ll archives: Do You Need a Small Business Loan?
So, now that we’ve covered what to use a small business loan for, the question remains: Do you — yes, you — need a small business loan? Looking to?
- Open a new storefront
- Move operations into a larger space
- Buy new equipment
- Hire additional employees
- Refinance expensive credit card debt
- Buy inventory
- Solve a short-term cash flow need in your business
If you’ve been thinking about any of the above, your business could be ready for the next big step — financing.
However, it is a crucial to have a clear idea of exactly how external financing will help grow your business. And this comes down to return on investment (ROI). Evaluating ROI is imperative — regardless if you are borrowing from a lender, or acquiring funds from investors. If you use your additional capital towards an expense that will generate growth or revenue, the investment will have a positive return. If you use your additional capital towards an expense that will not generate revenue — such as giving your flower delivery truck a new paint job — you will have a negative return on investment.
A good rule of thumb is to ask yourself: “Would this expenditure have a positive ROI and help grow my business?” If the answer is “yes”, and you have a clear understanding of exactly how this additional capital will help take your business to the next level, then it’s time to consider what type of financing is right for you: debt vs. equity.