This article is for informational purposes only and should not be construed as legal or financial advice.
At some point in time, most businesses in the U.S. face financial challenges. Whether it’s the finance needed for launching a startup, the funds required to upscale, or the money needed to cover gaps in cash flow, taking a business loan is often the only choice. However, applying for a loan and putting your company into more debt is a big decision and one not to be taken lightly. It’s important to know when to apply, how and where, which is what this blog is all about.
The Indications Your U.S. Business Could Benefit from a Loan
In this section, we take a look at the signs that indicate your business could benefit from borrowed money. They include but are not limited to:
Poor cash flow: When your business outlook is positive, but you are hampered by struggling to pay employees and suppliers on time or having problems meeting immediate operational costs.
Inventory shortages: When you’re facing a shortage of the materials needed to produce products to meet customer demand – particularly in times of peak demand.
Growth potential: When there is an opportunity for upscaling to fulfil increased demand, but you lack the necessary equipment to do so.
Aged Plant and Equipment: Whereby the equipment your company possesses is outdated and is holding you back.
These points refer to established businesses. But what about startups? They, too, usually require loan funding to get them off the ground.
Can you Afford Loan Repayments?
Like any form of loan, the repayments you will be contracted to meet will include interest. This can vary significantly from country to country and lender to lender. In the U.S., the interest can vary from 7.71% for a term loan right up to 350% for Merchant cash advances, according to Forbes.
One of the best ways of finding the best loan option is to use the new digital loan comparison platforms in the U.S. But before you decide whether or not to start searching for a business loan, you need to consider:
What is the purpose of the loan? Ask yourself if what you intend to use the money for is in alignment with the business’s targets and strategies
Have you made updated cash flow projections? You ought to produce new cash flow projections, They should include the new loan repayments, to ensure that the business can meet its financial obligations.
Also, check out any potential limiting factors, such as:
The business has a high debt-to-income ratio. If the business already has high levels of debt and cash flow restrictions, adding to them could put the operation in financial jeopardy.
Having an up-to-date business plan. Without a business plan, including financial projections, potential lenders might perceive any loan application to be ill-conceived.
What is the company’s creditworthiness? If the business’s financial transaction history isn’t good, it will likely attract loans offer carrying higher interest rates.
It’s only when you have satisfactorily considered and answered all of the questions and scenarios outlined above that you can say yes to taking on a business loan.
Naturally, you will want to secure the best loan offer you can for your business in terms of duration, interest and repayment amounts. Using one of the loan tendering (also known as loan comparison) platforms available in the U.S. is the best way of doing so.
What About Business Loans in Australia, New Zealand, and South Africa?
The answer to the question of when to say yes to a business loan in Australia, New Zealand, or South Africa, relies on exactly the same criteria laid out above.
In all three countries, the alternative finance revolution is well underway. More business owners and entrepreneurs are turning to borrowing from these new service providers. In Australia, the growth of alternative lending is predicted to expand at a CAGR of 17.4% between 2024 and 2028.
In New Zealand, in December 2023, the business loan sector was worth NZD 133,575 million. In February 2025, the figure grew to NZD 138,240 million. The non-banking business loan sector share has grown since records began in 1998 from NZD 2,270 million to NZD 9,423, an increase of 415.11%
In South Africa, although SMEs are the backbone of the economy, borrowing is not easy for them, as indicated by the funding gap for SMEs, which currently stands at more than R350 billion. Here, too, the non-banking or alternative finance sector is bringing about a change. In 2023, it was reported that 31% of SME owners preferred applying online using digital tools like loan tendering. The number has since grown.
Conclusion
While operating in debt is the norm for 99% of businesses, the decision to take on more borrowing to expand revenue or aid cash flow can nonetheless appear as something of a dilemma. However, it’s a dilemma you can solve once you’ve done your research, obtained a list of competitive loan offers from a loan comparison platform, seen which one best aligns with your plans for the future of your business, and said yes, it’s the way forward.