Almost any business needs funding at some point. Typically, when cash is needed in a hurry, you don’t have the time to search for the best options or go through a lengthy application process. You have no choice but to take the first offer placed in front of you.
The consequence of not being prepared are high interest rates, predatory fees, and other challenges, but with the clock running against you, there’s little you can do about it.
Having access to a small business loan (or how we call it, Amazon Loans) will never be a bad thing. However, specific reasons should make you consider having additional funding prepared for when (not if) the time to spend some urgent cash comes. In the end, you’re a business owner, and this is what owners do, prepare for growth and for the unexpected.
Here are the six reasons that should make you consider a loan for your Amazon business (even if you don’t need the money right now).
Money To Cover Working Capital Shortages
Working capital is the money you need to run your business on a day-to-day basis.
Working capital is measured via a cash flow report and is the blood of the business.
Think about this scenario: Amazon places a hold on your sales proceeds. Sometimes it isn’t a big deal. However, your highest season is coming, and you need to replenish your inventory. On top of that, you have to pay fixed costs like storage, employees, or your virtual assistant.
The above three lines are the nightmare of any business owner. One way to avoid this nightmare is to have previously applied for (and successfully obtained) funding via a small business loan.
What if you don’t qualify because of credit score issues? It would help if you had time to work on that. What if there’s a bad economic scenario and loans start to get harder to obtain? Many reasons can affect your ability to obtain a loan, so don’t get caught in bad times.
The key here is timing. As long as you are prepared, you’ll always have the funding to grow your business.
Money To Expand Operations
If your Amazon seller business is booming, you may need to order more inventory, advertise, and even add employees. In this case, a small business loan makes strategic sense. The opportunity to expand your business and achieve greater profits is far greater than the cost of interest payments.
The key here is opportunity. Those who can act quicker have the advantage.
Money To Purchase Inventory
If you have hot products or limited inventory, this is another strategic reason for obtaining the funding for your Amazon seller business.
In fact, not doing so may damage your business in the form of losing the battle for the “Buy Box” and losing rankings due to low inventory levels. This is especially true of Amazon marketplace businesses that are seasonal in nature.
If, for example, a business makes most of its sales during the holiday season. You have to be prepared way sooner than any other time of the year because every other seller will also place orders with manufacturers, and you don’t want to be left behind in the queue. Put that interest into your season cost structure and run with it. Don’t overthink it.
The key here is preparedness. Never be caught off-guard.
Money To Purchase Equipment
You may need additional equipment to meet increased orders or to expand your product offerings. If that’s your case, congratulations! that suggests the business is booming. Getting funding ensures you will capitalize on the opportunity to increase revenue and profit.
What if you let the chance of getting that new equipment pass? It may allow a competitor to offer better delivery terms and shut you out of potential sales.
If you need to expand your product offering, you might need a loan for your Amazon business. As that new product completes its cycle and starts bringing new income in, you don’t want all of your working capital stuck in inventory until you get paid. The expansion also involves expanding your capital.
Expanding your product offerings will make you more competitive in the form of a “one-stop-shop” and provide additional sources of revenue.
From a tax viewpoint, getting a loan can be a savvy move. You can take a significant tax write-off the first year and depreciate the rest of the equipment over its economic life. In either case, the additional revenue and tax write-offs associated with purchasing the equipment can outweigh the interest payments. Consult your accountant about this particular topic for more information.
The key here is strategy.
Money To Consolidate Debt
Small businesses often incur numerous debts with steep monthly payments. If you find your business in a situation of making payments to multiple high-interest debts, consider consolidating those into a simple, transparent monthly payment and free up cash flow to run your business.
The key here is savings. Don’t pay more than you should.
Money To Pay Business Income Tax
Many small businesses file their taxes annually, and they don’t make monthly cash provisions for it. Their cash flow is essential to running the business.
Unfortunately, when tax day comes, you may find yourself without enough cash to pay for it and will end up using your credit card with high interest rates. If you have already applied for a small business loan, this day would pass as any other day and remove the stress associated with dealing with the IRS and the potential penalties they may impose.
The key here is don’t let the IRS come for you!
Lastly, listed below are the best sources for obtaining a loan for your Amazon business.
Option 1: Amazon’s own program Amazon Lending, but its invitation only
Option 2: Sellers Funding Amazon Loans
Option 3: Your bank’s Small Business Loans
SellersFunding can help you get pre-qualified without a hard inquiry. See how much funding you qualify for.
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