Running a business is rewarding and liberating. You decide what hours you work, you decide what you charge and you are your own boss. It also gives you the opportunity to be creative and build up your business through the development of new products and services that appeal to more customers or clients. However, sometimes you just don’t have the funds to bankroll your ideas or outsource aspects of your work. This is when you might need a loan, but how can you use a loan to expand your business? And how do you get one?
Make sure you definitely need one
Write down a plan to help you work out exactly what you need. If you need more stock, work out what it will cost and try and get the best possible price and value for money. Don’t cut corners but do be frugal. If you are looking for additional premises then consider all the costs involved from the exact space required for your needs, the location and what it will cost to train staff, buy equipment or lease a property. Create a detailed costed plan and work out roughly how much you expect to make from the expansion after expenses. A comprehensive plan will help you to build a check list and prevent nasty surprises when it comes to implementing it.
Before you take the steps to apply for a loan first look at your books, your personal accounts, ways you could cut costs, anything you could sell to raise the funds. Do you have any savings that you could invest into your business? Do you have a friend or family member who would be willing to borrow you the money you need?
Gather all relevant paperwork together
Once you have established that you definitely need a loan to take your business to the next level, you will need to gather all the necessary paperwork. Requirements vary from lender to lender but most will want to see recent financial statements, insurance and your licenses. They need to know you can afford to pay it back so be as thorough as you can and make sure you have a well thought out strategy.
Decide on which lender you will use
If you don’t have good credit then you might not be able to go to the bank to get your loan. However, you might be able to go through smaller lenders. Some of these offer a business loan. They tend to be a bit more expensive than traditional bank loans but they make it easier for those who are trying to build their credit limit. You will need a family member or friend to be your guarantor but if you have a solid plan then they will probably agree to help.
Stay within your budget
Once you have your loan, make sure you stick to your budget and be stringent about your spending. It is better than to be below budget than over spend and get in a mess. Move quickly so that the expansion is swift. The sooner it is complete, the sooner you will start making money. But above all enjoy it and when your company grows you can pat yourself on the back.