
It takes effort and money to keep the lights on and things functioning smoothly. One-seventh of those who receive Square Loans utilize the loan to supplement their ability to pay for ongoing expenses.
4. Refinancing or paying other debts
It may be wise to employ small company financing for debt consolidation. Nine percent of those who receive Square Loans use their advance to refinance or settle other debts.
In order to expand your business, you must attract new clients and keep your current ones satisfied. Marketing is one of the finest ways to expand a business, whether it be through social media, email, events, or more conventional paid media. Six percent of companies spend money on marketing.
It’s essential to have a strategy in place for how you’ll use your small business loan. Perhaps one of the aforementioned investments makes the most sense for your company. Or perhaps expanding your company’s product line, trying a new marketing strategy, or opening a new location would be advantageous.
Whatever it may be, consider the most effective way to use it before applying for (or accepting) small business finance.
If you are interested in more articles like this, here’s one about how salaries work.