ll archives: Do You Need a Small Business Loan?

kelley raye

kelley raye

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?

  1. Open a new storefront
  2. Move operations into a larger space
  3. Buy new equipment
  4. Hire additional employees
  5. Refinance expensive credit card debt
  6. Buy inventory
  7. 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.

Check in next week to learn how to think through these options.

Samantha Novick is the Social Media Manager at Bond Street — a company focused on making small business loans simple, transparent and fair.

Photography: Kelley Raye