Getting a small business loan is a big business idea
By Bianca C|
April 24, 2023
Debt is not regarded with much favour in many circles. We blame Shakespeare. If it weren’t for The Merchant of Venice, maybe getting a small business loan wouldn’t be fraught with so many misconceptions.
Honestly, we get it. The idea of owing money to someone else can feel like a pair of shackles. But the truth is that, when you work with the right lender, debt is a tool that can liberate your business and empower it to reach new heights.
After all, hardly anybody can afford to buy a car or a home without using debt tools like motor vehicle finance or a mortgage. In these circumstances, it may be easier to recognise that debt can be used to improve the quality of your life and the value of your assets. It can actually be used to build wealth much more quickly and efficiently than if you’d just struck out on your own.
The same thing can be said for business debt. In 1000 words or less (we don’t like to waste time), we’ll explain why getting a small business loan is a big business idea.
Used correctly, debt is a tool for growth – not stagnation
Sure, there are plenty of debt-related horror stories out there. When businesses don’t use their debt responsibly, they can fold under the weight of what they owe. And if the business’s income can only cover existing expenses and loan repayments, then they’re stagnating. And growth is essential for a healthy business!
That’s why it’s so important to invest in growth opportunities. Debt is not the only reason that businesses fail – far from it. Stagnation can befall businesses that are unprepared or equipped to take on growth opportunities. It’s kind of ironic, but a small business that does not use debt is not likely to grow as quickly as a small business that does.
Let’s say, for example, that a big order comes through from a life-changing client. There’s only one problem. They’re bigger than you – much bigger than you – and, to fulfil their order, you need 1) to hire and train more staff, and 2) buy more machinery.
This is an ideal use case for debt as a tool for growth:
- You work out how much business funding you need
- You secure funding to train new staff and purchase new equipment
- You fulfil the order successfully – everyone is thrilled, your audience expands exponentially, and you use your new staff quotient and equipment to continue to meet big orders from this client and their referrals
- With the profits from this new venture, you repay the debt, build a great credit score, and reinvest into bigger and better growth opportunities
And that’s how getting a small business loan is a big business idea. To be a big business, you have to think like a big business. And big businesses take on considered, well-researched debt as a tool for growth.
So, how do you go about actually getting a small business loan? There are a few options, but you can essentially choose between traditional or alternative financing.
The deal with getting a small business loan from traditional lenders
Traditional funding is, well, traditional. Businesses have been securing funding this way for a long, long time. These lenders have the power of legacy behind them but, due to their size and status, their application processes are not optimised for small businesses.
Traditional lenders are not well-suited to small or medium-sized businesses because of one crucial factor: time. In order to survive, SMEs need to have their working capital and their cash flow constantly replenished. Traditional lenders are more than capable of supplying this funding, but they can take months to review funding applications. The truth is, most SMEs need funding on hand instantaneously to survive and – when the right opportunity comes knocking – to thrive.
Then there’s the sheer scope of the application process itself. It’s not just a case of filling out an application form and submitting it in the post. Nope. You’ve got to get a lot of ducks in a row, including:
- Certified copies of business owner IDs
- Proof of business address
- Proof of business registration
- A formal and detailed business plan
- Current and projected financials
- Cash flow statement
- Trading history
(There’s more, but we’re conscientious of our self-imposed word count here).
So, here’s the rub: small businesses need funding quickly to survive, adapt, and take on growth opportunities. That’s where alternative lenders like Bridgement come in.
The deal with getting a small business loan from Bridgement
We are rapidly running out of runway on our word count. If we’re going to make it, we need to be fast and simple. Thankfully, that’s our USP. Buckle in.
|Traditional business funding||Bridgement|
|Costs money to apply||Free to apply and get your facility approved (no upfront fees). You can even use our free business loan calculator to estimate a loan repayment budget|
|You have to reapply for a new facility every time you need business funding||You only have to apply once for your facility. Keep it in good order and you can use it as many times as you need|
|The complex application process is lengthy and requires significant documentation||A simple application process that takes two minutes to complete. All that’s required is your accounting package or PDFs of your financial information|
|Can take months for funding to be approved||Funding is typically approved and released within 24 hours|
Getting a small business loan should grow your business, not slow your business. Secure up to R5 million in business funding fast with Bridgement.
Not everybody understands what a credit score is, nor how important it is to know yours. But the credit score is not as mythical as it appears, and knowing what your personal and business credit scores are empowers you to negotiate better repayment terms and make more informed decisions about your business financing options. Want…
As any small business owner knows, cash flow is the lifeblood of growing enterprises. But this is especially true of eCommerce businesses. In an industry with famously slim margins and a propensity for volatility, maintaining healthy cash flow is vital for continued business growth and long-term success. Learning how to effectively manage and maintain positive…