3 Signs That Show That Your Business Needs A Loan

2 Min Read
457 words

A recent study found that more than half of businessmen take loans for the wrong reasons. Only very few businessmen were, for instance, able to recognize business opportunities that require taking loans with many confusing personal needs for business needs. The implication, therefore, is that banks continue to record bad loans because several businessmen are unable to repay their loans. This short article will look at three signs that show that the time is ripe for a business to access loans.
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1. High Demand For Goods And Services That You Have In Limited Supply

One of the most obvious signs that shows that your business needs a loan occurs when there is a high demand for goods and services to which you have in very limited supply. To put it more plainly, your business needs a loan when your customers continue to demand for certain goods and services which you either have in very limited supply or that is out of stock.

But before you settle for a loan based on the above sign, you must be able to ascertain that the goods and services in question are profitable and not seasonal. If the good and services are not profitable or are seasonal, there might be little or no point obtaining a loan to have them available.


2. The Need For Expansion And Growth

Depending on the nature of your business, the need for expansion and growth are signs that you need a business loan. There comes a time in the life cycle of a business when you are no longer comfortable with the status quo and there is a natural and organic need for growth. Once that moment comes, you might need a loan to bring your business needs to materialization.

However, in obtaining a loan for the purpose of expansion and growth, do not fall into the trap of Shylocks who masquerade as banks or lenders. By this I mean that you should avoid those loans that come with outrageous interest rates. This kind of loans has the potential to shrink your business rather than expanding it.


3. The Need To Replace Outdated Fixed Assets

If you run a service-related business, it is highly probable that the time will come for you to replace certain outdated fixed assets. Since these fixed assets are the life wire of your business and the cash cow upon which your business revenues are generated, obtaining a loan to replace these fixed assets is inevitable.

Nevertheless, any loan for fixed assets should preferably come with a long maturity, a maturity that is long enough for the fixed assets to generate enough money for the repayment of the loans.

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