8 Major Companies That Used Business Loans to Grow | SMB Compass
Ezra Cabrera | December 18, 2020
Business loans have always been a way for start-ups and established businesses to finance accounts and expand their operations. Unfortunately, the concept of getting loans can be misunderstood. People may think that established or major companies may not require external financing. However, this isn’t true, as any enterprise may need a loan at some point in its operation.
If you’re an entrepreneur considering how to procure funds, there are different ways in which loans can assist you. For example, loans can help expand production, pay staff, cover bills, or even help with mortgage refinance. All these ways will help your business grow as long as you manage your finances well.
Companies That Acquired Business Loans
Over the years, some major companies have used business loans to get to where they are today, and you can draw inspiration from them. The proper management of their finances is what determined their position in the current market. You could follow the same route as well.
Here are some of those companies:
When the idea of Starbucks first came about, its founders pooled together some money. However, this wasn’t enough, and they took some loans to fund their coffee beans business. They later started selling tea and coffee cups after Howard Schultz joined the team.
The Starbuck story of acquiring business loans doesn’t stop there. They also obtain loans from personal investors in either short-term or long-term options in the form of issued bonds. Even if the company is already well-established, loans could still be useful from time to time.
When Larry Page and colleague Sergey Brin initially thought of a concept to create a better search engine, their initial capital wasn’t enough to cut the deal and develop it to what is currently known as Google. At first, the search engine was named Backrub. It didn’t take off until they got some funding.
When their idea and entrepreneurial skills impressed Andy Bechtolsheim, he gave them USD$100,000 dollars to secure a garage to improve their invention. With the funds, they got enough resources to actualize their ideas and develop Backrub to Google. The online world was never the same.
Subway is now considered one of the most renowned restaurants in the world, with over 44,000 chains globally. However, its success story may not have been possible if it were not for a pivotal business loan. Its founder, Fred DeLuca, asked for USD$1,000 from a family friend to start a restaurant hoping to fund his college studies.
However, the business did more than raise enough funds for his education, as it developed to be what it is today. DeLuca is often quoted as saying that he didn’t know anything about sandwiches when he started. Thus, it’s fair to say that the early business loan he received helped pave the way for his eventual success.
4. Paul Mitchell
When John Paul DeJoria and his friend Paul Mitchell worked at the same hair care company, they decided to start an enterprise that would provide quality hair care at an affordable price. The company also aimed to support hairdressers to provide luxury hair care.
To kickstart their idea, the two friends took out a business loan worth USD$700 and started a company that’s now known as Paul Mitchell. The loan helped them start slow with only three products. They have since risen to be one of the recognized biggest manufacturers and distributors of hair care products and styling tools.
Tobias Lutke, along with his friend Scott Lake, decided to start an e-commerce software after Tobias was frustrated by what was then available in the market. It took them over 18 months and funding worth USD$200,000 from friends and an additional USD$250,000 from an angel investor to get it right.
However, funding acquisition didn’t stop there. In 2010 and 2011, they raised a combined amount of about USD$25 million to help their business. These loans have helped these friends develop Shopify, and it’s identified now as one of the biggest e-commerce platforms in the world.
6. Under Armour
When Kevin Plank started his sports apparel business, he didn’t have enough capital as he had only saved up to USD$20,000 he earned while selling T-shirts at concerts. However, his determination got him going. However, he racked up to USD$40,000 in credit card debts to get Under Armour going.
A year later, he was broke, and his business endeavor appeared to be failing before his fortunes turned. What changed was when his apparel attracted interest from the National Football League and other athletic bodies. This pivotal point turned his business until it is now worth billions.
Steve Ells founded the first Chipotle Mexican eatery in Denver in 1993 after working at a restaurant in Mission District, San Francisco. However, to get his business going, he had to ask for a loan of USD$85,000 from his father. According to reports, his father initially joked that his son would need to sell over 100 burritos a day to make a profit.
Fast forward years later, and it was evident that the loan from his father helped the business thrive. It now has a valuation of over USD$1 billion. This is another case of using business loans to seize opportunities. Perhaps it was also one way that he made his father proud, so to speak.
Dyson Limited is a company that designs and manufactures household items and appliances such as vacuum cleaners and hand dryers. While the business is now valued at over USD$4 billion, its success story also begins with a business loan.
In the late 1970s, James Dyson asked his wife to fund his first cyclonic vacuum cleaner design. This started the journey of what developed to be the UK’s biggest home appliance manufacturer. Though the funding was from his wife, it still counts as a business loan.
It’s clear that many reputable companies have a story of a business loan weaved into their history. Those businesses have grown to be what they are today through proper financial management. There are even cases of a company acquiring loans even after being stable, highlighting how crucial loans could be to any entrepreneurial endeavor.
These businesses can act as a source of inspiration of how budding entrepreneurs could also seize an opportunity with the proper funding. And years later, the same companies evolved into being top brands today. Business loans are significant, indeed. They helped these companies—and they might help yours, too.