5 Roadblocks That Small Business Loans Can Help Clear

Don’t let a lack of capital be your undoing.

Even if you are doing your absolute best to build your business, you will inevitably encounter roadblocks along the way. Some roadblocks are simple and quick to fix, but if you need a lot of capital to solve the issue, a roadblock could be problematic. In times like those it is helpful to utilize small business loans to clear the roadblock and get back to work.

Small business loans are very flexible and the funds can be used to solve many types of business problems. Small business loans give you time to pay back the money if you do not have it all right away. Additionally, it gives you more accessible capital to continue running your business at the level you need. If you have a roadblock large or small, you should consider using a small business loan. If any of the problems below are affecting your business, consider how business financing could help.

1. Outdated Equipment

Having outdated equipment can be a huge problem if you are unable to work efficiently or if it is holding you back from becoming competitive in your industry. Purchasing new equipment is expensive and can make a huge dent in your capital reserves. If you are unable to pay in full for a piece of equipment so you may consider renting or buying used equipment. While can be a good option for some, if you are looking for equipment that stand the test of time and you want to be able to sell it later to recoup some of the money you spent, it may be wiser to seek a business loan in the form of equipment financing or a small business loan.

2. Long Payment Terms

An issue that occurs often in businesses is that they offer a long payment window for customers and are unable to get the money they need. If you offer a long payment period of over a month, it can be difficult if you need that money to pay incoming expenses. Because offering long payment windows attracts customers and encourages more spending, you do not want to remove it as an option. Any small business loan can help with bringing in money, but invoice factoring is an especially good choice. Invoice factoring allows you to sell your invoices for a cash advance. You will pay a small fee, but you also get an employee of the invoice factoring company to handle your collections. With one job off your hands you will also have more time to commit to your business. Invoice factoring can still provide the benefits of long payment terms for your customers, while getting you your money in a timely manner.

3. Low Credit Score

If you have a low credit score or below average financial history, you may have a hard time being approved for a loan. This can be a large roadblock if you need financing and are unable to get it. The benefit of small business loans is that there are so many options that are geared towards those with low credit history. You do not have to have an excellent credit to be approved for financing. You can use these financing options to get the money you need, which may not be accessible elsewhere. Invoice factoring, merchant cash advances and equipment financing are all financing types that cater to low credit scores. They use the item being financed as the collateral, so you do not have to worry about offering your own collateral. This type of financing can help you get money for whatever item or service you need to purchase regardless of a low credit score. For traditional small business loans, however, a low credit score may be a roadblock so growing your credit score can be helpful to get you qualified and get better rates.

Find Out: How Does My Personal Credit Affect My Business?

4. Needing Fast Cash

When there is a roadblock that needs to be addressed immediately, it can sometimes be difficult to get financing quickly. Traditional bank loans can take more than three weeks to be approved which is a long time to wait if you are crunched for time. Alternative lenders  may be able to get you approved in less than a week, and you will be on the move with your money. Additionally, the application process may be faster and easier. Alternative lending options such as those offered by online lenders may have fewer barriers to entry, making them ideal for business owners in need of quick capital. If you are looking for quick ways to get money, small business loans like equipment financing, merchant cash advance and invoice factoring can be faster options than traditional bank loans.

See: How to Get a Business Loan

5. Small Customer Base

Having a small customer base can put your company at risk of not making enough revenue. To get more customers you can use advertisements to grab people’s attention and introduce them to your company. When more people know about your business, they are more likely to become a customer. The more you invest in marketing, the more customers you will get. You can use the money from a small business loan to pay for a marketing campaign that can boost your business. Using a small business loan for marketing purposes is a great investment into the growth of your business. If you are struggling with a low customer base, small business loans are a great opportunity to invite new customers to your business.

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