Building Your Business? Equity Bank Shares Five Reasons Why a Business Loan Can Improve Your Bottom Line

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Equity Bank’s Jeff Keyes, SVP senior lender, says there’s potential light at the end of the pandemic tunnel. Why? Keyes and his colleagues have seen an uptick in business loans, which is usually a good sign in an uneven economy. “There’s been a lot of activity, especially with real estate as well as mergers and acquisitions,” he says. “We’re also seeing some increases to operating lines of credit with businesses anticipating growth now that we’re—knock on wood—cycling through the pandemic. Many companies feel they’ve weathered the storm and they’re looking for opportunities to grow, expand, or acquire.”

When it comes to securing a loan, Keyes says that his team works hard to find common ground to help business owners. “It’s about understanding your needs,” he says. “Our interests should be aligned as we work alongside your growth plan.”

While many entrepreneurs use loans to start up a business or venture, Keyes says there are plenty of other avenues where Equity Bank can lend more than just a helping hand. Here are five specific areas where Equity Bank’s team can help your business thrive:

5) Reduce Personal Risk/Pay Yourself Back
Many business owners have all their assets tied up in their business. Leveraging business assets for necessary business funding can allow an individual to use their personal cash for personal reasons. “Sure, a business owner may have a lot of equity. And they may be sitting in a great position, but they may not have paid themselves,” says Keyes. “They’ve been growing their baby, so to speak. But as a company grows and becomes successful, you’ll frequently see people take some, as we call it, ‘chips off the table.’ They can take money out of the company via a loan and give it to themselves.”

Keyes adds it makes perfect sense. “Owners can take advantage of all their hard work. They’ve created a successful entity and a loan can give them a chance to enjoy the fruits of their labor,” he says. “Your business is successful. Allow yourself to enjoy it!”

4) Borrowing Funds Is Typically Less Expensive Than Giving Up Equity
Equity Bank’s loan officers often remind business owners and clients about the bigger picture. “If a business is successful, giving up equity can be very costly in the long run,” says Keyes. “As a business grows, it’s going to have a value in the marketplace. If you’re at the stage to take on debt, there are a variety of ways to bring capital into a company.”

Keyes reminds his clients that instead of giving up equity—which could be detrimental down the road—Equity Bank can help by lending to your business. “Yes, we want to be repaid, but as your company and cash flow grows the business becomes more valuable—and you’re still the owner,” he says. “We’re not taking ownership or equity. You don’t have to give up future value in your business.”

3) Purchase, Replace, Repair, or Upgrade Equipment
Many manufacturers simply don’t have enough liquid cash on hand to buy or maintain equipment they need to ensure success. Equity Bank can create a loan to be amortized over the life of the asset(s). “Say you need to upgrade or purchase new equipment or need to invest in a new fleet of vehicles. Instead of trying to pay cash up front, financing can allow you to spread out the cost over a period of time—typically between five to seven years,” says Keyes. “If you need equipment to generate revenue, one way is to finance that with a financial institution.”

Plus, there are plenty of tax advantages to taking out a loan of this kind—including interest deduction, adds Keyes. “Paying off the loan over the life of that equipment makes financial sense, especially when it comes to replacing or upgrading big ticket items.”

2) Purchase Real Estate or Expand Operations
Real estate transactions are booming—everything from investment properties to business expansion. Securing a long-term loan to offset the cost of buying property makes smart fiscal sense. “Rates are very low today, especially with fixed rates,” says Keyes. “And, again, there are significant tax breaks and tax advantages when it comes to purchasing property.”

Keyes relates one of Equity Bank’s success stories—a client in the healthcare industry who had outgrown their current office. “They approached us and needed our help. We were able to assist them in buying a new, larger space—one they needed to continue expanding their operations,” he says. “We not only helped them purchase their new building, but we also helped them to finish out the space with a 25-year note.”

1) Fund Working Capital
More times than not, companies need to bridge the gap from when a product or service is sold and when payment is received. A line of credit can help with a company’s cash flow or even assist with funding the purchase of inventory. “It’s all about timing,” Keyes points out. “When you build a product or sell a service, but don’t get paid for 60-90 days, that can create a mismatch for a company’s cash flow.”

Keyes elaborates, “Whatever the case, Equity Bank is here to help. We have a large team of commercial lenders that is very skilled and adept in multiple industries. We’ll have your company’s best interest in mind. Our goal is to align with you as the business owner to reach your goals.”