Business loans and financing can help bridge the gap from plan to reality. Common reasons for business borrowing include:
- Acquiring new equipment.
- Purchasing a new facility.
- Expanding operations.
- Paying for raw materials.
A smart borrowing strategy is vital to protect your organization. Selecting the most useful type of loan or financing means realizing the greatest chance of success.
Sound borrowing is for growth and efficiency
Increasing demand for a product or service is some of the best news you can hear as a business owner. But it needs to be capably addressed to truly seize the opportunity.
Companies with limited resources and an uptick in demand for their offerings can find themselves stretched to the breaking point. The short-term improvement in revenue may not be enough by itself to pay for necessary upgrades and expansion efforts.
This is what makes business financing and loans so valuable.
Financing can do much more than address increased demand, too. A business partnership may progress to the point where it makes the most financial sense to buy out a partner for the sake of efficiency, for example. Compensating them with a defined severance package and similar considerations, as opposed to a continuing salary and benefits, means long-term savings.
Real estate can also come into play.
Adding locations is a clear example of growth, but other decisions around real estate can lead to increased business efficiency as well. Purchasing a building that was previously leased, for example, can control costs by eliminating the potential for leases to increase in price over time. This strategy also allows your business to build equity in the property over time, further improving financial stability by eventually securing a valuable asset.
Make sure your reason for borrowing is tied to an opportunity for your business to develop in a positive way. Getting your loan approved will be easier and you can fast-track more predictable ROI for your business.
Opportunities may be transformative, or simply part of doing business
Keep in mind that not every opportunity for growth, expansion and efficiency involves transformational change.
If you sell a product to businesses in an industry that traditionally delays payment—perhaps in a net 15 or net 30 arrangement—a business line of credit is vital. It smooths over payment delays and protects your business from a lack of working capital. With a line of credit, your company would still have cash on hand to address short-term needs:
- Paying bills.
- Meeting payroll demands.
- Securing raw materials from your own vendors.
- Many similar needs.
These types of trade credit are simply a matter of doing business in industries where they’re used. Borrowing, in the form of a line of credit, helps you align with the demands of your market and seize opportunities to grow.
Why a dependable partner is crucial for a smart borrowing strategy
The bank you choose to work with plays an incredibly important role in this process, from start to finish.
There are some major differences between the ways different types of financial institutions manage their lending and financing programs.
In the case of large, national banks, there is a tendency to stick very rigidly to requirements like:
- Completing an application before meeting with a loan officer.
- Approving or denying the request based on standardized rules, with little or no room to also consider individual context.
Community banks tend to invest more in relationship building with applicants and clients. They demonstrate this by:
- Getting to know applicants, their businesses and their needs to help steer them toward the best type of borrowing before starting the application process.
- Taking context and individual circumstances into account when making a borrowing decision.
Adirondack Trust Company prides itself on a people-focused approach to lending.
Before you ever fill out an application, you sit down for an important conversation about your business, its current circumstances, the reasons you need funding and the options potentially available to you.
Our commitment to business owners in the Adirondack region means you can count on our loan officers to guide you in the right direction. We understand that you have plenty of expertise in your chosen field but may not have much experience in securing business financing or a loan.
When we clarify issues, opportunities, goals and ways of addressing them, everyone benefits. Our loan officers listen to unique requests and take context into account when making our final determinations, instead of only sorting applicants based on a set of inflexible qualifications.
Ultimately, we want to reach decisions that limit risk both to your business and our bank. In cases where a specific type of loan or financing simply isn’t a good fit for your business, we’re ready, willing and able to suggest alternatives. That’s true even in cases where it means referring you to another provider, and whether the financing comes as a grant or other type of award as opposed to a loan or line of credit.
Taking the next step toward business loans and financing
A long-term relationship with a caring, competent and committed community bank means your preferred lender maintains valuable context and knowledge related to your business. That, in turn, means more accurate and useful guidance for your business in all areas related to banking and borrowing.
Learn more about securing a business loan or financing from a dedicated local partner and get in touch with the business lending experts at Adirondack Trust Company.