What can I use a small business loan for?
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UPDATED: Aug 7, 2012
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Small business loans are perfect for funding purchases that are necessary to begin generating profit. That means business loans can be used for virtually anything, and those uses will vary wildly depending on the market one’s industry is in.
Some of the more popular uses for business loans include the following:
- Employee Payment
While not every company needs capital for each of these categories, most companies will find they need financing for at least one of these items.
Equipment: A Fledgling Business’s Foundation
For many businesses, equipment is necessary to produce the goods or services that a company is designed to provide.
For instance, a pizza parlor must have large pizza ovens if it hopes to succeed. Similarly, a tailor or seamstress must have industrial-grade sewing machines in order to satisfy their market.
Unfortunately, the initial funds to pay for the purchase of necessary equipment aren’t always available—and that’s where small business loans for equipment come into play.
Most equipment financing can be acquired in as little as a few business days and can be repaid over the course of six to 18 months.
Without Inventory, What Will You Sell?
For those who profit by selling goods, having those goods in stock is an absolute necessity. But before you begin selling those goods and turning a profit, how will you pay for their production?
Business loans can be used to purchase inventory and provide a company with the necessary goods to sell to clients. It’s important that entrepreneurs have a well-formulated plan for selling that inventory though. If a product fails to sell, then owners may be stuck with a large looming debt over their shoulders.
Expand to Become More Profitable
Entrepreneurs who are looking to expand their already successful business may need that extra surge of cash to get their expansion off the ground.
If a company owner has a clear business plan, they can qualify for a business loan and obtain large amounts of cash in a matter of days.
Then once their enterprise has expanded, an owner should have little to no difficulty generating an appropriate profit to repay their lender.
Pay Employees’ Wages
Finally, for those whose ideas provide services instead of goods, paying employees to facilitate those services is crucial.
A small business loan can be used to pay employee’s salaries, but the owner using his or her financing for this purpose should have a clear and definitive plan to turn employees’ work into profit.