A small business loan is often one of the first things that comes to mind for an up-and-coming entrepreneur looking to get their start, or for an existing business owner who’s eyeing plans to expand. Even so, few people truly recognize the full range of benefits the tool carries with it.
In addition to the obvious “win” — the ability to make important purchases — a small business loan has the power to pave the way for future business success, and to instill a fair share of confidence, too. Continue reading to learn all about the lesser-known ways a small business loan can help a company, and for tips to help you start the loan process strong.
A Small Business Loan Can Boost Your Credit Score
Credit scores play an important role in the corporate world, helping a business owner obtain affordable rates, opening you up to additional financing and positioning your endeavor as a trustworthy company with whom others can feel comfortable doing business.
And put simply, the higher the business credit score, the better.
Although simply obtaining a small business loan doesn’t do much to boost credit, being smart in the way you manage it can. Making regular, on-time payments helps to show you know how to manage money and can be trusted to do so wisely. And over time, those payments will help to boost your score.
Of course, it’s important to note that things can go the other way, too. Regularly making late payments — or missing them altogether — can cause your business credit score to go down.
A Small Business Loan Can Offer Peace of Mind
No one enjoys feeling like they’re living paycheck to paycheck. And with the substantial amount of money it takes to get a business off the ground (and to keep it going afterward), that’s what it can feel like for a small business owner who opts to fund things on their own.
By taking out a small business loan with quality terms, you’re allowing yourself a bit of breathing space.
Having added money in the bank means you can afford to purchase that important equipment, pay team members to take some of the work off your plate and manage other day-to-day aspects of your business without eating into savings. In addition, for businesses with strong seasonal peaks and valleys, it can create a more level fiscal playing field throughout the year.
Not only does all that do wonders for stress levels, but it allows for smarter management of your business. And when operations run more smoothly, that leads to happier clients and more overall success.
A Small Business Loan Can Serve as a Springboard for Future Growth
Much like the foundation of a building, a small business loan is designed to be something of a starting point for what’s to come. You have a blueprint in mind for your business and a vision of what your finished product might look like. But before you can continue forward, you have to lay the groundwork.
(And remember, that groundwork should be secure. Who you work with, matters.)
Whether your end goal is a new fleet of equipment, construction of a new office space or even additional people on payroll, taking a strategic approach to funding can help you reach those objectives — and then start out toward new ones. After all, when you have your ducks in a row, your finances in order and your business working like a well-oiled machine, current and potential customers are bound to take notice.
The Details You Should Know About Securing a Small Business Loan
We’ve already covered the “why” of the small business loan. Now, it’s time to look at the “how”. With so many financial institutions out there, and countless loan options, too, choosing a path forward can feel overwhelming. Here’s some guidance to help you along the way.
Enter into the Loan Process Armed with Information: There’s a reason they say knowledge is power. When you head into something as important as a small business loan application, understanding the steps involved and documentation required can help poise you for success. Online research and sit-down conversations with trusted financial professionals can help you take your next step with confidence. Our “How to Apply for a Small Business Loan” blog post is a great place to start.
Understand Your Options: As we mentioned before, there are all sorts of small business loans out there, each one tailored to a different business goal. You’ll want to sit down and really consider what you plan to put your financing toward, what sort of terms and payment plans you have in mind — and what you’re looking for regarding end results. By bringing things into sharper focus, you can narrow down your business loan options and help ensure you’re opting for the financing path that makes the most sense. Want some help? Our “What Every Business Should Know About Commercial Loans” blog offers insight.
Be Sure to Have the Right Team by Your Side: The lender you use to procure your small business loan is nearly as important as the loan itself. Why? Because financing is a big decision, and it can have a tremendous impact on your business as a whole. You’ll want to make sure you’re working with a reputable company that is willing to help you find the option that makes the most sense for you — not just help their own bottom line. In addition, your team should be willing to answer questions you might have, help you pivot your financial approach if goals or circumstances change, and basically serve as an extension of your team. At Central Bank, for instance, we’re built on relationships, and we take pride in helping our Houston friends and neighbors succeed. You can learn more about the benefits of doing business with a local bank like ours on the blog.
A small business loan is a pretty big deal, and it provides a company a wide range of benefits. If you have questions about any of the above, or if you’re interested in learning more about how Central Bank can help you secure the right commercial loan, feel free to contact our team. We’re here, and we’re always happy to help.