20% of new businesses fail during their first two years, 45% during the first five years, and 65% during the first 10 years, with lack of financing a top reason for failure, Investopedia reveals. Fortunately, by researching multiple sources of financing, you can successfully find ways to facilitate sustainable business growth. Whether you need to invest in technology, avoid stock-outs, or expand to a new location, the right financing solution can help you boost efficiency and output as needed.
Invest In Technology With An SBA Loan
Is outdated technology holding you back? Small businesses that embrace automation are 1.6 times more likely to experience growth, while 88% of small and medium businesses say automation allows them to compete with bigger companies. Indeed, investing in automation facilitates growth by saving time, increasing accuracy and output, and providing better customer support. So, if you’re ready to make this upgrade, an SBA loan can suitably finance this one-time purchase. SBA loans are small business loans provided by lenders and banks, and partially backed by the federal government. They typically include smaller down payments, lower interest rates, and longer repayment terms compared to traditional bank loans. Once you make your purchase, you’ll be put on a fixed repayment schedule.
Avoid Stock-Outs With Invoice Factoring
Running out of stock is bad news for businesses – between 21-43% of customers head to a different store to purchase their desired item if it’s out of stock. This means a stock-out can lose you almost half of your expected purchases. It, therefore, pays to ensure your business has working capital available to replenish inventory as needed – particularly for seasonal businesses and during busy periods. Otherwise, you risk restricting growth potential. Invoice factoring, in particular, is an easy way to access the funds you need fast. Since invoices typically come with payment terms spanning anywhere from 30 to 120 days, slow payment often causes cash flow issues for businesses. Invoice factoring can solve this problem by letting you sell unpaid invoices to a lender who pays you a percentage of its value (usually between 80%-90%).
Expand With A Commercial Real Estate Loan
If business is booming, an expansion in a new location may be necessary – this is one of the best ways to drive growth. To make sure you’re ready for expansion, take time to first conduct market research and make realistic revenue projections. Any move you make needs to be profitable. You should also ensure you’re able to maintain excellent customer service and overall high standards at the new location. If expansion is the right move for you, a commercial real estate loan can pay for your new building. These loans are similar to home mortgages: you use one to purchase the new property and you’ll be on a repayment plan typically spanning between five to 25 years.
No business’s path to growth looks the same. By choosing the right financing option for your needs, you can improve efficiency and output, and facilitate long-term business growth.