When your business is ready to expand, yet you do not have the necessary funding to do so and you find yourself in a bind. What can you do to raise the amount you need for the expansion?
Here is a look at some reasons that you need to consider as you apply for a business loan offered by moneylenders. However, remember to check with the Moneylender’s Registry to confirm whether they are authorized to operate legally by the Singaporean Law Ministry (MLAW).
What reasons can prompt you to get a business loan?
You Want To Build Credit For Future Higher-Loan Borrowing
Small businesses often experience tough conditions in fulfilling all the requirements for getting a substantial loan. Particularly when both the proprietor and business do not hold a healthy credit report. What can you do in such a situation then?
Consider getting small business loans and then make on-time repayments so as to grow your business’ rating for future borrowing.
Following this plan can likewise make it possible for you forge good working relations with a particular money lender. And why is this important? This can give you the advantage of getting that loan when you are ready for the higher loan. But be careful here and do not get another loan that you cannot repay.
Actually, a single late payment on the small loan can affect your chances for getting a loan in future. So what can you do to avoid this? Only get an amount you can repay with ease.
You Are Ready To Expand
Since your work area seems to be shrinking as the days go by, it can only mean you have outgrown your current office space. Or, it could be that you operate a retail shop or an eatery, and you eventually have an increasing number of clients than you can accommodate them inside the space.
Then this is great news! How so?
Because it means business is doing very well and it is time to expand. Even with this wonderful news, does it mean that you have the funds needed to achieve this?
It is in such situations that you will need a personal loan or a business loan to support your big move. Despite the relocation, it is worth noting the in- advance costs and overhead charges. But before you move, look for a way to determine the possible change in income which will originate from the expansion and move to a new space.
Will it allow you to cover the loan expenses and also make a profit?
Work with a projected income amount together with your present income record to understand how this move will influence your primary concerns. Additionally, if you are looking at getting a retail store, consider the location you should set up shop to guarantee you are reaching your intended customers in the market.
You Have Stumbled On a Business Opportunity Which Exceeds The Actual Obligation
In some occasions, you will stumble upon a business opportunity which is too good a deal to overlook – this can propel your current business forward. It is possible you encounter an opportunity which allows you to have large stock at a reduced price, or you have a bigger space going for less amount.
In these instances, determining returns after the business is open will require that you determine the cost of the business against the profit you will earn once the operation starts.
For example; you have a business where you receive a business contract of $20,000. The challenge is, that you do not have the equipment to carry out the activity. So purchasing the needed hardware will cost you around $5,000. now, when you get a 2-year loan for the equipment, and you are paying an interest of $1,000, then your profit will currently be at $14,000.
You Need To Add More Stock
This can occur when your business operates occasionally, it then means there are moments when you will need some money ready to restock your business. Slow seasons come before those high seasons or the touristic seasons – hence you will need a loan for the high season to buy the stock prior to earning a profit from it.
To determine whether this is a wise financial move for the business, come up with a business projection based on previous years’ deals during the same period. Find out the cost of a loan and compare that figure with your sum expected after operating to determine whether getting a loan to re-stock loan is a wise fiscal move.
Keep in mind that business figures may differ each year, so be conservative and look at different years to come up with a figure for your projection.
Your Business Needs A Clear Plan
When running a startup or independent project, you have many different types of caps. It may be that in some instances you are doing accounting, promoting, raising money, and client administration which will start to wear you out – and the business suffers.
If on occasion that your small group of employees is doing more of certain things, eventually something will get lost despite the overall sense of alertness and trade-off that the business shows.
Even with the right reason as you consider getting a business loan, the truth still remains: If, after all, expenses have been factored in, getting the loan is possibly going to increase your initial concern. since the connection between funding and an increase in income is still cloudy, examine whether applying for a credit line is the best option for your business.
You should be certain about your ability to repay a business loan within a given period and to get your business to succeed. In the end, only you can decide whether that loan is beneficial.
Though the current economy is steadily recovering, as you consider getting a loan for your business, ensure that you have looked at the reason behind the need for cash. Also when you are expanding to ensure that your business is located in an area that will encourage easy access to consumers.