As every small-business owner knows, it takes money to make money. Without adequate working capital on hand, businesses may lack the funds they need to get started, expand or cover day-to-day expenses.
Thankfully, there are plenty of financing options available to businesses, including small-business loans. In this article, we look at the different loans available, as well as some of the ways a loan can help a growing business thrive.
What loans are available to small businesses?
Before we delve into the many ways a small-business loan can help your company grow, let’s look at the variety of loans that may be suitable for your venture.
Term loans
Term loans involve borrowing a lump sum, which is then repaid in regular installments over a set period, with interest. This type of small-business loan offers business owners a fixed repayment schedule and a competitive rate.
Lines of credit
A business line of credit allows business owners to borrow a certain amount of capital annually. This amount is usually based on accounts receivable and current inventory.
Equipment financing and leasing
Business owners looking to own or lease new or used equipment can use that equipment as collateral to get a loan.
SBA loans are specifically designed to meet the funding needs of businesses that do not qualify for other types of loans. They’re guaranteed by the U.S Small Business Administration, and therefore offer longer terms and lower down payment requirements.
Business Access loans
Business Access is an exciting new offering from California Bank & Trust (CB&T) providing simple financing, and access to next-day funding. It is designed for companies with limited borrowing needs and offers term loans between $5,000 to $175,000, as well as lines of credit between $5,000 to $50,000.
How can a business loan help a company grow?
A business loan can help your company achieve its goals or provide the financial assistance it needs to take those next important next steps. If you aren’t sure if obtaining business funding is the right move for your venture, consider some of the vital ways a loan can help your small business to grow.
Increasing working capital
Having enough money to cover day-to-day expenses is important for the financial health of your business. Not only does it act as a safety net during tough times, but it also allows you to cover necessary payments, such as staff wages, inventory or utility costs. Therefore, a loan can quickly give your business the financial boost it needs to prosper.
Assisting with expansion
Expansion can be a costly yet rewarding exercise for your business. However, sometimes your company might not have the required funds to take advantage of this opportunity. This is where a business loan comes in handy, as it can provide you with the money you need to take your company to a new level.
Covering unexpected costs
Unexpected events can turn a business upside down. Businesses should have additional working capital set aside for those “what if” moments. Whether your business is facing a natural disaster, equipment failure, or lockdown measures due to a global pandemic, it’s always best to be financially prepared.
Purchasing equipment and inventory
New equipment can be expensive; however, if that piece of machinery is necessary for streamlining your workflow and creating a better customer experience, then it’s worth the investment. This can also be said about inventory, which is required at optimal levels to help your business run smoothly. A business loan can help prevent these two elements of your business from suffering due to low funds.
Hiring and paying employees
Whether you’ve just launched a startup or have been running a thriving operation for years, you need the assistance of staff. Hiring employees is vital for business growth, yet it does come with its costs. Thankfully, financing like a business line of credit allows you to cover new employee wages without dipping into your cash flow reserve.
Covering cash flow fluctuations
Speaking of cash flow, it’s not unusual for companies to experience seasonal fluctuations that may impact their bottom line. The financing you receive can cover these cash shortfalls, allowing you to maintain the daily expenses of your small business.
How to get a loan to start achieving your business goals
At CB&T, our experienced professionals evaluate your financing needs and make recommendations based on the dynamics of your business. We offer a variety of small-business loans to suit your individual situation, including Business Access -- which is especially attractive to businesses that want an easy, online application process and a quick decision. Contact us today to get started.