There are an unlimited number of reasons why businesses need capital, but here are five of the most common scenarios that we often see.

1.  When Starting a Business

Many people stuck working for others dream of pursuing a business to be their own boss, to increase their feeling of freedom, to be able to make decisions of consequence, and to hopefully make enough money to eventually become financially independent.

start a business

These aspiring business owners often have a great idea but will need financing to get their concept off the ground.  Not every financial institution is willing to invest in new businesses but fortunately there are lender that specialize in financing of this nature.

If you’re looking to get a business off the ground it’s a good idea to put a through business plan together with as much detail as possible.  This will not only help you to understand the steps your business will need to take moving forward it will also show potential lenders that you are serious and have taken the time to envision your future business thoroughly.  New businesses are historically a risky financing venture for investors, so the more peace of mind you can give them the better.

2.  To Purchase Equipment

When it comes to obtaining equipment for a business, owners often deliberate on whether it’s best to purchase equipment or to lease.  Each of these options have pros and cons, particularly if your business is dealing with bad credit issues or is looking for specific tax benefits.

purchase equipment

If purchasing turns out to be the best move for your organization it’s important to also consider the benefits of purchasing using a business line of credit vs. a term loan.

3.  Open a New Location

The costs of opening a new location differ from business to business and industry to industry.  Some businesses rely more on a web presence while others such as a coffee shop focus on goods and services that need to be transacted face to face.

Opening a new location can be very profitable but also risky if not properly planned out in advance with I’s dotted and the T’s crossed.  If you’ve determined that the location in mind will take your business to the next level a business loan can help make it happen.

4.  Advertising

Sometimes the difference between success and failure with a business is the ability to get the word out.  Advertising can be costly so it’s important to make sure the dollars spent in this area are maximized to their fullest potential to insure a proper return on the investment.

Once the plan is in place a business loan can provide the capital necessary to execute your vision.

5.  Purchase Inventory

For businesses that deal with inventory sometimes an opportunity arises to purchase goods at a fantastic price if cash is on hand.  This can be risky since unsold inventory takes up space as well as the capital that could be used to purchase better goods. However, if you’re certain that the goods in question will bring your business a large profit, having access to capital may be the difference between taking advantage of the opportunity or watching it pass you by.


Situations like these are perfect for a business line of credit.  The capital is available to be used when needed, but no interest has to be paid on the funds until they are withdrawn.  That way the cash is there waiting to be used at its most optimal level when the time comes.


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