Is your business in need of some extra capital? Are you hesitant about applying for business financing… even when you have a verifiable need for funds? For many small businesses, the answer to both questions is “yes”.

Many businesses don’t realise that the best time to apply for loans or increased lines of credit is when they don’t have a need for emergency funding. Perhaps you are looking to expand, but need capital to invest in the resources needed to grow your operation. If you can relate to any of the scenarios outlined below, it could be time for you to consider business credit options. 

1.  You Need To Expand Your Operations

 your current employees can’t handle an increase in sales volume, you might not need to buy more office space or open new locations. Instead, you might just need funds to hire new workers and grow your inventory. That’s where business loans step in.

If you need new equipment, more hands or more stock to meet growing customer demand, a small business loan might be exactly what you need. Such loans have speedy application and approval processes and the expected service life of new equipment determine the terms of the loan. You can even use the equipment as collateral to access lower loan interest rates.

2. You Have an Awesome Credit Rating

Small business loan advisors at say, “establishing a good credit score can take a long time and involves a commitment to submitting debt repayments on time, diversifying the types of credit you access and monitoring your credit report.” They suggest, “if your business has an excellent credit score (660+), it could be one of the best times to apply for credit.”

“Hard” credit searches can have a negative impact on your credit score, so you don’t want to make any new credit applications until your score has recovered and can take the hit.

As soon as your score is back into excellent territory, you are in the best position to access loans with low-interest rates, favourable terms and fewer fees. A good credit score can open doors to so many financing options. And, if you need funds to invest in resources to take advantage of super-rare opportunities, a line of credit is ideal.

3. Your Space Requirements Have Increased

If your business operations have outgrown the current space available (or will soon), business loans can enable you to expand. In fact, there are a lot of creditors that offer loans that are specifically designed for space expansion purposes, such as commercial real estate loans.

As a business entity, you can apply for a real estate loan to finance a new storefront, more office space, or additional warehouse space. It’s also permissible to use such a loan to fund the construction of a new building or a building extension. Traditional lenders, such as major banks, are some of the biggest providers of commercial real estate loans. But, as a small business, you should know that you can also choose alternative options, like SBA real estate loans, which have lower interest rates.

4. An Opportunity Presents

Are you thinking about a lucrative partnership? Perhaps you’re about to sign up a new big client that will completely transform the future direction of your business? 

A recent study shows that having a business partner raises 30% more money on average. Business loans are there to allow you to take advantage of those once-in-a-generation opportunities. You don’t want to regret what your life could’ve been if you’d seized at the chance and took that line of credit to support you.

Be ready to show lenders evidence of the lucrative potential of the opportunity. You need supporting documents to show that signing the deal will only strengthen your business. Lenders will want to see a clear timeline for the opportunity and its conclusion in big profits for your business.

If you conclude that a loan is right for your business, lenders will want you to submit a plan as to how the capital will be used. A line of credit, in contrast, gives you much more flexibility over how funds are used after approval.

Don’t make the mistake of waiting for disaster to strike. At that point, it will be too late and your options will be limited. You need to make a plan to safeguard your business’s financial future today. Check out the signs briefly outlined in this article. Then, apply for that business loan with confidence, sure in the knowledge that now is the right time.

By Eddy

Eddy is the editorial columnist in Business Fundas, and oversees partner relationships. He posts articles of partners on various topics related to strategy, marketing, supply chain, technology management, social media, e-business, finance, economics and operations management. The articles posted are copyrighted under a Creative Commons unported license 4.0. To contact him, please direct your emails to [email protected].