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The UK Government has provided startup loans to a total of 100,000 small businesses, giving more than £941 million in support. While this is a significant achievement for the scheme, startups need to ensure that they use this money wisely and make the most of it to grow their businesses. Here are three ways to stretch your business loan and make the most of the support offered.
Separate personal and business spending with a business credit card
Using a business credit card is an excellent way for startup owners to separate their business spending from personal expenses. This approach will help them manage their loan effectively and avoid covering personal expenses with their startup fund. Business credit cards come with a range of benefits, including lower interest rates, higher credit limits, longer interest-free periods, and discounts for early repayments. Using a business credit card can also help startups build credit for their companies, which can be useful later on.
Focus on purchases that generate revenue
Deciding which purchases should be made first with a startup loan can be challenging. In general, it is best to focus on items that will generate revenue for the business to increase the budget that they have to spend. Every item that a startup buys with its loan should be considered an investment, and the entrepreneur should ask whether the investment will generate good returns for the initial cost. If not, it is probably wise to leave this until they have more money to spend. It is better to invest the loan in creating new products to sell, for example, rather than purchasing a swanky new office.
Use what they already have
One of the best ways for startups to stretch their budget is to make the most of the resources and connections they already have. This means harnessing the skills of friends, relatives, colleagues, and business partners to save money elsewhere. Startups should ask around and find people who are great at social media marketing, financial planning, or even selling products. At the beginning, it is good to make the most of anything that they can get for free. Of course, startups cannot expect people to provide free services forever, but there is no harm in asking when they are starting out.
The UK government-backed startup loan is an excellent way to get a business off the ground. However, taking out a loan on its own may not provide all the support that startups need. They need to use the money wisely and make the most of it to grow their businesses. Using a business credit card, prioritising purchases, and using free resources where they can are just a few ways to stretch a startup’s budget. Startups should always remember that the loan is an investment, and every decision should be made with a focus on generating revenue and achieving long-term success.
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