Many small businesses felt an immediate financial pinch when the pandemic began, but they’re surprisingly positive about the future. The Wells Fargo/Gallup Small Business Index Survey reveals a sense of growing optimism coming from owners of smaller companies. In fact, entrepreneurial ventures with fewer employees have plenty of advantages, even in an economic downturn.
For one thing, they’re notoriously adaptable and able to make relatively quick changes. This gives them a nimbleness that allows their departments to switch gears without getting mired in red tape or layers of management. Plus, they might be able to pull back on unnecessary expenses swiftly, keeping more of their cash in-house. As the JPMorgan Chase Study 2020 notes, the ability to stay on top of cash flow can give small businesses extra time to recover from the fiscal effects of COVID-19 on profits.
Even when there’s not global uncertainty or a recession, organizations frequently find themselves in need of extra capital. When they do, many turn to a type of short-term business loan called a working capital loan. With abbreviated terms of anywhere from six to 18 months, working capital loans for small businesses can be excellent solutions to help solidly run companies move forward with growth even if they’ve been hit with flattening sales.
How could working capital loans help creditworthy small businesses? If you’re considering diving into any of the following projects, you may want to apply for a working capital loan.
1. Outdoor accommodations for social distancing
Social distancing has been a concern since the beginning of the coronavirus pandemic. Retailers, especially eateries, have creatively set up outdoor seating and gathering areas to encourage safer customer interactions and improve profit margins. From buying large street tents and outdoor furnishings to renting geodesic domes or constructing full-scale outside patios, businesses are getting imaginative and expanding outward.
Working capital loans for small businesses are especially useful for these types of expansions because they’re so often used for scaling. Being able to obtain a lump sum of money within a few days can enable your business to transform its exterior rapidly without requiring you to front any personal money.
It’s more important than ever to remind buyers that your business is open for business. And that means you’re going to engage in a variety of marketing endeavors to build brand equity and brand recognition, as well as talk about your offerings and differentiators.
Most sources suggest that companies earmark upwards of 20% of their annual budget on marketing. That figure may seem high right now — even 10% could be out of your realistic range without a little help. A working capital loan will enable you to communicate with your target audience, providing you with a chance to boost sales through high-quality marketing.
3. Digital transformations
Have you thought about updating your tech stack to better serve consumers clamoring for digital touchpoints rather than in-person transactions? Taking the step toward a digital transformation makes sense, particularly if you’re trying to improve your customer service interactions or expand operations to broader markets. However, as Cisco’s 2020 Small Business Digital Maturity Study admits, the process requires a healthy budget to bring digitization to fruition.
By taking out a working capital loan, you can secure the funds you need to embrace technical and digital solutions like e-commerce software, fulfillment platforms, and other cloud-based partners. At the same time, you can avoid dipping into your liquid cash.
4. Seasonal inventory
Even if you’ve historically had a good handle on your inventory management, you may notice unexpected spikes or dips after the pandemic. Consumer buying habits have changed in many ways, which puts the onus on you to have enough stock on hand. No, you can’t predict what’s going to happen within the next year. Still, you can use inventory tracking data to know what you should buy more of now.
On the other hand, you may know exactly the stock you need but be low on cash due to lowered COVID-19 profits for the past few months. Either way, a working capital loan can allow you to have the proper number of products on your virtual or brick-and-mortar shelves to avoid losing dollars to the competition.
Are you looking to the future with positivity and excitement? Many leaders are. Just don’t think that you can’t get bigger or take advantage of opportunities because you’re low on cash. Apply for a small business loan. You could be two days from realizing your dreams of growth.