ll archives: What to Use A Small Business Loan For
We’ve teamed up with our friends over at Bond Street to present a video series on financing for ladypreneurs. Check in every week for a new video on how you — as a creative entrepreneur — can take advantage of small business loans to grow your business. What do you even use a small business loan for? I mean sure, you might know what a small business loan is — but when do you know if you’re ready to actually go through the process of applying for one? Is there a sign that you should be looking for that will help you determine if the time is right? And how do you know if a small business loan is the best financing option to take your business to the next level?
One word: growth.
Well, not actually one word. But, the way that you should be thinking about financing — especially with regards to a term loan — is the value a growth opportunity adds to your business, or ROI (return on investment). And this should inform where you choose to invest.
Let’s continue to use our hypothetical flower delivery company as an example. You want to purchase a truck to expand your business. So, yes, this investment would fall under growth — woohoo!
But, even though this is a growth opportunity, you need to consider:
- The cost of a truck
- The projected revenue that extra truck could help deliver
- The ongoing cost of investing in a truck (gas, maintenance, etc.)
- The profitability of the investment (over a 1-5 year period)
As you can see, there are a lot more considerations that fall under the umbrella of “growth”. So, perhaps the best way to grow your business isn’t necessarily a truck, but additional employees? Or an app to streamline the ordering process? Gin Lane wanted a new office space, Joe Coffee was looking to expand with additional locations, and Uprise Art wanted a website refresh — and in the case of all three of these distinct ventures, the owners knew exactly how their investment would map to additional growth. So, what makes the most sense for you? In the following lessons, we’ll help you think through growth, and model out the return on that investment — so you too will be prepared to choose the best financing option for your business.