Are you in the process of growing your business, your brand, your website, or a side-hustle, and hitting some cash flow problems? If so, then you may benefit from a business loan.
As small business experts Max Funding said, “operating a business comes with its fair share of headaches. Overheads, payroll, and inventory are financially demanding, to say the least. And there are some months when simply maintaining positive cash flow can seem all but impossible.”
Here are some key questions to help you identify whether or not a business loan is a good fit for you.
Do you have a proven concept?
Whether you’re selling products or services, the most important thing that you will need to have a business is an actual proven business concept. A smart way to go about this is by determining your minimum viable product – the easiest to create, potentially unfinished version of your product or service, just to get it out there and to see if it is something that people are interested to buy. By proving the concept of your business idea, you will have validation that your idea can actually produce income and grow over time. Only after you take this crucial step does it make sense for you to even start thinking about business loans.
Do you have steady cash flow?
Another important factor for any early-stage business or growing business is actual cash flow. Are people buying your product or service? Do you have money coming in? And, if you have money coming in, is it coming in consistently? Cash flow is crucial to business success – without money, you have no business, after all.
While a business loan can definitely help get you started with cash flow, or to supplement existing income, it will be near impossible to pay it off if you don’t have a proven concept, and then incoming cash flow to be able to make payments. If you don’t think you’ll be able to adhere to the payment plan set forth by a business loan, then it’s not a good idea to move forward with pursuing one.
Do you have outstanding debt?
It’s not uncommon to have more than one loan, or debt source, in the early stages of your business. Starting a business is expensive, and you need to invest on crucial pieces, such a technology, marketing, product and more. However, if you already have more than one loan that you are working on paying, even if it’s a credit card debt bill payment, then you need to do some serious thinking before taking out a business loan. Business loans are highly regimented and structured, and you won’t be able to skip payments like you might be able to with other debt sources.
Business loans can be a blessing to your business – then can help get you startup money to support a proven idea, and help you multiply and grow your profits by providing some much-needed firepower. But, if you’re not fully prepared to take on a business loan and the baggage it comes with, then a loan can provide much more of a headache than it’s worth. Do your research prior to moving forward with any business loan to ensure it’s the right decision for you.