These Signs Can Tell You if Your Business Could Benefit from a Commercial Loan
Your business could benefit from a commercial loan. Borrowing money is often viewed as something negative, but in this case, it actually helps you build your venture. Corporate finance works differently than personal finance, and small companies are actually stagnating their growth by refusing to seek additional financing. Below are examples of when your business could benefit from borrowing money.
Boosts Operating Cash Flow
Many business owners take out loans because they need to boost their operating cash flow, but the reasons aren’t just that profits are tight. In some cases, the time to grow a venture is now, yet the company does not have the capital to do it. For example, imagine you own a submarine shop and your customers have been begging you to open another shop on the other side of town. The perfect space just became available; it’s right off the freeway and next to the mall. You need to snatch up this location, yet you don’t have the capital to do so. A commercial loan will give you that cash.
Establishes Company Credit
Alongside operating cash flow, you also need good credit to run and grow your business. Vendors and suppliers will not work with you if they cannot trust you’ll pay your bills. You won’t have access to additional funding opportunities with little-to-no-credit, nor will you be able to buy that other property for your second submarine shop. By taking out a loan and paying it back on time – or early if you can – you begin to build your business credit and open up more opportunities for financing to turn your mom-and-pop shop into the next great thing.
Helps Absolve Personal Liability When You Incorporate
The point of incorporating a business is to absolve the owners of personal liability should the business fail. When you started out, you probably mixed your personal and business funds; you may have even secured financing for your startup using your personal credit. When it’s time to separate the two and incorporate your business, commercial loans remove your personal liability and place it on the business solely, which means if you have to close your doors, your creditors cannot come after your home and other personal property.
The latter is perhaps one of the most important benefits of a commercial loan. It’s critical to separate your personal and professional finances, and this funding helps make certain you do that. If you think your company would benefit from some commercial financing, look into securing funding today.