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In fact, the last thing you should be doing is waiting too long to lend. When you turn to funding because your business is in crisis, funding is used to plug holes. According to Dov Girnun, CEO of Merchant Capital, “the best time to borrow is when you can use that working capital to enhance your chances of future success and make sure you can pay it back with ease.”
Here are some of the key ways to think about borrowing money for your small business as you head into 2021:
If there is anything that Covid-19 has taught us, it’s that we can never plan for everything. But as a business owner, there are many things you can foresee.
For example; that equipment upgrade which is looming, the staff training that is required or that renovation you’ve been hoping for. While you may have some funds available, it may be better to achieve these goals with borrowed capital.
“Once you understand what needs to be done in your business, then you can take the necessary steps to understand what kind of loan is best for your business,” says Girnun. “Taking a long-term view of the situation will allow you to think clearly and investigate all options.”
Gaining access to loans is complex. Lenders are cautious and they often require a credit history to decide on whether or not they can lend to your business. Because your current financial situation determines long term lendability, it is important to get in the game while you are able to manage that debt and pay it off quickly.
What are some good reasons to get a loan?
What are bad reasons to get a loan?
Smart debt can really relieve pressure on your business. Understanding your business’ needs, assessing this long term, and building a healthy credit history can be a very strategic move in building partnerships with responsible lenders. Once in place you will have quick access to working capital when your business needs it the most.