When Do Small Business Loans Become Important for Growth?

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Business owners want their businesses to grow, but in order for them to grow effectively, the deployment of capital needs to be approached from a strategic angle. One of the mistakes that business owners frequently make is using up all of the available capital they have access to in order to push their business forwards, without first thinking of the actual amount of growth they are ready for from a logistical standpoint. Things like market size, seasonality within small businesses and the ROI associated with various types of equipment will all dictate when a business needs an infusion of funding and when it should actually hold back on the throttle.

When is a good time to push forward business growth? Particularly good times to fund growth projects are in preparation for an anticipated period of heightened business activity, such as right before a holiday peak in sales or the beginning of a the busy season for a seasonal business. Debt, once taken on, must be paid off in order to avoid problems like credit damage and legal action, so ensuring that capital your business applies for will be able to start contributing to the growth of your revenues is essential if you are to succeed in balancing your expenses and profits.

Consider financing when you have identified a strategic growth opportunity. Another reason to obtain financing is if you have identified a strategically important opportunity that you would otherwise not be able to pursue. These types of opportunities include the chance to pick up heavily discounted equipment, take on an order that requires another component to complete, or the chance to promote your business in a coveted ad space. The point is to maximize the return on the financing that you take out through timing investments wisely.

Photo Credit to Chris Potter on Flickr

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