Business development
Growing a business often requires significant investment in new products, technologies, expanding facilities or entering new markets. However, companies do not always have the capital to finance these investments. This is where borrowing comes in to fill the gap.
Why is borrowing necessary?
To invest in new products and services: Developing new products or improving existing services often requires significant investment in research, development and production. Borrowing can provide the capital needed to fund these initiatives.
To expand facilities: As a business grows, it may need to expand its facilities to meet increased demand. The construction of new buildings or the expansion of existing facilities requires significant capital, which can be secured through borrowing.
Entering new markets: Entering new markets can offer significant growth opportunities, but also requires significant investment in marketing, distribution and other activities. Borrowing can provide the capital needed to fund these activities.
Investing in technology: Technology is playing an increasingly important role in business. Businesses that want to remain competitive need to invest in new technologies such as software, equipment and automation. Lending can provide the capital needed to fund these investments.
Accelerate growth: Lending can allow a business to accelerate its growth, enabling it to take advantage of new opportunities and outperform its competitors.
When is the right time for a business to take out a loan?
When there is a clear business plan: A well-structured business plan is essential to convince lenders that the business is viable and has the ability to repay the loan.
If there is sufficient collateral: In traditional lending, lenders usually require collateral to ensure repayment of the loan. Collateral can include property, equipment or personal guarantees. However, there are alternative forms of lending that offer significant benefits and conveniences over traditional lending, such as greater ease of approval, and we are focusing on these to help more businesses on their growth journey.
If the business has a steady income stream: A steady income stream is required to repay the loan. Lenders will assess the business’s ability to generate sufficient income to cover loan repayments. At the same time, with alternative lending from global financiers, their primary purpose is to secure the loan they provide with bank guarantees. This gives them an advantage in that they can even ignore the borrower’s consistent cash flow or failure to meet its obligations because they can liquidate the guarantee instrument where they have it and recover their capital.
Conclusion
Lending can be a powerful tool for growing a business, but it must be used with caution. Companies should carefully consider the benefits and risks of borrowing before making a decision.
