As a financial steward, I'll be the first one to caution about debt and its use. However, debt isn't always a bad thing, especially if you use it wisely and to your advantage. I believe there are 3 very good reasons to consider debt in the current economy. Here's 3 reasons why now is a great time to apply for business credit. As always, if you have a question or think you might want to work together, please get in touch through my Home Page. Also, never miss a blog by following me on LinkedIn or Facebook.
1) Low, in Fact Super Low Interest Rates
You may have heard that interest rates are low at the moment, however, the truth is that they have never been lower. In addition, central banks around the world, including Canada have signaled that rates are going to stay low for quite some time, as long as 2023. Ever wonder why house prices are going up like crazy? Low interest rates are definitely a big factor in that. Your business is no different. If your business is thriving or was never really impacted by the coronavirus pandemic, now might be the perfect time to think about expanding your business operations to take advantage of the low cost of capital. As always though, make sure you are only spending your capital on efficient growth.
2) Never Wait until you Actually Need Business Credit
If your business has been able to ride out the coronavirus storm thus far, but you're still worried about the future (with good reason, there's still lots of risk on the horizon for 2021), never wait until you actually need money to apply for it. For example, an unused business line of credit is never a bad thing. An open credit line means you have access to capital should you ever need it, but you aren't paying interest on it while it's not in use. If your bank rejects your application, try lower tier banks like Canadian Western Bank, Credit Unions, or the Business Development Bank of Canada as they will have slightly less stringent risk requirements. Other products to consider are low interest rate business credit cards or a short term operating loan.
3) Get Ahead of your Competition
The coronavirus pandemic has hammered so many industries since March 2020. However, in my opinion, with recent coronavirus vaccine announcements, normal times could be here sooner than we think. Now might be the optimal time to start thinking about scaling up operations to take advantage of competitor weakness and complacency. A greater sense of normalcy could be here as early as the Summer of 2021, don't wait that long to start planning. Low interest capital could be part of your relaunch and scaling up plan. Since there's definitely still some economic risks in play, ensure you are carefully planning and only spending money on worthwhile, efficient growth.