They’re called “growing pains” for a reason. Expanding your business means buying new equipment or hiring new employees: neither is a cheap thing to do. Most small businesses don’t have the working capital on hand at any given moment to hire new staff.
Working capital is the amount of cash you have available to run your business. Really, working capital is usually the money you have in the bank. A smart small business owner will build a successful financing plan to keep their working capital sufficient to operate, with reserved options for growth opportunity.
Small business loans are one way to boost working capital. By securing a loan, you can obtain the capital you need to hire more staff and grow your small business.
What are Business Loans
Finding the right way to manage your finances is key to running your small business. There are multiple financing alternatives for all business expenses. When it comes to growing your company, or specifically when it comes to hiring new staff, a working capital loan is one option to consider.
Working capital loans, or business loans, are short-term loans that can help you cover your operating expenses for your small business. Compared to traditional loan options, the terms are usually shorter and the overall amount borrowed is usually lower. Working capital loans are one opportunity that small business owners can leverage to keep their finances in check and to always be prepared for business opportunities.
How do I get a Small Business Loan?
Like all underwriting, the most important aspect of applying for a loan is credit history. The lender will do an extensive credit check on the small business and on the business owner. They will consider your length of time in business, your payment history as a business, your debt as a business, and your own personal credit history. They might also consider your annual revenue and cash flow to see if you will be able to manage repayment.
The key to applying for a small business loan is to establish a strong working relationship with your bank. Be open and give them all of the information they need to run the credit check and make a decision on your loan. Some of the things you might need to provide are business and personal tax returns, financial/bank statements, and any legal business documents (commercial leases, any franchise contracts, articles of incorporation, etc.).
Another tip when applying for business loans is to consider multiple lenders. Different financial institutions have different restrictions and qualifications for their terms. By comparing multiple options, you can look at the different interest rates and terms of the loans to find one that is best for you.
Using Small Business Loans to Hire More Staff Sets You Up for Long Term Growth
It’s important to put the right people on the job to set your business up for success in the short term, and to set yourself up for long term growth. This means hiring enough workers to cover all positions and staffing them effectively. Working capital loans offer small business owners options when it comes to expanding. Because of their flexibility and utility, small business loans are a great option to finance expansion opportunities like hiring more staff.
Compared to other alternatives for financing, business loans are best for long-term growth. You get the capital in one large sum, with no restrictions on utility. From covering payroll to hiring new employees, this makes a small business loan perfect for keeping the right people on the job to boost revenue and profitability.