As the owner of a small or mid-sized business, you know how important cash flow is to your day to day operations, and how vital working capital is for taking care of expenses – or seizing opportunities.
However, you also know that business cycles ebb and flow. Some weeks, months and quarters are better than others. And while you can implement strategies and tactics to maximize the upticks and mitigate the downturns, there comes a time when it just makes sense to seek a short-term business loan.
Below, we highlight 3 ways short terms loans can improve your business, and either put your operations back on track, or elevate them to the next level:
1. Topping-Up Cash Flow Shortages
We’ve already briefly touched on the importance of cash flow, but it’s worth focusing on again because not having enough is such a common issue. This is especially the case for relatively new businesses that haven’t yet been able to establish favorable terms with suppliers, or that can’t afford to purchase large volumes of inventory in order to enjoy bigger discounts. Topping-up cash flow shortages with a short term business loan can be a wise move – especially when the alternative is to maximize credit cards, which is almost NEVER a good idea.
2. Adjusting to Seasonal Trends
Some businesses need additional cash-on-hand in order to cover additional expenses or investments related to seasonal trends. For example, many restaurants experience a welcome spike in business around the holiday season, while some clothing retailers find that (unlike many students!) they love back-to-school time, because it means significant more sales. Short term loans can be the ideal way to cover additional, temporary costs – such as hiring extra staff, purchasing additional inventory, running extra ads, and so on.
3. Expanding Locations
Expanding locations is another common scenario where a short term business loan can make sense. This is because the initial and up-front costs of expansion are typically full of high, one-time fees (e.g. purchasing new equipment and furniture, leasing costs, etc.), current cash reserves can’t cover. However, once the new location is up and running, the cost factor drops considerably, and so the need for additional cash flow diminishes – which is why a short term loan likely makes more sense than a long term loan.
The Bottom Line
Is a short term business loan right for you? That’s a question that can’t be answered in a blog post – and anyone who tries to convince you otherwise is more interested in your money than in your success!
Rather, what we can say here is that if you need a rapid cash infusion to take care of an expense or investment – one that you expect to be one-time or relatively short in duration (such as the expansion example noted above) — then it’s very likely that a short term business loan is indeed the right option for you.
Call Mulligan Funding at 855-326-3564 to discuss your financing options today!