Five Signs That You Need A Small Business Loan

2 min read • May 09, 2016 • Tyler Heaps

Many signs can point to your business needing a loan. For this reason, there are many types of small business loans, such as SBA loans, equipment loans, lines of credit and more. Here are five signs that your business may need a loan.

Business is going well

Many companies think that you should apply for a loan when you need the money for something. However, getting approved for most small business loans takes time, so trying to get a small business loan when you need money fast is risky. In addition, securing a loan is much easier when business is going well because demonstrating a successful operation will encourage lenders that you will be able to repay them. If your business is going well, beginning the process of finding available financing can be very beneficial.

Cash flow is occasionally challenging

Are you paying for supplies and labor up front, but receiving payment from customers only on delivery, or with later payment terms such as Net 30 and beyond? If so, your business can have a cash flow issue even while generating profitable revenue. A traditional business loan or a business line of credit can come in handy for managing cash flow, allowing you to dip into funds when your operational expenses are due, and replenish them when you receive payment.

Need A Small Business LoanYour business is expanding

As your business grows, you will need to expand your operations, either by moving to a bigger space, or enlarging your existing space. However, real estate and moving are expensive, so you may require a small business loan to acquire the space that you need to expand, in a similar fashion to taking out a mortgage loan to buy a home.

You received a big order or need more inventory

Having inventory for products is important to be able to make sales, but if you have inventory that means that you haven’t sold the products yet – so you may not have enough cash available to purchase the inventory that you need. Perhaps you picked up a large customer, or several smaller customers, or are anticipating new orders, or launching a new product. To create the inventory necessary to fulfill these orders, you may need a small business loan.

You need to acquire another business

If a strategic acquisition opportunity comes along that will help you expand your business, having the ability to take advantage is very important. Getting a loan to purchase a competitor, for example, or to expand into another market by acquiring a similar business with customers in that area can spur your company forward. But, buying a business is often expensive, so getting a business acquisition loan may be necessary to cover the costs of the purchase.

These are just a few of the situations in which your business may need a loan. Businesses at any stage require financing. Lendio’s business loan marketplace features user-friendly tools to help you compare loan types for businesses at many stages to meet your specific financing needs.


Tyler Heaps

Tyler is a member of the Lendio marketing team. He is passionate about digital marketing, small business, and helping small business owners succeed. Tyler is an outdoorsman and loves spending time with his family.