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Monday, 13 November 2017

The Most Common Reasons Why Entrepreneurs Need Project Funding

By Arthur Bailey


In the perfect world, small business owners would never need external financing. You'd always have some extra cash whenever you needed it, whether it was for making urgent repairs or just getting through a rough patch. Of course, the real world is far from being perfect; it's estimated that about 60% of SMEs have applied for external project funding Europe over the last 3 years. There are several reasons why you might consider doing the same.

In the years you've been running your business, you've probably racked up a lot of debt as you tried to keep it growing. If this has left you with more repayments than you can keep track of, consider getting a loan to consolidate your existing loans. Besides making financial planning easier, debt restructuring would also save you money in the long term, which may explain why it's becoming a popular trend among small business owners.

Your ability to market your brand effectively could be the difference between success and failure. However, launching and running a fully-fledged promotion exercise costs money, and it's not always possible to spare funds for such activities. Still, securing a business loan could make it possible to fund your promotion drives, so consider this route if you're finding it hard to reach a wider audience.

Buying equipment for your business offers some unique benefits. Besides the tax write off, it also allows you to use the machinery for its life, eventually selling it for a salvage value. An equipment loan can help you finance major purchases, but it's important to do a costs vs. Benefits analysis before taking out one.

Have you ever been unable to purchase inventory in large amounts simply due to insufficient funds? You're not alone. For most small businesses (particularly those that are seasonal in nature), lean periods often precede peak seasons, creating the need to borrow the amount needed for the re-stocking exercise. Depending on the lender, it might be possible to pay off the loan as soon as peak season is over.

Are you looking to expand your business? Why not consider taking out a loan that will help you execute your plans? No matter how you're planning to grow your company, the right kind of financing can help transform your ambitions into a reality. Lenders will also accept monthly repayments in most cases, which makes it easier to fund other operations and control your finances as you grow.

Without sufficient cash, you can easily find yourself in a tough situation, no matter how profitable you are on paper. Even with good accounting and forecasting, there are going to be times when you need a capital injection to get through a dry spell. A short-term loan can help your business stay afloat during such periods, but the interest rate will likely be higher than normal.

A business loan can help transform your business into the company of your dreams. And while there are plenty of reasons why you might consider external financing, what really matters in the end is how it improves your bottom line. So take time to review your ability to handle the costs involved, then weigh this against the benefits you expect from the loan before going for it.




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