Debt can be a very misunderstood animal. It’s normal for most people to talk of being in debt as being a bad thing. Our first assumption when someone’s described as being in debt is to think they must be struggling.
Of course, in some situations this is the case. But the circumstances matter a lot.
Particularly when it comes to business, being in debt is more often than not a vital stage in the growth process.
Cash flow is a big problem for small businesses. Capital ebbs and flows all the time, particularly in seasonal businesses where a very busy period can come after an very quiet one.
Every day, we talk to customers who need an injection of cash to help them move to the next stage. Very often, that injection of cash takes the form of a business loan.
In these cases, being in debt isn’t a sign that that business can’t cope; it’s a sign that they are coping. They’re doing what’s necessary to help their business achieve its goals.
Uses for a business loan
Here are some of the most common reasons small businesses seek financing:
#1 Replenishing stock
Whether you run a restaurant, a hairdresser or a garage, your business won’t last long if you don’t have the ingredients, hair products or parts you need. But buying a new order of stock isn’t always possible if cash is tight.
#2 Buying stock in bulk
There are also substantial savings to be made from ordering in bulk quantities. Doing so can result in a lower cost per unit, which means more margin and profit for the business in the long-term.
#3 Investing in marketing
For your business to get to the next stage, you might need to reach new customers and make a splash with an ambitious marketing campaign. But marketing costs money, and that money isn’t always available.
#4 Hiring staff
Whether you employ staff already and need to hire more, or you’re getting ready to take on your first employee, recruitment costs money.
#5 Moving to new premises
If you’ve outgrown your current business premises and need to relocate elsewhere, you’ll need plenty of cash available to cover the costs.
#6 Staff training
For your business to grow, you need your staff to grow too. Investing in training to teach your employees new skills or to hone their existing ones is often a vital part of the growth process.
#7 Buying, replacing or upgrading equipment
Some businesses rely on equipment or machinery to carry out their day-to-day activities. If this equipment needs to be replaced, repaired or upgraded, it can sometimes involve a fairly substantial cost, which may not be readily available.
#8 Consolidating or refinancing existing debt
By consolidating several existing debts into one or refinancing, your business may be able to get better terms and save money in the long term.
#9 Paying a tax bill
If you know you’ve got a hefty tax bill coming up, a loan can help make sure you’ll have the funds you need to keep HMRC happy while still being able to invest in your day-to-day expenses.
As you can see from the examples above, business finance shouldn’t be something that attracts a stigma. There are plenty of reasons why your business might need to seek funding.
At Boost Capital, you can get funding for almost any business use and you can get it fast – in as little as two business days, in fact.