Getting a loan is an avenue that most small business owners are going to consider at one time or another.

There are a variety of reasons one might feel the need to get a fiscal injection and we’ll get to those later. What’s very important is to thoroughly assess your situation and make the most informed decision as possible. It’s ultimately going to come down to what you feel is best for your business.

Do You Need a Loan?

Good Reasons

There are plenty of very valid reasons to get a business loan. It could be incredibly beneficial; you just want to make sure it’s the right move. There are more reasons a loan could make sense, but, these are just a few of the most common reasons.


If your business is really picking up, not just experiencing a spike, you might need to expand your location if you have one. If your business is heavily reliant on the space in your business, and it’s starting to hinder production, it’s obviously time to move.


Another reason you might consider a loan is to get some new equipment. It’s not about getting the latest and greatest, if your ability to conduct business is being impeded or slowed down by faulty equipment, it should be replaced.

A bit of a bonus suggestion is to look into equipment rental if applicable. This can save you a lot of money and headaches when it comes to repairing or upgrading.

Unique Opportunity

Sometimes a special deal will cross your path. Maybe a supplier is unloading a material you use at a discounted rate. Or, maybe there is an opportunity that popped up on a great piece of property. Whatever it is, you’re going to want to use your best judgment and weight the price to risk ratio.

When to Wait

For as many great reasons to get a business loan, there are as many reasons to just hold off for a bit. These are some of the most common we’ve come across.

You’re Maxed Out

If your current lines of credit are all maxed out, you need to figure out why those aren’t getting resolved first. Borrowing and borrowing will quickly turn you into the snake eating its own tail. While you might get some temporary relief, you’re just digging yourself deeper in trouble.

Poorly Kept Data/Research

There’s a chance what you’re reading as a trend in increasing revenue could just be a spike about to fall through. Or maybe that awesome deal you found has a couple of unforeseen issues.

When your business is borrowing money, you better have all your numbers together. Bad research is a quick and efficient way to set yourself up for failure.

Your Budget is Fatty

Even if you’re not quite maxed out yet, make sure everything is in check and that you’re not overpaying for anything.

Go through that expense list, is everything on that list critically necessary? If it’s not, trim it. This leads us to our final suggestion.

The Loan Alternative: Bootstrapping

Bootstrapping or bootstrap financing is the practice of viewing outside funding as an absolute last resort.

Instead, when bootstrapping, you find every opportunity to effectively cut costs. Cutting costs can be the equivalent of opening up new revenue streams, freeing up cash that was before being used. This can be a great way to make sure your business is being as fiscally responsible as possible and operating as efficiently as it can.

Whatever your specific need is, you’re going to have to make the call on what’s best for your company. A business loan might be the precise answer. But, it could also just be time to review your budget and look for improvements.

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