If you are a small business owner, you may have been approached by multiple lenders for small business loans. In case you haven’t ever taken a loan, you might be wondering ‘what can I use a small business loan for?’
Despite being the owner of a small business, you would have your goals of business growth as well as obtaining a steady stream of revenue. For example, your revenue may be hampered if you do not replace old equipment with new ones. Similarly, you may need additional pieces of machinery/equipment if you would like to increase your output and increase your business growth by catering to increased demand. Investing in the required machinery or equipment to take your business to the next level is one of the best ways to use a business loan.
Some would argue that the best way to use a business loan is to manage operational expenses. This especially holds true for businesses where your clients are paying you after a considerable period of time, rather than immediately as is the case with retail businesses. In such cases, it becomes difficult to manage your cash flow because you would have multiple recurring expenses that have to be cleared regularly. Examples of such expenses include salaries, supplier payments, rent, etc. A small business loan would help you to deal comfortably with these expenses.
You need the right people to grow your business and they don't get easily. You would also need to continuously upskill and train your staff to become better professionals. You can rely on a small business loan to arrange for funds that can help you hire and train employees. You can then repay the loan in easy EMIs.
You may want to purchase or rent a new shop or office space. Rather than dipping into your savings or redeeming your investments, you could avail of a small business loan.
Once a business runs efficiently on auto-pilot, you may be keen on starting an ancillary business. For example: if you have a stationery business that is doing well, you may want to start another venture that offers printing services to large corporations. Or you may wish to begin a new division within your company. In either of these cases, a small business loan would be quite beneficial.
As your business grows, you may want to renovate your office or shop. You may wish to paint the entire office or refurbish it with new furniture. You may even wish to invest in electronic equipment such as air-conditioners, television screens for the conference room and CCTV cameras. You can use the amount availed from a small business loan to pay for these repairs or upgrades.
Today’s business environment is extremely competitive. A small business owner would have to implement multiple marketing activities to generate leads and reach out to his/her target audience in the most efficient way. Some examples of such activities would include digital marketing, social media marketing, out-of-home advertising, etc. You can avail of a small business loan for promoting your products and services.
For most individuals, starting a business can be challenging due to a shortage of funds. This is especially true where a business owner would have to make an initial investment such as purchasing a franchise or starting a small factory. Apart from this, a business owner may have to spend on multiple other expense heads such as arranging for the initial deposit needed to rent office space, furniture, laptops etc.
However, do note that at Fullerton India, we only offer business loans to eligible applicants who have an established business that has been in existence for at least 3 years, and has a stable record of profits for the past 2 years.
Finally, before taking a small business loan, use a business loan EMI calculator to estimate the EMI and remember to plan your repayments.