Setting up a business is not only hard work, but it's expensive work. It can take months of effort to be able to get things going, and even so, you are going to encounter significant obstacles. But what if you got a small loan? That would help things tremendously, because you'd have financing coming in, and that could cover some of the expenses you've been struggling to pay for. Whether that's an office space, employees, or stock, capital is always needed and always helps.
How Can You Use A Small Loan?
So, let's say you've got your loan - or maybe you're still deciding - what can a small loan actually help you with? What can you do with it, and why can it be important for your business? It might be that you can do without it, but if it can help you and your future success, then it's worth looking into it and taking it into consideration as an option. Use a loan calculator like the ones from Money Advice Service to work out how much you need.
If you have a business like a coffee shop, a bakery, or you provide any sort of physical service or product that's not exclusively online, then you're going to need a physical space where you can conduct your business. Even if you don't sell products, you might still need an office where you can receive clients. But commercial rent is extremely high, so you probably need some help, especially in the beginning. Why not use a small loan?
And speaking of businesses where you sell products, you also need stock. Even if you've got a service business like a coffee shop, you still need to purchase basic things like sugar, milk, different coffee blends, different types of syrup, teas, coco, etc. It's true that you will end up making a large profit, but in order to get there, you must first purchase what you need to start out. Setting up a business requires an investment, but for that, you need money. A small loan can be exactly what you needed to get started!
How can one even dream of opening a business without employees? Unless you work on a self-employed basis, or you're a one-man operation (at least, for now), chances are you are going to have more people on the payroll. And in order to be able to afford to pay these people, you need money. None of the magic can happen without the people working for you, so make sure you are offering them proper compensation.
How Can You Get A Small Loan?
The obvious solution is to get a business loan, but it may not be as easy as it seems. In order to be eligible for a business loan, you have to jump through some hoops first, including to have your business in operation for a minimum of 6 to 12 months or even a few years. If you have a small to medium business that's already established and running for a while, a business loan can be a wonderful option, but as the owner of a business you're just now setting up, it can be the kiss of death.
Merchant cash advance
A merchant cash advance is a less traditional form of financing for businesses, and it relies entirely on transactions you make with credit cards and debit cards. Essentially, you get your small loan based on how much you make from these transactions. Then, you repay by giving the lender a fixed percentage of these sales every day or every week. This way, the amount you repay is based on the amount you make, so you don't run into issues of affordability.
Of course, if your business is a scrappy start-up, then why not apply for a start-up loan? GOV.uk has all the relevant information on how you can apply, and which businesses are eligible for this type of financing. You can get £500 to £25,000 for your business, as long as you qualify. Check out the requirements and apply to get your start-up loan.
All in all, even though you may not even realize it, a small loan can be incredibly helpful when you are looking to set up a new business. It's a very expensive process, and help is always welcome. Make the most out of this money and use it in order to improve your chances of becoming a successful business!