Most people only consider taking out a business loan when they do not have the available cash to finance the business, or a purchase for the business, in their own bank account. However, there are many benefits to taking out a small business loan even if you have the cash available and ready to use in your own bank account. Here are four of those benefits.
You Can Establish Business Credit
One of the main reasons why you should consider taking out a small business loan even if you have the cash already available is because taking out a loan and paying it on time helps you to establish business credit. Establishing business credit is not always the easiest process. But you want established credit, especially if you plan on taking out loans or using terms to pay vendors in the future. Taking out a business loan gives you a place to start establishing and earning business credit.
You Can Establish a Relationship With a Lender
The second reason why you should consider taking out a business loan is that you can establish a relationship with a lender. If you take out a loan now and pay it back in full, the lender will be more likely to work with you in the future. This can be key as your business grows and expands.
You Can Use Your Cash for Other Expenses
It is not unusual to have unexpected expenses arise when you own a business. Having cash on hand can be key if an emergency pops up or business unexpectedly slows. Taking out a loan allows you to keep the cash you have, which you can then use to pay for other expenditures or unexpected expenses.
You May Be Able to Deduct the Loan Interest
The final advantage of taking out a small business loan even if you have the cash available is that you may be able to deduct the loan interest on your taxes. If you are using the loan to pay for certain expenses, such as farm equipment or a company vehicle, you may be able to write-off the interest from the loan. Consult with a tax professional to find out if the interest on your potential business loan may be a write-off.
Taking out a small business loan allows you to establish and build up business credit, helps you establish a relationship with a lender, allows you to use your cash for other expenditures and you may even be able to deduct the interest on the loan. Contact a business lender today to apply for a loan.