As a small business owner, you’re likely intimately familiar with the financial ups and downs that are part of launching even the most successful venture. And there have probably been times when you’ve second-guessed making a smart investment in your business—whether it was a new website or opening a new location—because you were sick of said ups and downs.
That’s the beauty of small business loans. They allow you to invest in your business while providing entrepreneurs like you some much-deserved financial security.
But sometimes, as much as you know you need a loan, it can be hard to decide exactly how to best use the funds once they hit your account. We’re here to help. Here are four tips to help you make the most of your small business loan.
1. Focus on Investments That Will Grow Your Business
Let’s be real. When you see all that money in your account, it can be tempting to start daydreaming about Lamborghinis or vacation homes in France.
Instead of letting your new bank balance go to your head, focus on your business goals. What do you need to do to take your business to the next level? (Or, to put it another way, what’s the first step to getting your business to the point where you could eventually pay yourself a Lamborghini salary?)
Investing in a new website and digital marketing strategy or a new employee could be the boost your business needs to bring in more money, now and in the future.
2. Pay Off Debt
If the financial ups and downs of entrepreneurship have already resulted in a hefty principal on your business credit card, it may be wise to pay off debt with your small business loan. This will not only improve your business credit score, it will put your entire operation in a better financial standing.
Less-Than-Stellar Credit Rating? Here’s How to Improve Your Score and Access Cash
3. Purchase New Inventory or Upgrade Your Equipment
Depending on your business, it may be wise to use the loan payout to buy your company a “present.” This could be new inventory to stock the shelves of your boutique. (More than 60% of retailers who took out a loan through Square Capital used their payout this way). For those whose operations rely on heavy machinery, buying new equipment is also a smart use of business loan debt. If you’re a mason whose concrete mixer is on the fritz, congrats—you’re about to get a new one! (Maybe two, if you think it will help your business grow.)
4. Improve Your Cash Flow
Do you struggle to keep up with your business’s cash flow? You’re not alone. According to a recent study by U.S. Bank, more than 80% of businesses failed because of poor cash flow management. But you’re not going to let this happen. Instead, you’re going to use your small business loan to get ahead of future cash flow issues—while brushing up on your forecasting skills.
Accelerate your growth even faster.
As the owner of a small business and a home, you have an additional option for funding your small business goals: a Home Equity Investment. Investors like Hometap offer you a percentage of your home’s equity in cash today in exchange for a share of the future value of your home. Since it’s an investment, rather than a loan, there’s no monthly payments or interest.
For small business owners or those looking to invest in a business, a Home Equity Investment offers a way to fuel growth without taking on debt—or using your house as collateral as with a home equity loan or HELOC.
Take our 5-minute quiz to see if a home equity investment is a good fit for you.
LEGAL DISCLAIMER
The opinions expressed in this post are for informational purposes only. To determine the best financing for your personal circumstances and goals, consult with a licensed advisor.