Top 5 Challenges Faced by Small Businesses and How a Business Loan Can Fix Them

As a small business owner, you are constantly fire-fighting problems to make things work and increase revenue and profitability. The biggest challenges, however, are mostly related to finances. You are aware that small business obstacles, business financing problems, and their solutions are all intertwined. However, the good thing is there are several challenges that can also be fixed with financial help. A small business loan can often go a long way in sorting out several short-term issues that can boost productivity for the business.
 
In this blog, we list the top 5 business challenges and how a small business loan can help solve them.

1. Limited Cash Flow

Cash flow issue is one of the top financial challenges faced by small businesses on a regular basis. Having a positive cash flow is just as vital as maintaining a positive revenue or profit. When your company gets payments on account from customers in exchange for goods or services, it generates cash flow. A poor cash flow can lead to one of the following problems.
 

• You won't be able to keep up with your utility payments.
• You will be unable to expand your business or enhance productivity due to a lack of cash.
• Your company's revenue will drop, but expenses will rise.

 

How can a small business loan help?

In most cases, cash flow issues in the business are temporary. To solve this issue, you may opt for an unsecured business loan that comes with repayment flexibility. If you are facing a cash crunch owing to late payments, a small business loan with a repayment term of a year or so can help.  
 

2. Outdated Equipment and Technology

If you are a self-employed medical practitioner or run a production or manufacturing business, keeping up with technology and equipment advancements is critical to your success. Using old technology or substandard or damaged equipment will result in late production and order fulfilment. This will ultimately result in the collapse of your business. Some other unpleasant effects of using poor equipment and technologies are: 
 

• Increase in maintenance cost.
• The use of substandard equipment necessitates the utilisation of more labour.
• Poor production cycle.

 

How can a small business loan help?

By taking out small business finance, you can easily replace your old equipment and technologies. If you are looking to buy heavy machinery, equipment financing may be able to assist you. Since it has a longer repayment term, it is easier on your budget.
 
ALSO READ: Get An Equipment Loan With These Five Easy Steps
 

3. Overworked Staff

A prosperous business relies on loyal and hard-working employees. If you are a small business owner with a restricted budget, you will need to offer a variety of perks and incentives to keep your employees happy. On the other hand, if you are a business that runs with fewer staff who are mostly overworked, productivity, output and morale are both bound to dip, ultimately impacting the business negatively.  Following are some of the other harmful consequences of understaffing and overworking employees. 
 

• Increase in employee attrition rate.
• Higher chance of injuries, accidents and health problems
• Drop in customer satisfaction
• Inefficient and poor quality production.

 

How can a business loan help?

Challenges to financing small businesses are one of the major causes of understaffing. However, by applying for a business loan, you can easily solve the problem of understaffing. Since this loan product comes with end-use flexibility, you can utilise the funds to overcome numerous workforce challenges.

4. Office Rent

 
Having an office space at a posh location is vital for increasing your customer base. However, due to skyrocketing commercial office rents, many small business owners set up their offices in the city's outskirts. A poor office location has numerous effects on your business, some of which are outlined below.
 

• Delay in the supply of raw materials and inventories.
• Poor impression of your brand.
• Inconvenience to workers.
• Poor customer reach. 

 

How can business financing help?

One of the most common reasons for businesses to take out loans is to expand their reach by opening new branches or offices in new regions. Since small business loans are available at competitive interest rates, you can easily apply for them to finance your office space. 
 
Read More: All You Need to Know About Business Loan Interest Rate in 2021
 

5. Finding Customers and Dipping Sales

All businesses need new customers. Even if you have a consistent stream of revenue, it's a good idea to keep an eye out for new customers who can help you grow your business and sales numbers. To do so, you will need to have a strong sales team and marketing plan, as well as spend on things like advertising, branding, and appealing product packaging. However, putting these plans and tactics into action will take a large amount of investment. Any financial hardship in the preceding situation could render you inept in the eyes of your business competitors and can drive your business towards the shutdown position.

By applying for a small business loan, you can invest in areas that can help you handle the challenges associated with new customers or boost your sales graph.    
   

Bottom Line:

Establishing a business is not for the faint of heart; it needs a lot of dedication and endurance. The responsibility that a small business owner shoulders are full of challenges and hurdles. And to deal with them, businesses require funding in the form of a small business loan. Having quick access to funds can help your company overcome even the most difficult obstacles.
 
Looking for financial help in establishing your business? We can help. Apply using Business loan application.