Embrace growth with a business loan

Do banks grant loans to the self-employed may be a question you as a small business owner have asked yourself. Banks have options for the SME market looking for unsecured loans or a business loan to help accelerate growth. Applying for a business loan may however have several strict requirements or restrictions.  An alternative worth considering is applying instead for a personal loan for your business.

Many people who start a business do so while they are still employed, full-time or part-time. With a steady income, along with payslips and proof of your steady income through your bank statements, you can apply for a personal loan and then use this as a business loan to get your small business off the ground.

In assessing whether borrowing money is right for your business, it is important to evaluate your reasons for wanting the loan.

A short term loan can be a great move, if done for the right reasons.

Our advice is that bells and whistles should always come last – you should not be considering a loan to take your customers to Cape Town to thank them for their business at the end of the year, or buy expensive branded uniforms just to look the part.   

5 scenarios in which you could consider using a personal loan as a business loan:

  • Building a good credit history: It is often difficult for small business owners to get larger loans because the owners and company do not have a strong credit history yet. Borrowing a realistic amount and making regular on-time repayments will hold your name in good stead for the future.
  • Moving shop: You do not want to be forced to stay put when your business has outgrown the premises. This growth is good news, so embrace it by looking into financing a move to bigger premises.
  • Hiring more staff: Growth often requires more hands on deck. We understand most small business owners wear many hats but if the time is right to bring more talent on-board then a loan could be the way to achieve this so that you can get on with what you do best.
  • Staying on point: Investing in proper systems is costly for start-ups but it may become essential if you are to keep up trends in your industry. A loan could help you implement more advanced computer software, for your accounting and HR processes for example. The return on investment may be priceless in the long run!
  • Buying equipment: With an increased demand for your products and services you may need to buy some additional equipment and other items to get orders out on time. Taking out a loan out to do this may pay for itself in just a few months when those orders are flying out the door.

Borrowing money from a bank to help your business go to the next level does not have to give you sleepless nights.

The important thing to remember is that a loan is a commitment to repay the money back within a certain time and at a certain interest rate.

If you go into the loan arrangement fully aware of what you are signing up for and are sure you are getting the best possible rates, your end of the deal is simply to make regular, on-time repayments.

This is crucial in securing your future credit record and to the long-term security of your business.

If your small business ready for a boost?  Why not talk to a financial advisor about your borrowing options?

African Bank offers several loan options, including personal loans and consolidation loans.

If you are unsure of where to start or whether lending is right for your business, read our informative blog about how to get and use a loan.

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