When Should You Get a Business Loan?

Written by
Marissa Saini
Last Modified on
December 19, 2023

We've all heard the old saying: Timing is everything. It's an adage that holds especially true in the business world, where unpredictable fluctuations in demand and supply can mean banking in, or getting phased out. But whether you're riding high or dipping low in your respective business cycle, you might be surprised: it could be the right time to get a business loan- and it happens more often than you think.

A common misconception is that businesses should only take loans if they're in deep water. But in a previous post, we advised: Don’t borrow if you only want to stay afloat. So the question is... when should companies borrow?

Why get a business loan?

Of course, the basic premise of getting a business loan is to gain access to money you currently don't have, and use it to grow- so you have the funds to both repay your lender, and to make the loan worthwhile in the first place. While many entrepreneurs borrow to pay for inventory, cover operating costs, or fill other cash shortfalls, perhaps it's time for a shift in the way we look at business loans: as opportunities, not liabilities.

So don't just think about how to work to pay off your loan. Here are 3 ways to put your loan to work for you:

  • Stocking up- at the right time
  • Investing in marketing
  • Expanding your business

1. Stock up to cash in

Any entrepreneur can recognize a good opportunity; a savvy one will be able to seize it. It's important to arrest the trends in the business cycle, and be ready. If you've been in your particular line of business for a while, you'll have experience on your side. What are the seasonal trends, calendar dates or high-profile events that will see peaks in purchases? Were there periods your stocks were depleting faster than you could fulfill orders?

Anticipating and predicting shifts in the tide of consumer demand are important, and so is making sure you'll have the inventory to handle it when opportunity strikes. Otherwise, you'll rack up opportunity costs for the lost products or services you could have provided, had you been prepared. And to be prepared, you'll need the funds to stock up strategically.

In this case, getting a business loan can help you capitalize on that profit-bearing opportunity. This is especially relevant for those seasonal peaks that will run their course in a couple of months, and that require just a one-off, short-term loan to do the trick.

2. Investing in marketing

Marketing is an oft-neglected weapon in the entrepreneur's arsenal. You've got a great offering, and a unique selling proposition that you're proud of... but the orders just aren't coming in. Don't bank on your potential customer base to somehow know about your product- you'll have to tell them!

Marketing is no longer as simple as placing an ad and hoping it sticks. In this digital media age, companies are looking at reaching their audiences on more channels and interfaces than ever- that could mean social media engagement, search engine optimization (SEO), content marketing and the like... all on top of ads. It might also mean investing in the customer relationship management (CRM) and data tracking software necessary to monitor your progress, or hiring a dedicated marketing expert to make it happen.

In short, boosting the marketing for your business might involve a larger budget than you think. If you want your company to attain sustainable growth, you don't want to just create hype- you'll also have to maintain it! Taking a loan could help kickstart the marketing process, and enable your business to grow from strength to strength as your customer base grows.

Psst... you might also be interested in:

  1. Low-budget Marketing Ideas for Your Small Business
  2. Low on Budget? Here are the 20 Low-Cost Marketing Ideas

3. Expand, expand, expand

Of course, the most obvious growth-oriented opportunity a business would need funds for is expansion. Whether you're growing your team or opening another branch, extending your product range or diversifying your business, one thing's for sure: you'll need capital.

Even if things are looking up and you're turning a positive profit margin, chances are you won't always have quite the full amount you'll need to take that next step. Rather than waiting idly by while you amass more funds for expansion, it's worth making a calculated decision to borrow to fill the gap. Taking a business loan can help you expand your operations promptly in a time-sensitive situation, whenever the opportunity rises.

Rethinking the business loan

In sum, when should a business make the decision to borrow? Perhaps in more scenarios than you think. Decidedly not when you're just trying to stay afloat; but especially when it's smooth-sailing- when you're cresting that wave and want to ride it to even greater heights. Think of a loan as an additional engine instead of a lifebuoy; it should propel you forwards, not suspend you in your current position.

After all, while we encourage you to shed the negative stigma of borrowing, it's important to attach an equally vital caveat: make sure you can meet your repayment schedule! When you do decide to borrow, use it where it counts- whether it's stocking up for a peak season, growing your marketing budget, or simply expanding your company.

Always be ready- with a credit line

As we've established, it's all in the timing. In fact, if you'd like to skip the wait times every time you apply for a loan, you might even consider upgrading your short-term borrowing options to a revolving line of credit. A line of credit functions like a credit card for your business: gain access to a pre-approved sum of capital, and drawdown whenever you need. Learn more about Aspire's line of credit here.

aspire business loan credit line inventory marketing expansion
Aspire's line of credit gives you access to business loans- whenever you need them, for whatever you need them for.

Recognizing growth opportunities- and acting on them!- can be one of the most terrifying and rewarding experiences of the entrepreneurial journey. When the time comes to get a business loan, make sure you won't be paralyzed- and miss your chance to grow your business. We're here to help you make it happen.

Psst... you might also be interested in:

  1. Advice from a loans startup: Don’t borrow if you only want to stay afloat
  2. Why Every Ecommerce Business Needs A Line Of Credit
  3. The SME Business Owner’s Guide To Working Capital Loans
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About the author
Marissa Saini
is a seasoned writer and an avid trendspotter across business finance, personal finance, travel and lifestyle industries. With writing history at SingSaver, INK, and ohmyhome, Marissa leverages her broad range of experiences to simplify finance and make readers financially savvy.
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