In an ideal world, cash flow would be positive, and you wouldn’t need to borrow a penny. Unfortunately, most businesses do need a cash injection at some point. Whether you require short-term funding or a long-term finance package, here are five reasons why a business loan is the right solution to your cash flow problems.
You’ve Had a Surge in Sales
For many businesses, customer demand is entirely predictable. For example, if you run a garden centre, you can be fairly certain demand for bedding plants and hanging baskets will rise in spring and at Christmas, shoppers want festive wreaths. But for some businesses, demand can spike unexpectedly, such as when a toy goes viral or a celeb is spotted wearing one of your products.
If you have seen a sudden spike in orders or customers have started asking for a product you don’t yet sell, a short-term loan might be the answer, so you can replenish your stock fast and meet the demand for your products.
Business is Slow
On the flip-side of the coin, you might need to borrow money when sales slow down or it’s the off-season in your sector.
Are you struggling to pay the bills? If so, look at securing short-term funding to keep the business ticking over. The current Covid-19 situation is a good example of a time when many businesses are struggling and short-term funding is essential.
You Need New Equipment
No piece of equipment is designed to last forever, so there will come a time when your business needs new equipment. One way to purchase the new equipment required is through equipment financing. Look around. Are your employees having to make-do and mend? Just think how much more productive they would be if you invested in more modern, reliable equipment. This where a loan makes a lot of sense.
You Need a Business Van
Vehicles are no different from equipment – they become less reliable as they age. It’s not good for business reputation if your company’s vehicles keep breaking down or are costing more and more to fix. It’s customary to upgrade to new vehicles every three years or so, so if your vehicles are considerably older and prone to mechanical problems, consider taking out a loan to buy new ones.
You’re Ready to Take the Next Step
Have you spotted a gap in the market your business can fill? Is trade doing so well you could easily expand to a new location? If so, now is the time to borrow some money and expand the business!
Think very carefully before borrowing money. Always read the T&Cs so you don’t get into difficulties making repayments.