You do not need have a university degree in finance to know the costs of starting your own business establishment that are considerably high. You need money to buy the necessary equipment to manufacture the products you intend to sell in the market, purchase adequate raw materials and pay your employees. Over and above this, you also have to incur other miscellaneous expenses relating to the marketing of your products. In such a situation, it is not always possible for you depend on your personal finances to meet all these expenses. This is the reason why you it is prudent on your part to apply for a business loan from a commercial bank.
George Ammar – Why should you take a loan from a bank for your business?
George Ammar is a Certified Public Accountant and the formerChief Financial Officer of Resilience Capital Partners LLC. This popular financial expert points out the following reasons why you should think of applying for a business loan from a commercial bank:
- Expand your business operations in the marketplace
Commercial banks are always willing to provide you with a business loan if the officials operating these institutions feel your financial plan is viable. However, you need to prove to them that your organization is earning adequate profits by selling its products to public and has a positive cash flow position.If you want to explain your business operation in the market, they will assume you are successful and lend you the money.
- Buy necessary equipment
You may sometimes need new equipment to improve the efficiency of your establishment and ensure the quality of the products you sell to the public. You can choose between leasethis new asset or buy it outright. Taking a business loan to meet the price of such an asset can be relatively cheaper option in the long-run than paying installments.
- To ensure your establishment has adequate inventory
Being an entrepreneur, you aware that inventory constitutes a significant part of your business expenses. At any point of time, you need to ensure that your organization has adequate qualities of raw materials to meet the demands of the public for the products it manufactures. Commercial banks usually to provide you with short-term business loans to enable you to make such purchases.
- Working capital needs
Like all business proprietor, you need liquid cash to enable your organization to carry out its daily operations in the marketplace. Sometimes, you need to obtain this money from external sources until such time your assets are able to generate enough revenue. This goes a long way in ensuring your organization has a stable cash flow position. Commercial banks can lend you this money in the form of short-term business loans on the condition to you meet the eligibility criteria of such institutions.
George Ammar says the above reasons prove beyond any doubt that business loans can help your organization carry out its operation in the market more efficiently. However, you need to remember that taking this form of finance carries an element of risk. You need to weight the pros and cons before deciding whether the risk is worth taking.