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Five smart ways to make the most of your small business loan

Getting approved for a small business loan is only half the battle. Here’s what you need to do next.

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Editor's choice: First Down Funding business loans

First Down Funding business loans logo
  • No prepayment penalties
  • Competitive rates
  • Works with bad credit and most industries
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Business loans are different from personal loans in a lot of ways, but the key difference is that the funds are essentially an investment. The way you use your business loan funds may be the difference between you increasing your profits and you defaulting on the loan.

So, how should you make the most of your business loan?

1. Buy new equipment

construction equipmentPurchasing equipment can take your operations to a new level, whether it’s industrial equipment or a new point-of-sale (POS) system. If you’re currently leasing equipment it can also assist your cash flow as you won’t have to make regular lease payments.

When considering whether or not to purchase equipment with your loan funds, look at how much you’ve been approved for and consider how much you really need the new equipment. There’s no need to spend your funds just because you have them.

2. Boost your online presence

conducting business onlineHaving an online presence, whether it’s a website or a social media page, is invaluable these days. By establishing and maintaining a website and social media accounts, you can increase your customer base and also your marketing capabilities. However, you may need outside help to do this.

Consider the costs of getting yourself set up as well as the ongoing costs of maintaining a website and social media accounts.

3. Market your products or services

marketersMarketing can make or break many businesses, and ignoring marketing due to costs can end up being a costly mistake in itself.

Whether it’s online marketing, an ad campaign or getting some PR expertise, you’ll need money to get started. Make sure you choose the right type of marketing for your business to ensure you get the best return.

4. Expand your operations

opening a shopIf your business is doing well it might be wise to use your loan funds to expand. You could consider opening up a new retail location, a second warehouse, a new office space or even start selling online products overseas. Restaurants are a great example of businesses that could benefit from having multiple locations.

Expanding your customer base is always a win, just ensure you’ve done your research so the investment is worth it.

5. Cover cash flow fluctuations

business cash flowCash flow is an issue for many small- to medium-sized businesses. Delayed payments can mean your business is left without vital cash flow for up to 90 or even 120 days. Depending on what type of business loan you have, you might be considering using it to cover gaps in cash flow.

For example, a business line of credit is ideal for covering cash flow fluctuations, but a lump sum loan may not be. Using your funds to cover cash flow means you can continue operating as normal and repay the funds once you get paid. Another example is invoice financing, which is best for businesses who rely heavily on accounts receivables.

Compare business loans you can apply for today

Data indicated here is updated regularly
Name Product Filter Values Loan amount APR Requirements
First Down Funding business loans
$5,000 – $300,000
Fee Based
At least 1 year in business, an annual revenue of $100,000+, and a minimum credit score of 400
Alternative financing up to $300K with highly competitive rates.
Lendio business loans
$500 – $5,000,000
Starting at 6%
Operate business in US or Canada, have a business bank account, 560+ personal credit score
Submit one simple application to potentially get offers from a network of over 300 legit business lenders.
ROK Financial business loans
$10,000 – $5,000,000
Varies
Eligibility criteria 3+ months in business, $15,000+ in monthly gross sales or $180,000+ in annual sales
A connection service for all types of businesses — even startups.
OnDeck small business loans
$5,000 – $250,000
As low as 9.99%
600+ personal credit score, 1 year in business, $100,000+ annual revenue
A leading online business lender offering flexible financing at competitive fixed rates.
Rapid Finance small business loans
$5,000 – $1,000,000
Fee based
Steady flow of credit card sales, bad credit OK
Fundbox business loans
$1,000 – $100,000
4.99
You must have an established business.
Get flat rate, short-term financing based on the financial health of your business, not your credit score.
Kickpay e-commerce business loans
$20,000 – $1,000,000
Not applicable
At least $250,000 in the past 12 months of revenue, e-commerce business, use a 3rd party fulfillment center for storing and shipping inventory, at least one US location.
Get a loan for your e-commerce business based on your sales history.
Fundera business loans
$2,500 – $5,000,000
7% to 30%
$300,000+ of annual revenue, 680+ personal credit score, in business for 3+ years
Get connected with short-term funding, SBA loans, lines of credit and more.
LendingClub business loans
$5,000 – $500,000
12.15% to 29.97%
12+ months in business, $50,000+ in annual sales, no bankruptcies or tax liens, at least 20% ownership of the business, fair personal credit score or better
With loan terms that vary from 12 to 60 months, enjoy fixed monthly payments and no prepayment penalties through this award-winning lender.
Monevo business loans
$500 – $100,000
3.99% to 35.99%
Credit score of 500+, legal US resident and ages 18+.
Use this connection service to get paired with a loan you can use for business.
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Bottom line

Before using your business loan funds, consider how you’ll spend it and work out what will be best for your business. You can consider getting expert advice before deciding and even work out some cash flow projections to ensure you’re making the most of the loan.

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