Need to Ramp Up Your Business’ Growth?
Whether your business is just a dream or something you’re already deeply involved with, if you need to start or grow your business, a professional loan can provide the boost your company needs. For operations of all sizes, credit can be an integral part of expansion, growth and success, and rather than seeing credit as a liability, it’s important to recognize its role as an investment into the future of your business. To illustrate, here’s a look at a few of the ways a professional loan can help ramp up your business’s growth.
Facilitate Opening Your Doors
If you are still someone else’s employee but are eager to hang your own shingle, a professional loan can help facilitate the transition. With a professional loan in hand, you will have the capital you need to pay a deposit on office space, start your marketing campaign, invest in office supplies and equipment, hire staff and cover other startup costs. Many professionals facilitate the jump from employee to business owner using credit cards or personal savings, but the first jump can be extremely costly.
When calculating the cost of using a loan to cover startup costs, it’s important to note that the IRS allows new businesses to write off a significant portion of their costs in their first year of business, rather than depreciating them slowly over a period of years. As a result, the tax savings have the potential to counteract the interest and fees on the loan, making the cost of a loan for startup capital negligent in many cases.
Expand Existing Operations
In other cases, you may have started your business, but you may need funds to expand it. If you need a larger office for your law or accounting firm, more floor space for your retail establishment, more lab equipment for your medical practice or better computers for your dental clinic, it may be time to investigate professional loans. Regardless of what you need, if you believe that a certain purchase has the power to help your business grow, you need to treat the expense like an investment into your company, and a professional loan can foster that growth and make it possible.
Boost Working Capital
While loans are often a tool for growth, they can be critical for sustaining existing operations as well. If revenues are slow, but you anticipate a jump in revenue in the near future, a professional loan can provide the boost you need to get through the slow period. In particular, you can use a professional loan to cover payroll costs, utility bills, inventory expenses, debt repayments, and other current or even long-term expenses.
In most cases, accessing an online professional loan to cover working capital, in particular, is easier than applying for a traditional business loan at a bank. Traditional loans often require lengthy business plans and personal guarantees ranging from high credit scores to collateral such as homes or cars. In contrast, online professional loans use a proprietary application process that leverages a range of data points to create a clear picture of the borrower’s creditworthiness and the business’s likelihood of success. This new model makes it easier for borrowers to access working capital, and the reliability of the data points encourages underwriters to offer relatively low interest rates to business owners. Additionally, because the application and funding process is faster with online loans, business owners don’t have to worry about missing a step in their march toward success.
Address Gaps in Cash Flow
Many professionals, whether they are doctors, lawyers, accountants or in a completely different industry, offer their clients the ability to pay their bills a month or even 90 days after receiving services. This is especially common for professionals who work in a business-to-business environment and, if offering net-30 or net-90 financing is the norm in your industry, your business has to do it to remain competitive. Unfortunately, the downside of this is that you may have gaps in your cash flow as you wait for clients to pay.
A professional line of credit can help you address these gaps. If you take out a line of credit in particular, rather than a loan delivered in a lump sum payment, you can simply spend a little from the line as you wait for your clients to pay. Upon receiving their payment, you can pay back the line of credit and then draw it down again as needed. By turning to a line of credit, you only have to pay interest and fees on the funds you actually use.
Alternatively, if you have unpaid invoices and your business cannot get approved for a professional loan, you may want to consider factoring. Factoring gives you an advance on your unpaid invoices. When the invoices are paid, you receive the remainder of the money minus a small factor fee, usually between 1 to 3% of the invoices’ balance.
When you own a business, access to affordable credit can be a critical part of your business’s ability to grow and succeed. When used wisely, professional loans can help you cover startup costs or expansion costs, and they can also help you stay afloat when you need extra working capital due to slow sales or delayed revenue. Although businesses should always be cautious about getting too deep in debt or taking out loans that they might not be able to repay, it’s also critical for business owners to be able to identify when a loan is a solid investment into their company so they can grow quickly and easily.