How to Use Small Business Funds

Funding for your small business is needed whether you are just starting your business or are ready to take it to the next level. There are many ways you can start to use your small business funds so it is important to first figure out what you will use it for and most importantly how you will pay it back. Every financing option has their own unique list of terms and capital amounts provided so it is important to do research beforehand to learn what they are.

Today, we will discuss the following ways small businesses can use their funds.

To Expand the Business

Using funding to expand and take on new opportunities is one of the most popular ways small businesses use their loan. From selling new products or new services or wanting to open a new physical location, a loan can help invest in growth. Expansion is good for businesses, but it can come with a high price tag. For example, if you are looking to open a new location, you also must consider the costs of new equipment, supplies, furniture, and more. If you are looking to expand your product line or have more services for your customers, you might need additional inventory or new hires to expand your team. If you are not prepared, then it can hurt your cash flow.

To Focus on Marketing Strategies

Having the right marketing strategy is essential for business growth. It is not possible to compete without it. Not only does a business need effective marketing offline, but online marketing is just as important too. With small business funding, business owners can invest in thousands of dollars to help build an attractive website. Other tools to think about in a marketing strategy is a way to help boost SEO and promote on social media, radio, TV, billboards, and more. Taking advantage of the funds for marketing will help it take the business to the next level.

To Take Advantage of Opportunities

Businesses need to take advantage of opportunities that may arise to make their business successful. Being innovative and having the right product or service is essential and a business loan can help try out new strategies.

To Address Critical Needs

Sometimes critical needs need to be addressed and they can be costly. From broken equipment, to helping support the business during seasons, and to have enough for payroll, financing can provide support. With extra capital, small business owners can cover any unexpected expenses without using personal savings, credit cards, or asking family and friends for help.

To Grow a Team

With a line of credit, a small business owner can use the funds to grow their staff and make sure they have the best staff that they can retain for their business. A bad hire and having high employee turnover can be costly so it is important to hire the right team.

Small Business Funding Options

There is a wide variety of funding options for small businesses and each have their own list of terms and capital amounts provided. Some of the common examples include:
• Small business term loans – get funding quickly and is the most classic form of a loan for business owners.
• SBA loans – can be used for business growth, expenses, and opportunities. This loan is guaranteed by the SBA, however, it can take months to complete the process.
• Small business lines of credit – you pay interest only on the money you use and is available for when you are in need.
• Equipment financing – this is used for computers, printers, servers, forklifts, warehouse equipment, etc.
• Merchant cash advances – commonly used for funding new hires, branch expansions, and other projects.

When you determine which one to apply for you need to be prepared to have a discussion with the lender about the amount of capital you would like to borrow, your ideal terms, how you plan to use your capital to grow your small business, and the financial status of your business (including your FICO, time in business, and gross sales). Once you are approved then the funding process is complete, and you can start to use the borrowed cash for its intended use. Any of the capital that is borrowed must be paid of eventually.