If you are a business owner, a signature loan could be a powerful tool to build your small business into a larger one. Signature loans are a type of unsecured loan where the borrower agrees to pay back the lender without attaching any other form of collateral to the agreement. They can be tough to get, as banks will only grant them to a borrower with a strong credit history and proof of income.
Nevertheless, small businesses across the country are using signature loans to grow exponentially. So how could you use this type of financial product to grow your business? Here are a couple of common uses for a signature loan in the world of a small business owner.
If you’re a retail or ecommerce business that sells physical goods, managing your inventory can be a constant seesaw between running out of a product and not having the liquid funds to purchase surplus. It’s frustrating to see an potential market opportunity and find yourself without the money to invest in a product you know you can turn a profit from.
This is where a signature loan could prove to be an invaluable tool. For example, maybe you’re a street vendor and an event is scheduled to take place in your area. A signature loan could help you stock up on food beforehand without worrying about having enough money on hand. Opportunities can take all kinds of shapes, and a loan at the right time can be vital to taking advantage of them.
No matter what kind of small business you own, professional equipment can be prohibitively expensive. Transportation, software, even something as simple as a copy machine aren’t cheap. Taking that last one as an example, when you first start a business, buying an industrial copier isn’t a justifiable expense. Once your business expands though, at a certain point you’ll be wasting you and your employees’ time having to use a desktop printer.
When you hit that point, it’s time to invest. Taking out a loan gives you the money you need to buy the equipment required to do a better job. The interest on the loan won’t outpace the increased efficiency you’ll get from upgrading your equipment.
This point is connected to the one above and adheres to the same logic. As your business expands, you’ll inevitably find your original location becoming more and more cramped, and as you take on new employees and talent, you’ll increasingly need to find more space to grow. A loan is often the only viable way to successfully bridge the gap from one location to the next.
These are just a few of the ways you can use a signature loan to grow your small business. Like any other kind of loan or business decision, you should seriously weigh the pros and cons of a signature loan before pursuing one. Consider how stable your business model is, and how likely you are to recoup the cost of taking out any type of loan. Used strategically though, signature loans can be a powerful tool.