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Why Getting A Business Loan Isn’t A Bad Idea

By Kally / September 1, 2017

Starting a business in Singapore is a great idea, especially since Singapore has a stable economy and a stable political environment. Starting a business is much like starting a race: you are super excited and full of zeal and fresh ideas, but after a while you get stuck, you slow down, you run out of steam, and sometimes you stop.

The decision to run a business in Singapore isn’t for everyone because not everyone has the chops to start a business and stick with it without getting help. You should make sure that, in the course of running your business, you pace yourself and avoid running out of steam before you have even gone halfway. Also, you need to realize that there may come a time when you will have to get some help to keep your business moving. Cash flow in a business is a problem that every business owner expects and, as such, you have to prepare adequately for that problem.

One of the ways to solve the problem of inconsistent cash flows in your business is by getting a business loan. Business loans are a good way to help you move forward in running your business. Though this may seem like a bad idea, getting a business loan is actually beneficial for you if you are running a business in Singapore. Why is that so?

Ensures Liquidity To Pay Monthly Expenditure

There are always necessary expenses to pay for every month or even every week. If you are renting space for your business, you will need to pay the rent and pay for utilities such as light and water. There is the phone bill that you need to settle and your internet subscription. Then there are the monthly salaries for your staff. Running your business could quickly become stopping your business if you can’t pay your staff and they all decide to quit, or if your landlord tells you to leave his premises because you cannot pay your rent on time.

If you think this could never happen to you because your business is in its fifth year running, you are wrong. Low revenue is a problem that all businesses face, both start-ups and older businesses, due to any number of reasons, including economic changes or alterations in the industry. In such cases, you will need to have a sure source of money so that you can meet your monthly expenses.

Businesses that provide services can also have problems with cash flow, especially when they have to wait for receivables to come in so that they can settle other clients. Receivables can take months to come in sometimes, and impatient clients can bring lawsuits against you that will necessitate your having to shut down all business operations.

In all these cases, getting a business loan is a good idea, as it can help you settle your financial problems while waiting for business to pick up, or for the receivables to come in.

Ability To Expand At The Right Moment

Expanding your business is a decision that you cannot take lightly. The timing has to be just right, with the right opportunities, before you can expand your business. This expansion could be in any form, like opening a new branch or starting a new innovative project, or starting operations in a new market overseas: all this needs to be done at the right time because when these opportunities present themselves, you might lose out to the competition if you delay.

Because these opportunities are highly competitive, you need to have the funds you need readily available for when the moment is right for your expansion plans. Acquiring these funds could involve getting investors to back you in your new venture, or to wait until your revenue increases enough that there is surplus for you to use for your expansion plans. Both these instances are likely to cause delays for you, and that opportunity will pass you by, leaving you with regrets.

If you would rather bypass the regrets and fulfil your expansion dreams, getting a business loan will provide you with the funds to grab expansion opportunities the moment they present themselves. Do not worry about the fact that you are acquiring a debt just to expand your business: most at times, it costs you more to miss that opportunity time frame than it would cost you to pay back the business loan.

Tiding Over Unexpected Expenses

Unforeseen circumstances always arise to through a wrench in the best-laid plans. It doesn’t matter how well you plan and organize: something unexpected will always come up that you didn’t plan for, and that may end up ruining your financial budget to a certain degree. Investors backing out, faulty equipment, or some loyal customers that can no longer do business with you: all these are unexpected happenings that can mess with your cash flow, especially if you haven’t budgeted for emergencies like these.

It would be unprofessional to ask your backers to put more money in your business to address these emergencies because it shows you are unprepared for emergencies and there is a strong possibility of waste if this money is supposed to fix a problem that affects normal business operations. Getting a business loan will be useful in this situation, especially since repaying the loan won’t be immediately, but spread out over a couple of months, giving you time to gather funds to pay back the loan.

Conclusion

While getting a business loan isn’t a bad idea, it may not be a good idea for your business if you haven’t created a solid plan for generating consistent revenue for your business. A business loan should be to your benefit, not to become a liability.

Getting a business loan for such issues as: for emergency situations, or for tiding you over till you get your receivables, or for grabbing expansion opportunities at the right time. It will help you in your business operations because you are sure of repaying the loan, especially when the loan can be paid back on a monthly basis.

 

About the author

    Kally