Opportunity knocks — but does your business have the money to listen? 😄 😄
Ah ah feel that quote from lendigo?
A lot of business owners shy away from loans because of the numerous stories that we have heard. Some of which includes:
- Debt being bad for business.
- Loan companies enjoy disgracing people when they default.
- Not being certain they can pay back.
Do you fall into any of the above categories?
There are quite a few businesses that grow organically from word-of-mouth, but for many business owners you’ll have to put some money behind getting new customers in your door and your revenue will cover those marketing expenses.
For some businesses, opportunities for growth sometimes come knocking on your door and you may not have the cash flow to support a large investment.
This is where some business owners will choose to finance their growth opportunities.
We will be discussing with you whether financing business growth is a smart move and how to ensure you’re getting the right financing for your business.
BUT BEFORE THAT….
We have been taught that owing money is a bad thing and this has caused us to fail to see that there are times when debt can be good too.
- When the debt you take on allows you to make more money, then it is classified as good debts.
As the saying goes “ It takes money to make money”.
- If your intent of borrowing money is towards a business investment or acquiring equipment to expand your business, then it is probably a good debt.
- If you intend to fund a purchase order, then debt can be a good thing as well.
Here are a few points to help you make borrowing profitable for your business as well as knowing the right financing opportunities.
- Borrow with the right purpose
It’s tempting to think that if you had just a bit more capital, all of your business trouble would disappear. Because of this temptation, there are certain business owners who think borrowing funds would solve their financial troubles.
Oftentimes, debt only makes your capital problems worse.
When you’re considering financing for your business, you want to make sure that you’re borrowing for the right reasons and that the debt will help your business grow, not weigh it down.
- Ensure your books are up to date.
Many lenders will only lend to established businesses, including Lendigo. So how does an early stage business, that needs borrowed capital to grow, prepare your business from day one?
Without a lot of revenue, a track record, or established business credit profile, there’s no way for a lender to accurately judge your business’ creditworthiness.
During your first year in business, you should think strategically about building your business credit.
- Ensure to start small
Starting with a manageable short-term loan might be the first and best option to take. It might not help you close out fully on that expansion plan, but your good credit behavior will show future lenders that you can responsibly manage debt when the time comes for taking a larger, longer-term loan.
- Establish solid relationships with vendors and suppliers.
Even though this isn’t a loan, it will help establish your business’s creditworthiness. Make sure your suppliers report your credit history to the appropriate business credit bureaus. All of the major business credit bureaus consider these relationships when evaluating your business credit profile.
WHAT NEXT TO DO?
- Bring your calculator and put your business projections to paper.
- Confirm how much credit your business can access with the Lendigo App.
- Speak to your Lendigo portfolio manager to help you pick the best loan options for your unique business type.