Many businesses today may be concerned that taking on more debt may not be a wise financial move. There is fear that the economy may not improve, and resources to pay back the loan will not be available. Understand that banks are hesitant to loan money to a business that does not have any growth prospect.  Is your company ready to expand?

Business financing may seem counter intuitive because the best time for a loan is when you are growing; but without it your company may not be able to take on more employees and update its technology. People need services and products regardless of the economy. Your business can provide those services if you allow it to grow.

Use Credit to Your Advantage

Large businesses and corporations use credit consistently to expand and develop their growth. Having equity does not always mean you have cash reserves in the bank. Small companies also need to leverage credit in order to grow. No one hesitates to take a mortgage out on their home, so why fear a “mortgage” on your business.

The definition of good debt is where the value of what you have purchased exceeds the value of the debt. Your growth prospective should exceed the value of the debt. The mistake many small businesses make is waiting until they need a loan just to meet payroll or to pay the light bill. That is not growing your company, it is bailing water in a sinking boat.

Now Is the Time to Expand

Every business borrows money. Large corporations know the benefit of investing in research and development. As a small business owner, you may need more office space but simply do not have the cash to outlay. The Small Business Association (SBA) is there to help. They understand if you cannot grow your company in your current location. A business loan is to grow your business, so if you are in a position of development and don’t go forward then you stand the chance of losing your edge and sliding downward.

What Does Expansion Say to Your Customers?

Small businesses are independent and extremely proud of that fact. You want to expand because you have made some smart choices, and managed to weather the storm better than your competition. From hard times comes success, like certain trees that can only grow after a fire has swept through. No one starts a company hoping to fail. Your customers and employees expect you to grow.

Customers want to see you grow, and they also like to see that they are not the only ones that appreciate your services and products. There are certain “givens” about business, one being that no one stops at a restaurant at lunch hour when the parking lot is near empty. 

Strike When the Iron Is Hot  

Move forward when the momentum is with you, when the wind is at your back so to speak. Your growth will far exceed the loan value. Investing in a bigger space and updating office systems or new ovens for the bakery will only increase your business. New clients and customers will give you a chance. A business loan will drive more business through the front door.

Credit gives you a means to move forward. Expansion in a down economy makes more sense than many companies may realize. The competition is less, while the demand is still there. Consumers need products and services regardless of the economy. The simple fact of the matter is that, in a down economy, there are fewer companies to provide those services. The bold move forward.  When the less confident downsize or fold, it leaves more customers for you.

Thomas Hathaway is a management consultant and blogger.  He suggests there are also times when simple payday loans may come in handy when you have financial urgency prior to a pay date.

Business Credit, General