A lot of effort and time is required for small businesses to succeed.
From the time when an idea is first conceptualized to leasing building space to finally opening the doors for the first customers, small business owners are involved in every step of the process.
But nothing can happen without money. No matter how good your idea is, if you don't have money, you won't be able to sell products or services to consumers.
The costs of opening and maintaining a small business are also much more than you might originally envision. Ask any current business owner how much they needed to get off the ground, and soon enough you'll come to an average amount.
Before you start worrying too much about the startup funding, know that two lending options exist for your use. Both are handy and when used in tandem, your business can stay open for many years to come.
Small business loan
One of the first options you should look at is a small business loan. Banks and other lenders follow loan guidelines set by the U.S. Small Business Administration. Small business loans are available from a variety of sources, including your local Landmark Bank branch.
The amounts will vary. You can take out a loan for as little as you may need to a maximum amount of $5 million. It's in your best interest, and in the interest of maintaining the health of your business, to settle on an amount of money to take out.
Don't forget that you also have to account for interest. With small business loans, you will have to pay monthly installments just like any other loan. Too large of a loan, plus interest, may be too big of a hurdle to overcome.
Small business loans can come in handy to purchase the supplies needed to get started, as well as pay for any renovations you may need to make at the space you're leasing or have purchased.
Business credit works in the same way personal credit does. You apply and are given a credit limit. This amount will then vary moving forward depending on how much you utilize your credit. And like a regular credit card, any purchases you make will show up on a monthly statement, at which point you can pay them off or make the minimum payment.
Business credit is helpful because it is a large part of the overall financing strategy for your company. Whether it's paying employees or making an unexpected purchase, credit can provide a quick and easy cash infusion.
However, your business credit line still has to be monitored closely. Spend too much, and the monthly bills can quickly become overwhelming.
"Your business credit line still has to be monitored closely."
Balancing the two
As a small business owner, loans and credit lines are the two of the more popular tools you'll use to finance startup costs and maintenance costs over the years. If after a few years you're in the black, expansion can also be a realistic possibility. Opening a new storefront can bring in even more revenue.
Knowing when to apply for loans or utilize the credit lines is an important part of a successful small business strategy. These two financial tools will also prevent you from relying on personal income to help your business. Doing so is not advised because not only might you lose money, but when it comes time to file taxes, things can get confusing.
Most importantly, however, is that financial management is still key. Borrowing too much money when your business isn't pulling in enough to pay the bills is never a good option. But loans and credit are extremely helpful when relied upon.
For more information about how you can grow your business, contact Landmark Bank.
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