Identifying which type of business loan is best for your SME can be more difficult than you’d perhaps have previously anticipated. With so many options available to you as a business owner, separating one commercial funding product from another can feel like an impossible task.
So when taking the above into account, it is clear that there is only one way to decide which business loan is best for your company - establish what you want or need the funds for and then let that dominate the decision-making process.
If you only require a small amount to make the changes necessary to your business, an unsecured product such as our Business Growth Loan could be the ideal solution. Your business can borrow between £3-50k and pay the loan back comfortably with 12-month terms, with the option of quarterly top-ups available.
However, if you have a much larger loan amount in mind then a secured business loan will likely be the best route to explore. By securing the loan against your assets, such as property, you will be in a better position to borrow a bigger sum of money with more favourable rates and lengthier terms.
But what exactly can you spend the business loan on, should you decide to opt for a more substantial amount by securing it against a residential or commercial property you own? To provide a little clarity and direction on your potential options, our team have outlined a few ways in which a secured commercial loan could help your business flourish.
1. Purchase New Machinery and Equipment
There is no escaping the fact that buying expensive machinery and equipment is a hard-hitting purchase that most SMEs try to avoid. For equipment that is particularly exorbitant, many smaller businesses choose instead to lease assets on a month to month basis.
Leasing equipment and machinery is sometimes the only option available to SMEs and the ability to avoid paying huge upfront costs is often a lifeline for smaller or younger companies. But over time, the amount spent on leasing assets can add up to an eye-watering sum and it is usually seen as the least cost-effective approach.
By securing a loan against property you own, you will be able to use the additional cash to buy the equipment and machinery your business uses in everyday operations. Instead of skimping and saving to afford poor performing assets, your business can instead access machinery that is of a much higher standard.
2. Move To A Better Location
Regardless of whether your business offers the best product or service in town, if the location isn't right, it is never going to exceed expectations. Location is the be-all and end-all for the majority of businesses and many SMEs have learnt this the hard way.
Perhaps what started as a micro business grew into something much bigger and now you are realising it's vital to relocate before the opportunity passes you. If your SME relies heavily on footfall and you are in an area that is not quite as busy as you'd hoped, relocating is in all likelihood the only chance your business has of surviving past the five-year mark. But remember to do your research on relocating your company first...
With better locations come much higher rental prices and for initial deposits and moving costs, your business will need ample working capital behind it. For most SMEs that are seemingly underperforming, this tends to be the biggest obstacle standing in the way of a much-needed relocation.
A secured business loan will enable your SME to front the costly fees involved with moving to a better and much busier location without having to face financially difficult months ahead due to tightened purse strings.
3. Grow Your Workforce
Having the best possible workforce should be one of your biggest priorities. Choosing employees with inadequate experience or low skill sets, especially for roles that require expertise, is almost a guaranteed way to damage the reputation of your business.
Whilst expensive machinery and fantastic locations are all important aspects of running a successful business, your company's most important asset is its workforce. People power is what truly defines a business and having a workforce that excels in every sense will give you a hugely competitive edge over your counterparts.
An extraordinary team does not happen overnight, however. To have the very best will take time, effort and yes, money. Attracting highly skilled employees will take work and spending more on recruitment initially will certainly pay off in the long run. But retaining key workers is usually where things start to get a little more challenging, as talented individuals are in high demand everywhere and usually a lot harder to come by.
Using part of your business loan to hire great people is a fantastic way to make use of the additional working capital and by opting for a larger amount via secured lending, you can acquire the creme de la creme for senior roles within your SME. Attract the right people and keep them by providing competitive remuneration packages, all with the help of a secured business loan.
4. Start Marketing Your Business Effectively
You have probably realised by now that good marketing comes at a price. An effective marketing strategy alongside the resources to deliver it are potentially the two most important components in any SMEs arsenal.
But it is important to realise that often in business, you must first spend money in order to make it. To get your brand on the map, you must first set aside enough of a budget to get the name of your business out there.
We previously discussed how to market your SME on a budget and whilst there are plenty of things your business can do to establish itself amongst its target demographic, spending more on marketing can only ever be a good thing if done correctly and with careful consideration.
Whether you use your secured commercial loan to build the perfect website, create effective video marketing campaigns or even pay to outsource your marketing needs to an agency, it will no doubt be money well spent.
5. Provide Excellent Training To Your Staff Members
Having the best possible workforce is not simply about hiring the best candidates whenever a position needs to be filled. Cultivating a homegrown talent strategy is one way in which you can create a strong, trustworthy, talented group of employees.
We're sure that we don't need to talk too much about the challenges businesses face regarding employee retention, but we can perhaps shed some light on exactly why that is. Gone are the days where an individual would start working for a business straight out of school and remain at the same company for decades, with many only leaving once they retire.
With various growth opportunities available and encouragement to always opt for what makes us happy, it isn't surprising that workers leave the moment they no longer feel job satisfaction from what they do.
An employee retention report published last year found that recognition is a matter of priority, with over a fifth of employees admitting to interviewing for other jobs due to not having great work recognised. It also found that employees who feel they are progressing in their career are 20% more likely to continue working at their company in one year's time. A secured commercial loan will enable your business to spend money on training its employees, which will, in turn, reduce the challenge of struggling to retain talented members of staff whilst also improving standards within your company.
With a secured business loan, the ways in which you can put the money to good use are endless and only you will know where to best spend the money. We provide the funds and trust that you know exactly how to make the most of your secured finance facility, ready to watch the magic happen.
For more SME advice and tips, read our related posts below. If you are experiencing cash flow challenges or want to realise your business growth plans, get in touch with our team of Funding Specialists today on 020 8038 6612 or email firstname.lastname@example.org.
30 June, 2021