skip to Main Content

When to Consider Getting an Unsecured Business Loan?

When you do not want to give away equity in the business, such as shares.

Loans do not require you to give up any shares in your company, and you can pay a loan off at a fixed cost over time. That allows you to plan ahead as well.

If you are just starting a business or wanting to expand an established one, you should avoid spending your own short-term profits to purchase long-term assets.

The ACCC reports that this is the most common cause of small business failure. A much better way to increase your profits is by using other people’s money.

It can be very difficult to get investors from the private sector, and you might need to sell shares of your company in order to attract the funding you need.

Why you might need to get a loan to help grow and expand your business

Different businesses have various attitudes towards loans, finance, or lending.

You might have successfully borrowed money in the past before reaching the position you are currently in. Or perhaps you feel like it is the time to borrow money. It might be risky for your company to take on a loan. However, it can be a risk that is worth taking sometimes.

When a loan is used for the right reasons and at the right time, it can allow you to take your business up to the next level. Some of the most common reasons business owners consider taking out a business loan include:


Cash flow

It isn’t a lack of profit sometimes, but cashflow that can take a small business down. If a lack of money could end up putting you out of business, take out a loan to cover any shortfall.

Get new inventory or specialist equipment

At some point, almost every business needs new gear, stock, or equipment. Sometimes the only way that you can increase your profitability or productivity is by having more efficient and newer technology. Whether you are a service business or a manufacturer, the equipment you are using now will almost definitely be different than what you use in a couple of years.

Capitalise on an opportunity if the costs are outweighed by the benefits

A new opportunity will sometimes come along that you are surprised by. A new market might open up, you may form a new business relationship, or discover a new way that you need to move quickly. When an opportunity comes knocking, a loan can help you take full advantage of it.

Hire better or new staff

A majority of business owners agree that their greatest asset is their employees. And it can be difficult to find good employees and retain them. Don’t lose your very best people because you are unable to afford to keep them. This could turn into a very important investment walking out of your building.



Increase your credit record

When you borrow well that can open up the possibility of getting bigger loans later on. If you prove you are able to pay off your loan – even a fairly small one – it can help to improve your credit rating. In a couple of years, you may want to borrow much more. It can be more difficult to secure a loan without having a good repayment record as part of your history.

Obtain a second site or additional space

Your business might have outgrown its original office, shop, or site. Or your current location might work well but it is time for you to expand into a second or even third location.

Finance Expert, Writer, Entrepreneur

Tammy Richards is a passionate finance expert who is also a writer and business owner. With over 10 years of experience as a finance expert, Tammy wants to share her knowledge with her readers.

Tammy covers and simplifies a range of financial topics, including how start-ups can raise capital and how established businesses can grow successfully. It is clear that she is firmly on the side of Australian small business owners.
Tammy keeps her fingers on the pulse of financial updates. Through her articles, she regularly shares the latest tips and traps around financial products such as business loans and credit cards. She also delivers her information in an easily consumable and interesting way.

Tammy is a keen advocate of promoting financial literacy. She aims to educate small business owners by providing financial insights into common financial problems that businesses face.

“More than anything, I am enthusiastic about using my experience to help Australian small business owners to achieve their financial and business goals,” she says.

Like it? Share it!