When is the right time to take out a business loan?

Posted by Chauncey Garduno on April 29, 2019 in Perth News |

Just about everyone has heard the expression “You need money to make money.” That’s almost always true when it comes to business – you need to spend money in order to run your business. But unfortunately, not all aspiring businessmen have the resources to sustain their dream business’ financial needs.

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Business loan

If you want to become an entrepreneur but you’re not independently wealthy or established, a business loan is the answer to your needs. Business loan is extremely popular among business owners. Almost every entrepreneur at some point has to consider a loan regardless of the business’ size.

A business loan can help your business to get started, expand once it’s on its way and growing, or get a business through the challenging times that happen occasionally.

During tough spots of your business, a business loan can be beneficial. A business loan can help you settle your financial problem without diluting your business’ equity. Many business owners decide to sell their equity to raise cash. Well it may allow them not having incurring interest or not having to make repayments, but it will dilute your ownership of the company and hence the share of profits you enjoy. This will not happen when you just make business loan.

Accelerating growth is also one major advantage of this type of loan. Even the best performing businesses can hit a sudden cash flow blip. And if you don’t have appropriate business finance options in place, then these crises can prove terminal. Ironically, these problems can be most serious when your company is enjoying significant growth, as taking on new customers means paying for people and raw materials in advance of getting paid.

However, business loans also bring disadvantages so it is very importantly that you think through it first before getting one. Is business loan right for you? When is the right time?

Read this article to answer your questions: https://www.flyingsolo.com.au/finance/when-is-the-right-time-to-take-a-loan