Interest rates are at all-time lows, and if you’ve ever thought about borrowing funds for your business, the time is definitely right.
In this blog we wanted to touch just a bit on business lending, and possibly introduce you to some ideas that can help your business grow or at least function a bit more efficiently.
Lending for cash flow
Many people think of loans as borrowing one large sum of money for a single, high-dollar purchase, like buying a car or a house. This is a pretty common form of lending, but it’s certainly not the only one.
Often called a “revolving line of credit,” you can make a series of small loans from your bank to help meet short-term financial requirements. Maybe you need a bit of cash for the next week, just to cover payroll or to buy supplies for a big project that’s coming up. You know you’ll have the money in the future, but you just need a little bit of help to get you over that hump until the money comes in. This is where a line of credit can help.
Your bank can help you set up this sort of loan with easy-to-understand terms and a simple repayment schedule to help you meet your short-term business goals.
Like we mentioned, loans are often used for large, one-time purchases such as real estate or buying new equipment or replacing old equipment. But when are you replacing your equipment? Are you the kind of person who drives a car until it dies, or do you trade in your old car for a new one every few years?
There is a case to be made for replacing your equipment before it’s completely worn out. With interest rate at all-time lows, you could replace a piece of high-dollar machinery in the near future and get a fairly competitive interest rate, but you should consider the resale value of your old equipment. If you drive that car until the engine burns up and the wheels fall off, there won’t be much trade-in value. But if you replace your equipment while it still has resale value, you can recapture that value as a trade-in or a sale.
Then you’d have new equipment, a low-interest rate, and a bit of extra cash to put toward the loan payments for this new hardware.
Like we’ve mentioned, interest rates are at lows that we haven’t seen in decades. If you have debt on your credit cards or a high-interest loan with another lender, you could save some serious money every month by simply taking out a low-interest loan to pay off those high-interest loans. This is a possibility for small loans and large loans alike, and it’s something you should definitely consider. You could get your company in a better financial position, or you could simply reduce the amount you need to pay each month to cover your debts.
Business lending is a valuable tool that can help you in a variety of ways. You can strengthen your existing business or you can begin to take steps towards serious, long-term growth. Don’t be afraid to reach out to your CCB lender to see what we can do to help put success on your to-do list!