Top 3 Reasons Companies Apply for Business Loan
by Alex Antony, on Dec 13, 2018 3:00:00 PM
It is true that not every reason is a good reason to go into debt for your business, that doesn’t mean that good reasons don’t exist. If your business is ready to take a leap, here are 3 reasons to apply for a Business Loan that you might want to consider.
1. Securing Funds for Business Expansion
This is probably the best reason to need a loan. After all, it means you have already have a successful business and need extra financing to take the next step. Borrowing to expand your business can be a great idea. However, you should still be frugal. Only borrow what you absolutely need. And don’t fall for the myth that you can’t expand your business without debt.
Engaging a finance broker would make the job even easier allowing you to compare a panel of 40+ lenders in just one application. It even saves you from the negative impact on your credit score that comes with multiple credit enquiries showing up on your credit file.
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2. Paying for Operating Expenses
Needing money to pay for operating expenses, also known as working capital, is common, particularly for start-ups and businesses that operate in seasonal industries. Although paying for operating expenses is a valid reason to get a loan, it’s not sustainable. So, it needs to be combined with a realistic business plan to reduce costs or increase revenue.
Purchasing equipment that can improve your business offering is typically a no brainer for financing. You need certain machinery, IT equipment or other tools to make your product or perform your service, and you need a loan to finance that equipment. Plus, if you take out equipment financing, the equipment itself can often serve as collateral for a loan -- similar to a car loan.
3. Paying out Credit Lines
Paying for existing debt is a challenge for new businesses struggling to reach profitability or for established businesses with poor cash flow. A short-term loan to cover debt payment can make sense if you know business will pick up soon. Otherwise, you should probably consider a loan refinance or debt consolidation loan.
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Ausloans provide a high standard of finance and insurance solutions across Australia. We can do more for your business. For more information, call us on 1800 277 768 or you start on your application today.