Congratulations, you have finally been approved for a business loan. But this is only half the battle. What you do next will mean the difference between increasing your business profits and defaulting on your loan. A business loan is meant to be a blessing to your business. It can help you to achieve your goals, make necessary changes, and help your business to continue growing. But all of the above will only happen if you have a well-thought-out plan before the fund arrives in your accounts. Below are some tips to help you make the most of your business loan;
- Put the money in a separate account:
if you plan to use your loan funds to pay for ongoing operational expenses and purchases, then it is advisable you keep the money in another account aside from your primary business checking account. The idea is for you to pretend the money isn’t there and only transferring it when you need it. This will prevent you from overspending.
- Set up automatic loan payments:
Defaulting on your loan payment would hurt your credit score, making it difficult to borrow money in the future. One way to prevent this from happening is to set up automatic debits. Majority of lenders have an online banking system which allows creditors to do this. Setting automatic loan payment will save you the hassle of manually moving money around, as long as you have the funds each month.
- Purchase new equipment:
One of the most effective ways of spending your business loan is to purchase equipment, this could be industrial equipment or a new point of sale system. If you previously were leasing equipment buying yours can assist with cash flow as you won’t have to make regular lease payments.
Don’t just buy equipment because you have funds, firstly consider how much you have as against how much you really need the equipment.
- Improve your marketing:
It is the goal of virtually every business to attract new customers and keep existing ones. Another effective way to spend your business loan is to improve your marketing capability. This could be by hiring new staff to increase your internal marketing campaign or invest in marketing software and system.
Improving your marketing capabilities and spend can lead to an increase in brand visibility, better marketing insights, and a higher chance of generating a return on investment.
- Expand your operations:
Perhaps your business is already doing well, then it may be time to expand. You could consider opening a new retail location, or a second warehouse, or a new office space. You could also decide to start selling your products online or overseas. Expanding your customer base will always be a win for any business.
- Hiring and training:
You can never go wrong when you invest in your staff, it is a win-win game. Investing in them will make them feel valuable and secured in their job and you will benefit from their improved efficiency and expertise.
The loan can open up opportunities for staff development or allow for the hiring of new staff.