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When Should Your Business Apply for a Loan?

Entrepreneurs who intend to build a new business and need a capital injection often acquire their funds through a loan from banks, financial institutions, or new alternative financing companies – such as Peer-to-Peer (P2P) lending platforms. However, business loans aren’t just for building new companies, but also to maintain them. After creating a business, the next challenge is developing it. The effort of maintaining and growing a company is not easy. You need a steady supply of capital. If your money can’t cover your business needs, you may have to apply for a loan. Here are examples when the timing is good to start applying for loans.

Asset building

Say you are a business owner growing a home bakery. Because your breads and pastries taste better than what your competitors make, everyone falls for it. You get a higher and higher sales volume day by day. Meanwhile, the number of ovens you have can’t accommodate the amount of customer orders you are getting. Soon enough you won’t be able to get orders ready by the scheduled time and your once happy customers will start grumbling. But what if the current profits you are earning aren’t enough to purchase new ovens? Long-term, new ovens are assets that will greatly assist your business. But you can’t afford them this moment. This is a good time to apply for a loan. With a loan, you can buy new ovens and maintain high-quality products to deliver to your customers.

Business expansion

After growing your business for several months, you see potential to expand and gain more customers. One of the key strategies of expansion is by building new outlets and channels in more areas. Entering a new area or a new market requires money. To succeed, you also need to introduce and promote your products to new customers. Again, maybe the profits you’ve earned so far can’t afford a campaign for business expansion. In this instance, it may be prudent to apply for a loan.

Cash flow maintenance

As a business owner, especially of a small enterprise, a well-run and healthy cash flow might just be the most important element of business growth. You have to consistently manage your cash flow well. When company cash flow is stuck, your business will face a problem as well. Companies, especially small businesses, often encounter cash flow problems when their customers pay their invoices late. Late payments make it difficult for businesses to pay operational fees, such as employee salary, electricity, water, rent, etc. You might need a quick loan to tide you over until your customers pay their bills. Financing products like invoice financing can be the answer to such a situation.

In need for funds? Check your eligibility now!




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  1. Pingback: Businesses That Should Consider P2P Loans – Kopitiam Bot

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