Small business owners know that loans are part of running a business. Most companies need a loan early in operation. However, some businesses can wait a while before needing to apply for a term loan. Here are some of the most common reasons you may need to borrow money and lending options to consider.

Increase Inventory

You may run into situations where you need to boost your inventory but do not have the cash on hand. You may need to transition to a new inventory season. A vendor may offer a significant discount. Financial vehicles to assist you with these purchases include a line of credit or a cash advance.

Expand Your Business

Either way, business expansion is a common reason to investigate loans. In addition to giving your company more space, transitioning from a leased facility to a self-owned building has many benefits. Speak with Small Business Administration or your financial institution to discuss the different term loan options available.

Improve Cash Flow

Cash management is the lifeblood of your company. Over 80% of businesses fail because they do not maintain sufficient cash. If you are in a negative cash flow situation, look for ways to increase income and decrease expenses. Proactively monitor cash flow statements to determine the level of assistance you require. Most businesses turn to their lines of credit for quick cash. Turning outstanding invoices over to a factoring company can provide a portion of the money while waiting for payments.

Purchase Equipment

Equipment is expensive. From computers to vehicles to heavy machinery, equipment is a large part of the cost of doing business. Replacing damaged equipment can be costly. Using your equipment as collateral can help you get lower interest rates on a term loan. Many companies lease equipment to maintain a competitive advantage.

Build Your Talent

At some point, every small business owner recognizes they need additional personnel to grow their business. Finding and hiring the right talent is a costly and time-consuming process. Even if you outsource employees, you still have to take the time to find the right company and pay contract employees. Business lines of credit can help you pay these expenses. You can also apply for an unsecured term loan for additional cash. Some lenders may require collateral to secure the loan.

Adding a loan to your financial portfolio isn’t an easy decision. Loans are a tool designed to improve your business.