Small business owners frequently face the dilemma of having big dreams but a limited budget. Even if your business is thriving, you may fret about using your newfound profits to expand. This is where flexible business loans come into play.
Instead of tapping into your personal savings or waiting for a traditional loan to be approved, a flexible business loan may offer faster access to much-needed cash. Read on to learn why you might consider getting this kind of loan and how it might help you grow your business.
7 Benefits Of Flexible Business Loans For Small Businesses
If you need some extra money to fuel your growing business, you might be considering borrowing from family members or getting a traditional loan from a bank. But these options generally come with major drawbacks such as rigid rules or a negative impact on your personal relationships.
Here are some benefits that may make you consider taking out flexible business loans instead:
Immediate Access To Capital
Let’s face it, cash flow can be irregular, and some months will just be better for your business than others. There will simply be times when you’re in a better financial position to start offering a new product, providing an in-demand service, or even opening a new location. But what if you have these opportunities in front of you while you’re still saving up?
A business loan could offer a much-needed source of funds to boost your operations. Whether it’s to upgrade equipment, expand your inventory or get a brick-and-mortar location. Instead of waiting on your personal savings, you could have extra cash immediately to use on limited-time opportunities like bulk-purchase savings or seasonal discounts.
More Competitive Business Position
This benefit is directly connected to having quick access to business capital. Flexible business loans may be able to give you a competitive edge over your competitors. Because you’ll have more cash on hand, you could be able to beat them to the punch for advantages like:
- Being the first in the area to provide a popular product or service
- Getting equipment that can increase your productivity and output
- Offering more products that may appeal to a larger customer base
- Having a larger location or more branches to serve more customers
- Opening in an area with high foot traffic or close to your target demographic
Flexibility For Spending
Traditional loans have a lot of requirements before they’re approved by a bank or other lending institutions. One common requirement for traditional loans is stating a reason for the loan, such as managing cash flow or advertising your business.
If you end up spending your loan on reasons apart from your stated purpose, your loan terms may come with penalties that could leave you out of pocket. This restriction can be tricky if you want to spend a little bit of money on different things that may help your business grow, instead of just one thing.
Flexible business loans give you funds to use as you see fit, whether it’s for a one-time purchase (like equipment) or ongoing expenses (such as traditional and digital marketing). You may consider getting this type of loan instead if you want to avoid a traditional loan’s restrictions.
Better Cash Flow Management
There will be times when you have bigger operational costs or unexpected expenses, such as replacing important equipment or increasing your available stock. However, you may not have enough coming in just yet to cover these costs. Especially if you’ve just paid off big bills like business utilities and salaries. This might keep big opportunities for growth just out of reach, slowing down your business’ momentum in a competitive market.
You may want to get a flexible business loan in these times, so you can respond swiftly to these expenses. With a quick infusion of ready cash, you may protect your bottom line without sacrificing growth opportunities.
Faster And Simpler Approval Process
Getting traditional loans from banks or other lending institutions can take weeks – or even months – to approve. They also have very stringent requirements and ask for a lot of documentation, which may make it hard even for thriving businesses to get a loan when they need it.
Even if you put together all the necessary paperwork, your loan may not come in time for you to spend during key periods, like the holidays. On the other hand, flexible business loans usually offer application outcomes in as little as a few hours. You typically get access to funds within just a few days from approval too, which can allow you to quickly adapt to situations like a sudden boost in customer demand.
More Flexible Repayment Options
Traditional loans usually provide a limited number of options for borrowers, such as fixed repayment periods or specified loan amounts. This may prove tricky if you want to repay your loan more quickly or later down the line, or if you don’t want to borrow as much as the specified amounts of lending institutions.
Flexible business loans may be tailored to best suit your business needs, such as a longer or shorter repayment period or the specific amount you require for an unexpected expense. By having more flexible repayment terms and borrowing a custom amount, you may have more control over your small business’ finances and better cash flow management.
Improved Credit History
Small businesses may want to build a strong credit history, as this typically makes it easier to qualify for future loans and larger loan amounts. You may consider doing so by applying for a business loan, then repaying it on time and according to its terms.
By successfully managing a short-term business loan, you strengthen your credit score and may improve the likelihood of being granted more loans down the line. This improved access to more credit can improve your business growth and help you reach your goals.
Conclusion
Flexible business loans may help small businesses fund growth opportunities, such as expanding your operations or working on new projects. Keep these advantages in mind if you’re looking for ways to finance the next step for your business. By having greater financial flexibility customised to your business’ needs, you might get the boost you need to turn your big dreams into reality.