4 Reasons To Borrow Money (As A Business Owner)

Business finance is a tricky concept. Conventional wisdom says that you should try to avoid debt at all cost, and any outstanding debt should be paid off quickly.

So as a business owner, running your business as debt-free as possible is the only option, right? Wrong.

Borrowing money is a frequent occurrence in business and nothing to be ashamed of. As the saying goes, it takes money to make money. Here are four situations where borrowing money may actually be the right decision for the future of your company.

1. Make Updates to Existing Equipment

Whether it’s due to government regulations or simply because the current equipment is on its last legs, businesses are often required to update equipment in order to stay competitive.

However, making a sudden and drastic update to a new computer system, for example, can be an expensive endeavor. However, business loans make it possible to get the upgrades your business needs quickly and affordably.

2. Purchase or Update Your Fleet

Maybe the situation for your company goes beyond office equipment and into a more expensive endeavor. With fleet management, it’s all about maximizing profits, increasing fleet safety, and improving productivity. In order to abide to certain rules, an outright purchase or replacement of your fleet might be necessary.

Instead of deferring on employee salaries or skipping building lease payments, many businesses borrow money when the matter is pressing. Financing these major purchases through business loans makes massive purchases possible without having to cripple regular operations.

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3. Office Renovations

Between the cost of office computers, software, and comfortable office furniture, renovating an office isn’t a commitment for businesses to take lightly. Aside from the internal controversy that can go into deciding minor purchases, office renovations aren’t cheap. This can be a real dilemma when up against client-facing business models.

Once again, borrowing money lets the company renovate without compromising on quality.

4. Purchase Inventory

You may be wondering how a business ends up short on inventory when the top priority of a well-managed business is to have products on hand at all times. It often starts with a “good problem” in that the businesses has a hot product that’s flying off the shelves faster than the company can stock it.

Without free capital to purchase more inventory quickly, businesses can lose out on sales. With certain types of business financing you’ll be able to stock you shelves exactly when you feel you need to.

The Bottom Line

Company financial decisions aren’t easy. There will be trade-offs and cost-benefit analysis involved with every purchase.

“Should we buy more of product A? Can we afford more of product B?”

Borrowing money lets you have your cake and eat it too while maintaining stability in your company’s finances! Contact us for your complimentary consultation today.