When to get a business loan in South Africa
When is the best time to get a business loan for your small business in South Africa? Find out more now.
When should you get a business loan for your small business?
What will your friends say when you apply for a small business loan? Some may tell you your new venture is too risky. It’s certainly true that you don’t want to get into debt recklessly.
We spoke to Jonathan, a small business owner, about business loans to bring you some first-hand info.
Read what Jonathan had to say about business loans.
Have you ever applied for a business loan?
"No, instead of getting an overdraft facility for emergencies, I only pay interest if I use it.
"I keep getting offered pre-approved business loans from my business bank with a very high-interest rate.
"While having lots of cash on hand is great, the burden would be too big and cost too much in the end."
When is the best time to get a business loan?
"When it makes good business sense. So, will a business loan let your business earn more money than it costs to pay back the loan?
"Don't fall for having more money to spend on things your business doesn't need."
Jonathan gave us some useful things to think about before getting a business loan.
Do you have any questions about when to get a business loan? Read on to find out more.
Do you want to know more about funding small businesses?
Learn more about funding your business idea
Let's go through some of the possible times when it could be a good idea to get a business loan.
Your business is growing
If your office is getting too small, it’s time to make that move. Perhaps you own a restaurant, and customers keep on coming while you’re running out of tables and chairs. While this is a cause for celebration, you may be unable to move. And the reason is you need some moolah.
Do some research first
How much extra cash will you make after the move? Would you be able to pay off your loan and still make a profit? Take a close look at your business’s current income and see what impact the move could have.
Also, make sure that the new location is in the right area to provide your business with enough customers.
Take small steps first
Don’t bite off such a huge chunk of debt that you can't see yourself surviving. If you see yourself expanding rapidly over the next few years, start taking out smaller short-term loans instead. In this way, you’ll improve your business credit.
As a new small business, your reputation is unknown to banks. They first need to see what your company is made of before risking larger amounts. By taking out frequent small loans, you build a trustworthy relationship with the bank. This could open the way for larger loans later.
Also, remember to be careful to avoid damaging your reputation and business by defaulting on payments.
Does your business need more equipment?
Expanding your restaurant may mean you need more equipment. You can’t do without larger deep freezes to store food. So, an equipment loan is what you require. But, again, do some research first to ensure you are covering the important business functions and not the nice-to-haves.
Always stay focussed on your core business, and don’t invest in something that can wait.
Taking on extra staff
When you run around like crazy, you’ll eventually have to hire extra staff to keep up with the growth.
But, before you consider a business loan, factor everything into your business's overall financial situation like affordability. Can you afford the loan?
Yoco could help your small business grow
Are you a Yoco merchant? Yoco offers entrepreneurs fast funding with Yoco Capital, an alternative to getting a business loan. Go to Yoco Portal to access Yoco Capital and see if you qualify. If you do, Yoco will immediately approve, and the cash will be in your business bank account within a business day. You repay the loan automatically by Yoco taking a small percentage of every sale you make. If you have any questions, don’t hesitate to get hold of us.
Disclaimer: Please get financial advice from a certified financial adviser. This article is for informational purposes only. Yoco does not offer business loans, instead, Yoco offers cash advances with its Yoco Capital product.