The first steps in setting up your business can be exciting, and building something from an idea can be transformative. You dream of expansion, yet when you’re ready to take the next steps, you may find yourself unable to move forward due to a lack of capital and staffing bottlenecks.

It’s people that are the beating heart of any business. Yes, exciting and efficient tech has its place, such as onboarding and payroll software, but it’s your staff who implement and drive your company and its brand.

For instance, you might be ready to expand your team to support growth or improve payroll efficiency, but lack the funds to bring in the right expertise. As you remove operational bottlenecks, you may also need to invest in people who can create smoother, more consistent onboarding experiences for new employees.

If you’re at the point where you’re ready to bridge the gap between your ambitions and your current resources, keep reading to learn how a business loan for hiring could help you grow your team.

Why is hiring a strategic investment?

You may find yourself stretched too thin simply because you don’t have enough time or team members to support your growth. This, in turn, limits your bandwidth for strategic work because your focus is distilled. The more you’re able to delegate the operational tasks, such as onboarding, payroll, and so on, the more you can focus on strategic aspects of your business.

In other words, by taking on skilled hires, you’re confidently investing in boosting productivity, sales, and your customer experience. An investment in people facilitated by, for example, a business loan for hiring or a payroll loan,  can bring you long-term returns on your investment (ROI). You’re building a business that not only offers excellent products and services but is also backed up by exceptional talent, creativity, and efficiency.

How business loans can help you grow your team.

There are a number of ways in which your business growth can be boosted. For example:

  • Working capital loan: a short-to-medium business loan to fund day-to-day operations and cover immediate cash flow shortfalls
  • Term loan: a loan that offers a set amount of money to be repaid by a pre-agreed period of time using regular repayments‍
  • Lines of credit: a more flexible option that gives you access to a pre-agreed amount of cash that can be borrowed and repaid multiple times

Any of the above options can be used to fund or create a cushion or financial buffer for expenses incurred during periodic or one-off recruitment drives, subsequent onboarding, and payroll. In addition, you may consider a business loan for any of the following hypothetical hiring scenarios:

  • More sales reps to focus on growing the business by entering new markets
  • More production staff to meet growing demand
  • Install a marketing specialist to raise brand awareness
  • New employees for a time-sensitive project

Any of the above can potentially free up leadership time to focus on strategic business development.

The beauty of a business loan is that you have the freedom to use it to cover not only upfront costs but also ongoing expenses, such as employee salaries, benefits, and software tools. Not only that, but the right business loan can give you the space to grow without disrupting your cash flow.

Covering payroll and recruitment costs.

Instead of a long-term business loan, you may benefit from something shorter-term to stabilize payroll during hiring periods or cash flow gaps.

Such a loan might, for example, cover:

  • Hiring fees and job postings
  • Background checks and onboarding
  • Staff training and certifications
  • Initial payroll run until revenue generated from hiring increases

The last point is especially significant because time-to-productivity can be weeks to months. For example, explain why this matters: new employees often take weeks or months to become fully productive. A Gallup report suggests that it can take up to 12 months for new hires to become productive.

Choosing the right financing option.

If your priority is to cover immediate hiring or payroll costs, a short-term loan can provide quick access to funds when you need them most. For companies that experience seasonal surges or ongoing recruitment cycles, a business line of credit offers flexibility by allowing you to draw funds as required to manage payroll during busier periods.

When planning for sustained growth and larger-scale hiring, SBA loans (small business loans) are often the most suitable option, offering lower interest rates and longer repayment terms.

Tip: Use cash flow projections to help gauge your repayment capacity. A well-timed loan, aligned with a clear hiring plan, can help your business unlock meaningful growth.

Avoiding common pitfalls.

Before diving in and applying for a hiring loan, it’s essential to avoid common mistakes. These include:

  • Overhiring before your revenue justifies the expense
  • Not being strategic about hiring, for example, hiring for roles that don’t generate or protect revenue.
  • Poor record keeping. It’s essential that you keep detailed and consistent financial records to ensure your loan funds are used responsibly.

In addition, it’s important that you approach a lending institution that meets your needs. For example, According to the FDIC Small Business Lending Survey, 53% of small businesses prefer to apply for a loan online. Yet, only 29% of large banks and 8% of smaller ones have the technology to do this.

When lenders look at small business loan applications, they will assess your application. Strong workforce planning will help lenders see you as a lower risk, thereby improving future financing options.

Long-term payoff: Turning payroll into growth

Instead of viewing hiring as an expense, think of it as an investment in your business’s long-term growth and performance.

For example, imagine a small retail business that takes out a loan to hire a digital marketing manager. Within six months, that new hire drives a 40% increase in online sales through targeted campaigns that build brand visibility and customer engagement.

This hypothetical scenario shows how investing in talent through business financing can create measurable, sustainable growth. Lendio’s mission is to help small business owners turn their ambitions into reality. Start your application today to grow your team and unlock your full potential.