The UK Government has provided startup loans to a total of 100,000 small businesses. This marks a major milestone for the scheme and means that the government has given more than £941 million in support.
Each startup that applies to the scheme is eligible to receive up to £25,000 to help their business grow. Here, we take a look at 3 ways to make the most of your small business loan and stretch £25k to much more!
Use a business credit card
Business credit cards are a godsend to any startup owner. Yet, many budding entrepreneurs fail to use them. Using a business credit card to make purchases will help you to separate your business spending from your personal spending. This is a good way to manage your loan and avoid accidentally covering personal expenses with your startup fund.
Business credit cards also come with a range of budget-stretching benefits such as: lower interest rates, higher credit limits, longer interest-free periods and discounts for early repayments. It is also possible to build company credit by using a business credit card which could help down the line.
Focus on purchases that will make money
At first, it can be tricky to dictate which purchases should be made first with your startup loan. In general, it is best to focus on items that will generate revenue for your business so that you can increase the budget that you have to spend.
It is good practice to think of every item that you buy with your loan as an investment. Will the investment generate good returns for the initial cost? If not, it is probably wise to leave this until you have more money to spend.
For example, it is better to invest the loan on creating new products to sell rather than purchasing a swanky new office. The office can wait until you’ve made some revenue! Learning how to prioritise your spending can massively help towards making your loan go further.
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Use what you already have
One of the best ways to stretch your startup budget is to make the most of resources and connections that you already have. This means harnessing the skills of friends, relatives, colleagues and business partners to save spending money elsewhere.
If you ask around, you will be surprised at what people around you can bring to the table. You may know people who are great at social media marketing, financial planning or even selling products. At the beginning, it’s good to make the most of anything that you can get for free! Of course, you can’t expect people to provide free service forever. However, there is never any harm in asking when you are starting out.
The UK government-backed startup loan is a great way to get your business off the ground! However, taking out a loan on its own may not provide all of the support that you need. To help stretch your budget try using a business credit card, prioritising your purchases and using free resources where you can.
By Alice Cumming
Source: Business Leader