Apart from hard work and zeal, growing and scaling any business requires a significant cash infusion. Whether you wish to open new branches, introduce new products, or make your business digital, you need capital to meet scaling and expansion costs. Small business loans offer an easy solution to this immediate cash crunch problem. Since small business loans do not come with usage restrictions, you can tailor the fund use to fit the specific needs of your business.
So, if you are an MSME owner, looking for an easy way to finance your growth and expansion initiatives, you can turn to small business loans. You can borrow unsecured credit and repay the same at affordable interest rates over a flexible tenure to meet your growth requirements without overburdening your current cash flow.
How Can You Use A Business Loan To Scale And Grow Your Business?
Business loans are multi-purpose loans with no end-use restrictions. In other words, you can utilise the sanctioned loan amount to meet varied business requirements. From investing it into assets to expanding your product line, you have complete control over how you wish to use the funds to grow and expand your business. Here’s a list of ways you can use a business loan to scale and grow your business:
Source Inventory
Stocking up on adequate inventory is crucial to meet the demand of your customers, especially during peak sale seasons. For instance, if you have a small business selling diyas and candles, you can expect high demand surges just before the Diwali season. Since building a sizable inventory requires capital, you can utilise your business loan amount to finance inventory procurement. You can use the business loan proceeds as working capital to purchase inventory in bulk.
Increase Production
If the demand for your product has increased substantially, you will require new machinery, more raw materials, and a bigger team to meet this heightened demand. This means certain fixed costs as well as an increase in production overheads. Business loans offer easy access to credit when you are looking to ramp up production. With a small business loan, you can finance the purchase of new machinery, raw materials, and hire new staff to optimise the production process, meet increasing demand, and increase your revenue with higher sales.
Enter New Markets
Breaking into new markets remains one of the best ways to scale and grow your business. New markets allow you to capture novel growth opportunities as well as expand your target customer base to boost sales and revenue. However, planning expansion with new stores requires substantial capital. Leasing properties, constructing stores, hiring new talent, securing fresh supply lines, all require funds. These expenses can be easily covered with a handy small business loan.
Launch New Product Lines
Introducing new products can help your business stay relevant and maintain an edge over competitors. If your current products have already gained the customer’s attention and trust, this might be the right time to capitalise on the momentum and launch new product lines. Launching new products may seem simple, but actually every new launch goes through intense R&D efforts, product design phases, and a long development process. The new product must also be marketed in a way that attracts customers. All this requires capital which you can easily source from a small business loan.
Settle Outstanding Bills
Too many supplier bills and outstanding dues affects your overall profits while simultaneously compromising the creditworthiness of your business. Applying for a business loan can help you settle these outstanding dues like inventory payments, utility bills, and more to boost the financial standing of your business.
Take Your Business Online
Digitisation is one of the best ways to make your business accessible to new-age customers who prefer to shop online. Ever since the Covid-19 pandemic, the e-commerce retail space has seen unmatched growth. Therefore, joining the e-commerce bandwagon is the next and most logical step in expanding your business reach. But migrating your traditional brick-and-mortar business to the e-com space requires capital. From setting up a website and app to hiring a delivery team to take care of logistics, a small business loan can help you meet these requirements.
Invest in Advertising And Marketing
Many MSMEs avoid spending on marketing and advertising. They solely rely on word of mouth to grow their business. However, this strategy can actually limit the reach of your business. Instead of avoiding marketing campaigns due to a lack of funds, you can secure an easy small business loan. Availing a business loan ensures that you have ample funds to popularise your business through social media campaigns, online ads, billboards, and mailing campaigns. Creating an active marketing strategy and campaign helps you raise brand awareness and attract new customers to potentially grow sales and expand.
Consolidate Debt
A business loan is a practical solution for many MSMEs that are struggling to manage different EMIs. If you have borrowed funds from different lenders and cannot handle the maze of multiple EMI schedules, you can avail of a business loan to refinance these existing debts. The new loan allows you to consolidate these varied debts into one single loan, simplifying your repayment burden with a single EMI. Since managing your debts becomes easier, you can spend time focusing on how to scale your business.
Conclusion
Small business loans are a boon to MSMEs looking for easy credit to scale and grow their business. These unsecured business loans do not require collateral as a result you get to retain ownership of assets and property. Additionally, these multi-purpose loans can meet versatile business needs. From sourcing inventory, scaling production, and entering new markets to launching new products, financing marketing campaigns, and consolidating debt, business loans can be used to meet the specific needs of your business. MSMEs can leverage small business loans to gain access to capital to attract more customers, great strong brand recall, expand into new arenas, scale manufacturing, and break new ground to effectively grow and expand.
