Wednesday, 17th July 2019 | Small business financing Canada,Business loans for bad credit,Management
Six reasons why your small business should consider a term loan
Small businesses need cash flow to operate and grow, but many fundraising strategies come at a hefty price. Learn all about term loans, and to decide whether this product is right for you and your small business.
Small businesses need cash flow to operate and grow, but many fundraising strategies come at a hefty price. Even if owners can manage the rigorous application process of a big bank, the banks are famously reluctant to lend and their terms can be unfavourable. Investors may offer much-needed capital but their involvement will shift your control as an owner. How, then, can Canadian small businesses access the money they need now for equipment, renovations, or expansion? Some have found the answer in term loans, a lending option with repayment typically happening in small increments over several months. Read on to learn all about term loans, and to decide whether this product is right for you and your small business.
What is a term loan?
When a small business takes out a term loan, they borrow a certain amount of money (the loan) and agree to repay it in regular payments over a period of months (the term). Term loans work well for small business because they deliver a lump sum of money with the ability to repay over time. Terms loans will carry interest at a fixed or variable rate, have a regular repayment schedule and a set maturity date.
Advantages of term loans
Term loans are very popular among Canadian small businesses and it’s easy to see why. Take a look at these six reasons to consider a term loan.
- Hassle-free financing
In Canada, you can get a term loan within a couple of days. The application is short and simple. When you submit, it goes to an underwriter to review and approve, and then you receive your funds. - Better interest rates
Term loans tend to have lower interest rates than shorter-term loans. Your interest rate will depend on length of the loan, the collateral you supply to secure the loan, and your credit history. - Flexible cash flow
Small businesses need cash flow for all sorts of expenses, from one-time spends on equipment or renovations to recurring costs like training new employees. Borrowers can use term loan money as they wish to meet their business goals. - A tax write-off
The interest paid on the term loan is a deductible expense on your business tax returns. - Maintain independence
Small businesses in need of capital may seek investors and issue shares to raise funds, but this strategy results in a change in ownership and control. A term loan gets you the money you need without having to forfeit your independence. - Helps you build credit
Responsible repayment of your term loan will improve your credit score, unlocking better financial products and making it easier for you to do business.
Are there any drawbacks?
Term loans are highly regarded for their flexibility and ease but there is one major caveat to consider. Since you’ll have to supply collateral—usually, the business itself—to get your loan, you’re putting your business on the line. The best way to protect yourself is to borrow only as much as you can afford.
In the world of Canadian small business, finding capital is a major challenge. Many owners opt for a term loan for its easy application process, flexible terms, and attractive rates.
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Customer retention best practices for your small business
In 2023, the business landscape will be more dynamic, with constantly evolving trends and changing customer demands. You can keep your customers engaged and returning for more with the right strategies. Here are some invaluable customer retention best practices to help you stand out from the crowd and keep your customers coming back for more:
Embrace Omnichannel Sales
The pandemic accelerated the shift to online shopping, and customers are now more comfortable than ever buying online. This means providing a seamless experience across all channels, from your website to social media platforms, mobile apps, and online marketplaces. Investing in innovative technologies such as AI and automation can deliver personalized and efficient products that set you apart from the competition.
Use Social Media to Build Relationships
Social media is a powerful tool for building relationships with your customers. You must use social media to build a community around your brand, engage with your customers, and create meaningful relationships. By actively listening to your customers and responding to their queries, feedback, and concerns, you can show that you care and establish trust. Furthermore, social media allows you to showcase your brand's unique personality and values, which can help you stand out from the competition. Sharing customer stories, testimonials, and reviews can also be an effective way to humanize your brand and build social proof.
Leverage Data Analytics
Data analytics can help you understand your customers better and identify opportunities to improve customer retention. You can identify opportunities to improve customer retention and create personalized experiences by tracking customer behaviour, preferences, and feedback. Investing in data analytics tools can help you make data-driven decisions and optimize your marketing and sales strategies to meet your needs.
Be Transparent and Authentic
Customers are increasingly demanding transparency and authenticity from the brands they do business with. Customers are looking for open and honest businesses about their practices, policies, and values. This requires being transparent about pricing, shipping, and returns policies and using authentic and inclusive marketing messages. Doing so can build trust with your customers, which is essential for long-term loyalty. Customers are also more likely to recommend businesses they perceive as transparent and authentic.
Focus on Customer Experience
Customer experience will be a major differentiator for small businesses. As a small business owner, providing exceptional customer experience across all touchpoints should be a top priority. This means investing in customer service training for your staff, optimizing your website for usability, and gathering customer feedback to improve your products and services continuously.
These customer retention best practices can help your small business to stand out from the competition, improve customer loyalty, and grow your business. By embracing omnichannel sales, using social media to build relationships, leveraging data analytics, being transparent and authentic, and focusing on customer experience, you can create a loyal customer base that will continue to do business with you and recommend your brand to others.
Sales ,Marketing ,Management