7 ways to effectively spend your small business loan
Small to medium-sized businesses are the heartbeat of growing economies. For example, most businesses in Canada are small to medium-sized. In addition, 98.1% of employer businesses in the country are small or medium-sized.
But while such businesses play a vital role in economies, they sometimes lack the financial resources to capitalize on opportunities or overcome financial hurdles during times of economic uncertainty.
This is where small business loans enter the picture. Such loans can help small businesses satisfy different types of growth needs.
Securing, understanding, and comparing such loans used to be challenging. However, modern small businesses can easily compare offers from multiple lenders by using an advanced loans platform that uses Artificial Intelligence and Machine Learning to match users with the best financing options.
Here are some ways you can spend your small business loan:
1. Emergency spending
Emergencies can strike a small business at any time. Fortunately, a fast, small business loan can cover the gap and keep a small business afloat. Examples of emergencies that impact small business operations include:
- Natural disasters like storms and fires can disrupt operations, damage facilities and inventory, and result in financial strain.
- Health crises like the COVID-19 pandemic that resulted in lower demand, lockdowns, and restrictions.
- Cybersecurity breaches such as ransomware attacks are a rising threat against smaller companies.
- Supply chain disruptions due to strikes, demonstrations, shutdowns, and geopolitical events can significantly slow down or hurt operations.
- Employee turnover for any reason can cause an emergency.
- Theft or acts of vandalism can be damaging for a business.
- Unpaid invoices or broken contracts can negatively impact a small business’s stability.
2. Covering operational costs
Some businesses need loans to cover operational costs when revenue is unexpectedly low. A loan can pay for rent, utilities, salaries, inventory, marketing, and other overhead.
3. Repairs and maintenance expenses
Investing in repairs and maintenance is critical for the longevity of a business. For example, neglecting regular upkeep can lead to costly breakdowns and potential disruptions in operations. Small businesses can be proactive by using loans to optimize equipment, machinery, and infrastructure.
4. Expansion and diversification
An effective way to spend a small business loan is by investing in expansion and diversification. Whether it’s opening a new location, launching a new product line, or entering new markets, expansion can drive significant growth and increase your market share.
5. Acquisition opportunities
Using a loan to acquire another business can be an excellent move for a growing business. It can provide access to new customer bases, technologies, or intellectual property. It can also help diversify products and services.
6. Managing inventory
Effectively managing stock levels is important for businesses that rely on inventory. A small business loan can enhance inventory management in various ways. Small businesses should consider inventory management software, purchasing more storage space, and stocking up on essential items.
7. Seizing seasonal sales growth opportunities
Certain seasons can provide exciting business opportunities for some types of businesses. For example, a landscaping business can convert some of its trucks into snow removal vehicles in the winter. Small businesses interested in capitalizing on seasonal opportunities can use loans for new equipment, hiring and training staff, and marketing.
These are seven ways a small business can spend a loan effectively. And by using an intelligent loans platform like Levr.ai, they can match with the best lender for their needs.