Loans have received a bad reputation over the years and especially in relation to SMEs. However, with all the new industries appearing over the years, more and more entrepreneurs are born. Small business owners are wary of debt financing because of the stories and misconceptions they’ve heard. Falling into the endless debt trap sounds terrifying. Many only think of taking loans when they are experiencing financial difficulties, and even then it remains an uphill task because it means accepting that they’re not doing well. Taking up loans isn’t only for the cash strapped business owners. It is actually for those that aren’t risk-averse or those we are seeking to upgrade their company. Large companies with big brands under their belt also take loans but for the right reasons. Their objective will be to bring the company to the next level. Good reasons to take a loan for an SME To better explain the line of thought in some of the successful SMEs, here are some situations that make sense to take a loan for a small business. 1. Expansion Businesses are growing and for growth to happen effectively, it usually requires money. Any excess money in business will most likely go into building its capacity and generally growing it in whichever way that is relevant. It is possible to expand using regular cash-flow, but the speed at which it will happen may not be appealing. Taking a loan gives an instant cash injection into the business thus increasing the speed at which expansion can occur. It will also ensure other monies go towards operational costs thus keeping the business expanding and running. 2. Capitalizing on business opportunities Sometimes offers come up and the business could use that particular item being offered at a reasonable price. A loan comes in handy to acquire such things, especially if it is a capital-intensive item required such as machinery or a vehicle. 3. Inventory A business must have an inventory before it can make any money. Inventory comes in large amounts for it to be economically viable and the situation is worse if
Copyright © 2020 Lending Bee Pte Ltd.
All Rights Reserved.
Co. Reg. No. 201841732D.