Small businesses rely on cash flow, and the last several years have been exceptionally challenging for businesses to survive for more reasons than one. The pandemic caused businesses to come to a virtual standstill in myriad industries. Therefore, this cessation in operations naturally trickled into other companies and industries. With a shortage in supplies, limited operations, and a global halt in the economy, the pandemic years forced many small businesses to operate in survival mode.
Additionally, in recent months, inflation has also thrown another wrench in the works for many small companies, as the cost of doing business has been steadily rising. This is in addition to increasing interest rates for loans of all varieties. As a result, it’s also not surprising that so many small businesses are struggling to stay afloat.
More Small Businesses Are Turning to Loans
With all this in mind, it’s understandable that many companies are considering a small business loan to get back on their feet and focus on growth instead of survival. However, what options are available if you are a small business owner in need of capital. Is now a good time to get a loan? Also, what can you expect in the months and years ahead?
Here are some considerations to keep in mind when it comes to small business loans, other financing options, and your best next steps.
It’s a Good Time to Get a Small Business Loan
Rising interest rates have been a top financial headline for 2022. However, despite the sticker shock as opposed to previous years, it’s still a decent time to get a small business loan.
SBA 504 loan interest rates have nearly doubled in the past 12 months, increasing from 2.97 percent in September 2021 to 5.44 percent in September 2022. In contrast, these rates are still relatively attractive for small businesses that need a jump start compared to the previous year.
After all, the 2-3% rates have been common in the past several years were more of an anomaly than the norm. Therefore, the 5.44 percent is historically not exorbitant when compared to the past several decades, like 2006, when rates were 7 percent or higher. In addition, it’s possible that rates could continue to rise. For this reason, securing an SBA 504 loan now might be a good plan, especially if your small business needs assistance.
Other Options Besides Small Business Loans
A Small Business Administration (SBA) is just one of many options for smaller companies. There are multiple choices and flexibility when it comes to securing the capital you need to keep going and eventually grow.
A business line of credit, where you draw from a set limit of funds and only pay interest on the money you borrow, is a solid option for ample flexibility. Additionally, this is for businesses where future needs and growth remain a little hazy.
For smaller amounts or an immediate influx of cash, a business credit card is also worth considering, and can come with a hefty selection of varying perks, depending on your company’s finances. For example, you may be able to secure a 12- to 18-month promotional 0% APY when acquiring a business credit card. In addition, this could be more than enough to secure financing and allow your business to increase its sales and profits in the short term.
Selecting the Right Lender and a Trusted Financial Partner is Key
Small businesses around the country are facing financial challenges like never before. It can be daunting to figure out the best next steps that allow your business to successfully come out of the pandemic years and focus on future growth. There are countless options when it comes to financing, from the traditional to more diverse ones. Therefore, what you’ll need in terms of a loan depends on your exact operations and bottom line.
Your best bet for securing your future is to work with a trusted financial partner to identify the best solutions your small business.
Saddock Advisory is Your Trusted Financial Partner for Business Success
Growth requires capital, and at Sadock Advisory, we work as your personal CFO to determine how much you need. Additionally, we assist in securing and reassuring existing sources of capital by maintaining strong financials and anticipating potential red flags.
You don’t have to navigate this difficult post-pandemic landscape alone. Our trusted financial advisors at Saddock Advisory can help you get out of survival mode and into a new period of growth. Our financial experts will work with your business to find the capital you require – right now – to ensure a prosperous and secure future.