At one point or another, most small business owners have considered applying for a small business loan.
The question is, is a small business loan actually a good idea?
The simple answer to this question is yes, small business loans can be a solid choice for your business. If an owner needs to take a loan out for some much-needed funds, generally speaking, they’ll try to acquire a small business loan rather than other types of loans.
Here are several reasons why acquiring a small business loan may be a good idea for your business.
Purchase Real Estate and Expand Operations
There are multiple reasons why small business loans can be great for helping you expand the operations of your business.
Firstly, acquiring a new location or expanding your current one at the right time can be a boon for your business, helping you take your operations to the next level and help more consumers than you could before.
Secondly, you are more likely to be approved for a loan if it’s going to be used for purchasing real estate. If your business is at the point where it needs to expand, that is a good sign of success.
Small business loans that are used for real estate tend to be long term, up to 30 years.
Increase Working Capital
Working capital is the money that businesses use to manage their day-to-day operations. Small businesses sometimes need to take out a loan in order to meet their day-to-day expenses, especially when they are just starting up.
As the business grows, they will be able to repay the money lent to them. If you are in need of funds to help cover expenses, a small business loan can be a good idea.
Keep Your Personal and Business Funds Separate
Some business owners will consider taking out a personal loan, but it is generally advised to take out a small business loan instead, and not just to help make your finances and taxes easier.
Many lenders will look suspiciously at tax returns that combine personal and business expenses. If you consolidate both types of expenses, it makes the job of discerning your business credentials much harder, which probably won’t help the chances of you getting a loan.
In addition, mixing your personal and business finances may also put your personal assets at risk if your company finds itself in a lawsuit, regardless of how your company is registered.
Build the Credit of Your Business
Rather than relying on your personal credit history, taking out a loan can help you establish the credit history of your small business.
Doing this will help you to keep your personal and business finances separate and can put you in a great position should you need to take out a small business loan at a later date.
Get a Loan with Generous Term Lengths
SBA small business loans, in particular, can be a fantastic idea. SBA loans come with a great many benefits including:
- Projection-based underwriting
- Lower down-payment requirements
- Financing for a majority of project costs
- Caps on interest rates, including a cap of 2.75 prime on loans
In general, getting a small business loan means that you may receive more generous terms as well as reasonable interest rates.
Are small business loans a good idea? Obtaining a small business loan can give you the boost you need to help get your business off the ground and grow.
Sunwise Capital can offer a small business loan to your company, even if you’ve been denied. Contact us today and let us see what we can do to help you.