Top Reasons to Get a Business Loan

There are a number of reasons as to why small businesses take out loans, with the main reason being to grow the business and its operations. Of course, as a business owner you do take on a degree of risk, but the debt can definitely be worth it in order to take your business up a notch. 

Here are the top reasons to get a business loan.

Time To Go Bigger

A loan is a great way for you to purchase real estate, so that you are able to expand your operations. A lender will be interested in lending a business money when they have expansion in mind as expansion means that the business is successful.

Expansion only occurs when the business is turning a profit and there is a positive cash flow with a positive forecast for the future. 

You Need Equipment

When you buy equipment for your business you are able to improve your business offering. You will need certain equipment so that your business ticks over like IT equipment, machinery or other tools that make your product or perform your service. You will need a loan to finance this equipment. Also, your equipment can serve as collateral for the loan.

Make sure that you only get equipment that you really need and not just because they are nice to have. 

You Have To Have Inventory

One of the biggest expenses for any business is inventory. As demand increases, you will need to have the inventory to keep up with it. This can be difficult at times as you may need to purchase a large amount of inventory before you are able to see a return on your investment. 

If you have a seasonal business, you may find that you will need to buy a large amount of inventory without having the cash in hand to do this, which means a loan could be the best option so that you can buy the inventory and then see the profit at the end of the season.

There are more reasons why you might need a business loan…keep reading

Get Daily Operations Going

Your working capital is the money that is used for your day to day operations. In the beginning, you may need to take a loan to cover these operations until the earning assets are creating enough to cover these daily operational needs.

You are able to find short-term loans that will help you to get your businesses off the ground and grow. As your business grows and your assets start to earn money, the loan can be paid back. 

Build Credit for the Future

If you plan to apply for larger financing in the future, then starting with a smaller loan can help you to build your business credit. 

Newer businesses may find it hard to qualify for a large loan, especially if the business and the owners do not have a strong credit history. Taking a smaller loan and ensuring that you make regular payments will help to build your businesses credit for the future. 

Too Many Tasks Not Enough Hands

At the beginning of your small business, you will find that you will wear a lot of hats, but at some point, you will find that you are doing too many things and something is bound to fall through the cracks. 

You can choose to invest in talent to keep your business competitive and innovative. If there is a clear connection between hiring and an increase in revenue, then this can be a good move. However, even if just having an extra set of hands helps you to focus on the big picture then that could be worth the cost of a loan. 

When it comes to taking a business loan and all costs have been factored in and it is likely to increase your bottom line then you should get a loan. You will need to be confident in your ability to pay the loan back and have your business succeed over time. Taking a loan is one risk that your business may face, but if the risk is worthwhile then apply for a business loan. 

2 Ways You Can Pay Off Your Credit Card Debt

It is easy to get into credit card debt, but it is difficult to get out of it. However, with some discipline, a plan and dedication it can be done and you can live a credit card debt free life. 

If you are committed to paying off your credit card debt, you will first need to determine how much you can afford to repay each month. The best way to see how much you are able to afford is to use your monthly budget, but if you don’t have a budget in place then now is a good time to start one. 

Budgets Are Easy

A budget is easy to set-up. You first need to add up your net monthly income from all your sources. Then add up all your monthly expenses, which includes your minimum payments on your credit cards and loans. Then you simply subtract the expenses from your income. The number that is left, is what you will have left after all expenses. This is what you are then able to afford to send to your creditors each month. A good idea though is to look for other ways you can generate more money that you can put towards your debt as this will help to speed up the repaying process. 

Once you know how much you can afford to put towards your credit cards each month, you will need to determine the order that you want to pay your credit cards off in. 

2 Ways You Can Pay Off Your Credit Card Debt

Highest Interest First

In the long run, you are able to save money by taking on the credit card with the highest interest first, especially if it also carries the highest balance. However, it will also take the longest to pay off if the card has the highest balance, which means you may lose motivation.

Lowest Balance First

There are immediate benefits when you pay the lowest balance first. The first ones, you tackle will be easier and quicker to pay off. Once you have paid off a bill, you will gain a feeling of accomplishment, which will then motivate you to keep going. 

If you are wanting to save money in the long run then you need to tackle the highest interest rate balance first, but if you want to get some accounts paid quickly then go for the lowest balance method. 

You should write down your debts in the order that you have chosen to pay them either from high to low or vice versa. Make a note of the balance, interest rate and minimum payment. 

The extra money you have will go towards the credit card at the top and the other cards will get the minimum payment. 

Once the first credit card is paid off, cross it off the list and move onto the next one and so on.

Paying off credit card debt is not easy, but it can be done, you just need to have a plan and stick to it.