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By: rkapur
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Is 2020 A Good Year To Get A Business Loan?

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The New Year provides each one of us an opportunity to start afresh. It’s far easier to achieve your goals if you can begin with a clean slate with 12 full months ahead of you. 

How does that translate for business owners like you? Fortunately, the current economic environment in the country is highly favorable, and all the indicators show that 2020 will be even better. There are plenty of opportunities, and if money is a constraint for you at this moment, a business loan in 2020 could provide you with the funds you need.

In this post, we’ll examine why 2020 could be an excellent year for small business owners like you. We’ll also explain how you can raise the money you need to expand your level of operations and look at the factors you should consider when taking a business loan. 

Why 2020 Might be a Good Time to Get a Business Loan?

Here’s why we think that 2020 holds immense promise for small business owners:

Reason 1: Proprietor’s income has been trending upwards since 2009

When the demand for goods and services is high, the revenues of small businesses tend to increase. If your selling prices remain stable and your costs are contained within reasonable limits, your profitability will also improve. 

That’s precisely what has been happening in the country for the last ten years. According to data compiled by the Office of Advocacy of the US Small Business Administration, a government agency that provides help to small business owners and entrepreneurs, annualized proprietors’ income has been growing since 2009.

How much has proprietors’ income increased by? The information gathered by the US Bureau of Economic Analysis indicates:

  • Proprietors’ income has risen by 15% since 2016.
  • Incomes have nearly doubled from the level in mid-2009. 

Reason 2: Small businesses are optimistic about the future

If you are an experienced business owner, you know how important it is to plan ahead. There is usually a lead-time between deciding to expand operations and actually increasing capacity. So, you could start working on increasing production levels three or six months before demand goes up. 

Why start so early? Orders for new machinery have to be placed, new employees need to be hired and trained, and your company’s procedures have to be revamped to accommodate the increased level of sales. It may also be necessary to take a business loan to pay for new equipment or additional marketing expenses.

As all these activities take time, a small business owner will usually be prepared to invest only if you are optimistic about the future. You will risk your capital and raise money in the form of a business loan if you think that there will be an adequate level of demand for the goods you produce or the services you provide. 

What do small business owners like you currently think? Are they positive about the future?

The October 2019 report of the National Federation of Independent Business (NFIB) indicates that entrepreneurs are confident that the country’s economy will continue to prosper. NFIB’s Small Business Optimism Index is based on ten components. In October 2019, eight of these showed an improvement over the previous month.

Source: NFIB

NFIB’s survey, which was conducted in October 2019, received responses from 1,618 small business owners/members. The survey results indicate that an increased percentage of entrepreneurs plan to hire workers and make additional capital outlays. Many of them also think that it is an excellent time to expand operations.

Reason 3: Small businesses are hiring more and unemployment is at a historic low

Low unemployment is an indicator of an economy’s health. According to the November 1, 2019, release from the Bureau of Labor Statistics, unemployment stood at 3.6%. Since 2016, the economy has added more than 6.7 million jobs

How is new employment being generated at such a rapid pace? Small businesses contribute to the majority of new jobs. Data released by the SBA reveals that small firms account for 65% of net new jobs.

Small firms help to keep the unemployment rate low

Source: SBA

Small businesses reap immense benefits from low unemployment. As more people get jobs, consumer spending rises. This leads to an increase in demand for goods and services. Think of it as a snake biting its own tail. 

Will employment numbers continue to rise? This illustration shows that the number of people who are employed in the country will increase from 156.92 million in 2019 to an estimated 158.13 million in 2020. 

Employment in the United States from 2010 to 2020 (in millions)

Source: Statista

What Does This Mean for Small Business Owners? 

If proprietors are earning more, employment is rising, and business confidence is improving, what are the implications for you as a business owner? It could be the best time for your company to increase production capacity.  

However, you could need additional funds to expand operations. Here is what you may need the money for: 

  • New capital equipment – you may have to buy new machinery. A restaurant may need additional kitchen equipment, and a construction company may need another vehicle. If you run an auto repair shop, you could need a new air compressor or engine hoist.
  • Additional working capital – if your sales go up, it’s likely that your debtors will increase, too. This is especially true if you operate in the business-to-business (B2B) segment. You may also need to maintain a higher level of inventory. This will result in funds being locked up in working capital.
  • More employees – you could need extra people to run the new equipment you buy. If you’re increasing capacity, you may have to hire more sales staff.

As you can see, your business could need additional funds for expansion. Most company owners address this issue by taking a business loan. 

However, you need to be careful when you borrow funds. It pays to shop around and find a lender who can provide you with the cash you need at the best possible terms. 

Camino Financial: Your Best Choice for 2020

If you’re planning to take a small business loan in 2020, start the process early. Choose a lender that can provide you with the best terms and with whom you can establish a long-term relationship. Camino Financial can be that lender. Our loan process is simple, quick and transparent. Why us? Check out some of our features: 

Our approval procedure

Some financial institutions have complicated approval norms that could be hard to meet. Traditional lenders like banks could ask you to provide copies of several paper documents. Missing papers could result in delays and confusion.

At Camino Financial, our loan application and approval procedure are entirely online. You can apply for a loan directly from your computer and find out if you prequalify instantly. After this, it’s possible to receive money directly in your bank account within a few days.

Our minimum requirements 

“No business left behind” – that’s our motto. Our team members will do their best to ensure that you are successful at getting the money you need for your company.

What do we look for before approving a small business loan? These are some of our requirements:

  • Your business should be at least nine months old. 
  • Sales should be at least $30,000 per year.

What requirements you don’t need to meet with us?

Borrowing costs, fees, and charges

Remember to read the fine print when you are finalizing the loan agreement with the lender. At Camino Financial, we will let you know how much you will have to pay in the form of interest and closing fee before you sign on the dotted line. There are no other hidden costs, and we don’t charge a prepayment penalty

Flexibility to use the money you borrow

The funds you borrow from Camino Financial must be used in your business. You can use the funds we provide to buy inventory or new equipment, to hire staff, to improve your cash flow… In fact, we’re quite flexible – the cash can even be used as a bridge loan or as a debt consolidation loan

The Bottom Line

The New Year will bring greater opportunities for small business owners like you. Many entrepreneurs are confident about the business environment and are planning to buy capital equipment and hire additional workers to meet the increased demand for their products and services.

This could be your year too. If you intend to grow your company in 2020 with a business loan, get a quote today from Camino Financial. We’ll let you know immediately if you prequalify. Subsequently, our loan specialists will help you raise the money you need at the least possible cost and the best terms. 

Happy New Year from Camino Financial!

 

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