Business Borrowing: A Wealth Of Options

As a business, it’s very easy to assume any sort of borrowing is negative. A lot of people think that taking loans will have a huge negative impact on their company. But, in reality, this is rarely the case. Most companies need to borrow money at some point; otherwise, they won’t be able to grow. You will reach a stage where you can’t handle the work you’re getting while also not having quite enough to expand. In this situation, borrowing is one of your best options, and can even be the one thing which saves you company.

To help you out with this, this post will be going through three different scenarios and the loan options you have in each of them. So, now, you just have to get out there and do some research.

Business Borrowing

Using What You Have

Most companies will have resources which can be used to get some extra funds. You don’t have to get rid of the resources you have. Instead, you’ll be putting them in the hands of someone else for a while. Options like this can be the best because they give you a physical barrier between you and the loan. If you can’t pay it back, you’ll simply sell the resources to cover the costs. This can help to keep you out of any possible trouble.

One of the simplest and easiest ways to do take this sort of approach is by releasing equity on the equipment your business uses. Most factories have loads of physical resources which can be treated like this. Large machines have high-values, often causing a huge build up of sunk funds in a company. Along with this, offices and other businesses often use computers for the bulk of their work. Although not as valuable as machines, this sort of tech can bring some money in, too. With a loan like this, you’ll have to pay money back before you own your items again. But, with the growth this can spur, it could be well worth it.

Some companies will also have a building or two which can be used to generate some additional income. Even if you’re still paying a mortgage, you can usually reapply for something bigger as and when you need it. Of course, doing this will be borrowing money you’ve already paid. But, you will get most of the money back, when you complete the remortgage. The loss you will experience here isn’t very high, and the payments you’ll have to make will be reasonable. If these actions result in large growth, you might not have to worry about the payments, anyway.

Finally, this final option isn’t necessarily a type of loan. Instead, it’s a way to get some money out of your resources, without having to use a large organization. It’s a lot cheaper for a new business to use someone else’s office or factory space, rather than building their own. And, you can capitalize on this. By offering spare resources to other companies, you can make some extra income for your business. You don’t have to pay this money back, and you can take back the resources whenever you like. This is perfect for businesses waiting for growth.

When You Don’t Have Anything

Of course, some companies won’t have anything they can use to get a loan. In this case, you’re not out of options, though. When you don’t have anything to cover the loan if it falls through, you’ll be taking on a slightly higher risk. Business is all about risks, though. So, it makes sense to take one here instead of failing to make ends meet. Let’s take a look at the options you have.

A simple, long-term unsecured loan is the option most people will choose. This sort of loan is given in good faith but is also based on the money your company already makes. This sort of loan is much more like the loan you would get personally. Typically, this sort of option will be the go-to choice for a new company. Unlike an equity loan, this sort of borrowing doesn’t tie up your physical resources. Instead, if you can’t pay the loan back, the company who gave it to you will have the freedom to take what they want. Of course, this isn’t all bad, though. It gives you the chance to retain your value, unlike other loans. You can find out unsecured lending details through a variety of methods. But, it’s usually best to go directly to the people giving the loans.

You don’t always have to go through a big company to get your loan, though. Instead, you could look into having other businesses and individuals fun your borrowing needs. Over the last decade or so, a lot of companies have started which allows companies to get loans from their peers. This sort of loan is very similar to an unsecured option, as you don’t use equity to get it. But, you don’t have to worry about your credit rating with a loan like this. People will invest based on the money you make and structure of your company. This is one of the best ways to get a modern loan.

Finally, you can look to your government for some help. Having active and successful businesses benefits a government greatly, providing loads of funds in the form of taxes. This makes it a priority for most countries to support their companies, putting aside money to help them grow. If your country has a trust or other type of system for this, you could use it to secure a fair and safe loan which is designed to be easy to manage. This is the safest loan a business can take. But, it will require a lot of work to get it going.

Hopefully, this post will inspire you to start working much harder on the research you do before borrowing as a business. Taking loans as your company grows is normal and can often be a good thing. It will help you to grow, providing much-needed funds. And, it could give you a chance to give yourself some extra time.