Maximizing Your ROI from a Small Business Loan
Joe Camberato
CEO & Founder of National Business Capital | Private Lender Offering Companies Access to Bridge and Growth Capital | $2.5B+ Funded Since 2007
Whether you need a capital infusion to cover a seasonal cash shortage, want to expand your product or service lines, or have decided that it’s time to stop dreaming of a renovation and actually make it happen, a business line of credit can propel your business back towards profitable territory.
To maximize your ROI from the line of credit, move in with an organized, profit-driven attitude, and always prioritize your bottom line.
1. Know The Amount You Need to Borrow
When you apply for a business line of credit, calculate the amount that you need to borrow based on your short- and long-term spending needs. If you borrow too little, then you’ll need to urgently raise more capital to cover routine expenses, especially if your energy is focused on expansion. On the other hand, if you borrow too much, you’ll have dead money sitting in your account.
You can avoid both of these scenarios by doing your homework beforehand. But, it’s always better to have more funding available than not enough, especially when you’re in the middle of an expansion.
2. Understand the True Understand the True Cost of your Opportunity and Cost Funds
When you’re looking for ways to seize a new business opportunity, you should avoid getting caught up in the cost of borrowing money. Instead, consider how utilizing your financing to expand and grow your business can drive profits that make taking a loan out worthwhile, and then some. Used properly, financing can be a great tool for scaling your business. Curious about the potential return? Try putting pen to paper, calculating the doors that financing can open up, while considering your costs and net profit-- you may be pleasantly surprised.
3. Take Advantage of Paying Down Your Line
One of the best things about a business line of credit is that you only pay for what you use, and get charged for the total amount outstanding. As you continue growing and money comes back into your business, make sure you pay down the line so that you pay the lowest amount of interest. The amounts may seem small on a week-to-week or month-to-month basis, but over time, these savings can really add up. All of your savings go right to your bottom line.