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Four ways a business loan could help a business grow

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seek some clarity on some commonly held financial beliefs

According to Dun & Bradstreet, Australian businesses are confident with the state of the economy and their prospects over the coming year. Figures show 60 percent of organisations are more optimistic about growth this year than in 2016, with capital investment expectations climbing to two-year highs1. Further, market research firm Sensis revealed that sentiment among small and medium-sized businesses was at its highest point in six years2

With lenders approving approximately $40 billion of commercial finance in January 20173, you may be considering how a small business loan can help you achieve your growth ambitions. Let's take a look at four ways borrowing could help your business expand.

1. Purchase new equipment or software

Investing in new equipment or specialised software may help you automate manual processes such as inventory management or payroll/accounting4, but equipment and software can often come with a hefty price tag; the initial outlay could be a barrier for many small businesses. Small business loan options like asset finance could help with purchases that you need quickly to potentially increase productivity, boost revenues and optimise business performance5. The cost savings you might generate by higher output or automation of manual tasks may help with covering your loan repayments however, every small business is unique in some way. Consider seeking a professional who has the capacity to analyse and conduct the necessary calculations to ensure that you are maximising your return on investment6.

2. Stock up on inventory

Inventory costs can be one of the biggest expenses on the balance sheet for businesses, and many stock up well in advance to fulfil future orders7. Some suppliers may offer discounts if you buy in bulk, so purchasing large amounts of inventory can be an effective way to reduce the cost per unit. If you have the finance available for a large inventory purchase, building up your supplies could be a viable option8.

Hot Tip: Consider creating a sales projection to predict demand. Underestimating the popularity of your products could leave you with empty shelves when your business is busiest while buying too much stock could leave you with unwanted inventory gathering dust9

3. Add sites or change physical location

If your small business is doing well, you may find that you're outgrowing your current premises. This can be a great problem to have, but can also be a barrier to continued growth10. To relieve pressure on working capital, consider a location that will enable you the option to expand in the future11.

The upfront costs of expanding your physical location can be considerable, and you'll also have to calculate the additional overheads you may incur such as new staff, the rising cost of energy bills, extra equipment and other expenses12. A small business loan may help to upgrade sooner rather than later if you don't have the required funds on hand.

4. invest in your people

Small businesses can usually only exist on a skeleton crew for so long. As your small business becomes more successful, the pressure on your staff may increase and you may eventually need to bring in more people to cope with extra demand13If you're able to predict future growth, consider expanding your head count or upskilling existing employees in advance leaving your business better prepared for further growth. This is particularly true if you're a small business owner who performs various time-consuming tasks, such as accounting and customer service. Investing in staff to take on these duties frees you up for more value-oriented opportunities14

In summary

These are just four ways that small business loans can help you grow your organisation, but you may need to compare available products to help you get one that meets your needs. If you would like to enquire about competitive small business loans, please contact IMB Bank to learn more about our comprehensive range of commercial lending solutions.

Enquire about a competitive IMB Bank Business Loan


1 Dun and Bradsheet,‘Australian Business Expectations Survey: The Business Expectations Index is at its highest point since Q4 2015, March 2017

2 Sensis,‘Sensis Business Index December 2016: A survey of confidence and behaviour of Australian small and medium businesses, January 2017

3 Australian Bureau of Statistics, ‘5671.0 - Lending Finance, Australia, January 2017

4 Intuit Quickbooks, ‘5 Ways to Save Time by Automating Your Small Business

5 Huffington Post, ‘What You Need to Know About Small Business Automation, December 2016

6 Intuit Quickbooks, ‘Automating Business Processes: What’s the ROI?

7 Handshake, ‘What is Inventory Control?’, August 2015

8 Small Business Chron, ‘Advantages & Disadvantages of Buying Bulk to Save on Unit Pricing

9 Queensland Government, Sales forecasts and targets, June 2016

10 Queensland Government, Outgrowing premises, June 2016

11 Queensland Government, Outgrowing premises, June 2016

12 Hospitality Magazine, Location, location: 5 things to consider before moving your business’, August 2015

13 Tribe of Zero, 10 ways to know when to hire new staff

14 Tribe of Zero, 10 ways to know when to hire new staff

Why choose IMB Bank?

Established in 1880, IMB has been helping people achieve their financial goals for 140 years. IMB offers a full range of banking solutions including home and personal lending, savings and transaction accounts, term deposits, business banking, financial planning and can arrange a wide range of insurance and travel products.

IMB has a growing branch network throughout the Illawarra, Sydney, NSW South Coast, the ACT and Melbourne. We have a lending specialist in every branch and a team of mobile lending specialists who will come to you. IMB members enjoy access to free automated phone and internet banking and a team of professionals who are just a phone call away at our locally based call centre.

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