Gearing up for Spring Season with Low Rate Loans!
Welcoming the spring time generally means increase in spending by consumers and increase in sales of the retailers. After a long and dreary winter season where people do not like to venture out unnecessarily, spring time means the weather is getting warmer and summer is right around the corner. This means people will now seek to buy and to invest in things they did not do in winters.
How does weather affect spending patterns?
Different weather means different types of spending patterns by the consumers. As we can already see, winter means slow business for most companies and as soon as the spring time comes in, there is a surge in business activities for most businesses across different industries. Whether you are a small business, a mobile company or in the wedding industry, there is similarity in the sales trends for this season.
- Adverse weather means shoppers stay home. If you are running a small business that generally relies on shoppers coming down to your store, then spring time means a boost in sales.
- Warm weather means shoppers go out. After a long winter, now shoppers can decide to spend on outdoor activities like gardening or home improvement.
- Surge in car sales. Spring is that time of the year where the car sales are up by at least 10-20% as compared to the yearly average. It is also when the car models of the previous years are selling for lower prices.
- Spring means shopping for later. According to research, most of the customers start shopping for summers when spring sets in. If you are in the wedding industry, you can get ready as the summer brides will start planning their wedding from this season.
- Increase in mobile usage. According to research by Google, the usage of mobile generally increases in summer months because people are spending more time outdoors.
- Planning for summer. Spring time is where the consumers are planning for outdoor parties, graduation ceremonies and more. Spring time is when these promotions work for those consumers who are planning ahead.
Spring time also means the tax season!
With the rise in sales and the rates of interest going down, most businesses are having a good time, with a positive outlook for the coming months. Around the spring time however, is also the tax season. Tax season may be quite a challenge for many businesses, as it requires a lot of time and energy to meet all the requirements that are associated with it. The best thing to do however is to prepare for the tax season from before and it will pass by in no time!
How to prepare for the tax season?
Prepping up for the tax season is no rocket science and can easily be done and the key to doing so is simply to “track” everything from before. It cannot be done overnight and this means that you would be required to record every income and expense, whether you think it is important or not. There are certain documents that you must keep with you at all times, such as bank statements, receipts, sales slips as well as invoices. Other considerations that you must keep in mind are as follows.
- Set an accounting system. In order to prepare for the tax season you must have your accounting books in order. You may use automated accounting software to do so which are made especially for small businesses.
- Pay and go. You can pay taxes to the IRS as you earn your income throughout the year. Payments are to be made as estimated tax payments.
- Keep your personal and business expenses separate. Never mingle these two as it may even hinder you getting a business loan. It is a better idea to open a separate business account, set up a separate legal entity. Failing to keep these two expenses separate will waste your time trying to distinguish between your personal and business expenses at the end of the year.
- Hire an expert. Most businesses can really benefit from the services of an expert to help them with their taxes. An expert accountant can be consulted every quarter to help you before the tax season.
Welcoming Spring time by the business owners
So whether you are a small business owner who relies heavily on walk in customers or in the car industry or even a simple retailer, you can expect your sales to go up when winter is finally over and spring time is here. However, spring time also means that the loan rates are also generally low, as they are currently. This means, it is the best time for business expansion as loans are available to them for a lower rate. So whether it is opening up of another branch or moving to a different location, it is the best time to take advantage of the low rates of loans and finally expand your business activities and take advantage of the low loan rates.
Why do business borrow?
There are many reasons why a business may borrow or take a loan. Just because there are low rates of loan does not justify a business taking a loan from someone, rather it is also the necessity that drives it. Businesses may need to borrow funds regardless whether the lending rates are low or high if there is a dire need. However, other business plans that can be delayed for later and requires heavy funding can be materialized when the loan rates are low. For example, a business must meet its working capital requirements, which are for the short term by borrowing at which ever best rate they can get, which is for throughout the year. Other long term loans, which are for longer term, may depend on a timeline and when the business can get the best rate. For example, a business may want to move to a different location or open up a new branch which obviously requires heavy investment and as such, may wait for the right time where the cost of borrowing is the cheapest.
Reasons for taking loans
- It can be to meet cash flow requirements
- To renovate the business premises
- To expand the business activities
- To open up branches in other locations
- For hiring additional workers
- For spending on marketing and advertising
- To buy equipment or machinery
- To spend on training of the staff
- To improve the layout of the premises
- To buy supplies
Low interest business lending
If you have a business with strong credentials, which means a good personal credit score and strong financials along with being in business for at least a couple of years then there are more chances you would be able to qualify for a low cost borrowing option.
What determines whether you will get a low cost loan or high cost loan?
There are many factors which make the cost of financing high or low. It depends upon the going interest rate, of course but also on the business that is applying for the loan. The amount and the tenure of the loan matters as well.
- Personal credit score
The personal credit score of the borrower is very important. It basically shows how reliable the borrower is with their personal debts that they have taken in the past, this determines their willingness to repay the loan they are applying for. If you are a small business owner, you cannot separate yourself from the business financials. This means that if the borrower has a low credit score then the loan becomes risky for the lender and the chances of them getting their money back reduces to mitigate that risk, the lender would charge the borrower a high rate of interest. On the other hand, a good credit score will make you eligible for low interest rates.
- Time spent in business
The amount of time you have been in business is yet another factor that determines the rate of interest that would be charged. A new business is more risky than an older, established one since research has shown that new business survival rates are low. This implies that a new business may not be around to repay their debt and so, the new business tend to get charged with higher rates of interest on their borrowing to mitigate that risk.
- The industry
Another factor that plays an important part is the industry that the business operates in; if it is a risky one then obviously the rates would be higher. Most lenders consider the restaurant business as risky business due to their affordability to repay the loan; as such they are charged higher rates.
- Ease and speed of the borrowing
Generally the longer time a lender takes to review your request for the loan, the higher the possibility you will get a loan with a low rate since they are doing all of their due diligence. This is usually the case with traditional banks and SBAs. While other alternative lenders may provide faster loans, but would probably charge higher rates of interest for disbursing the loan quickly.
- Term of the loan
The term of the loan is also an important factor that can impact the rate of the loan. There is usually a higher rate of interest for longer term financing because it is harder to make economic predictions for the long term due to volatility in the market.
Business funding option
At some point in time, all businesses need to borrow money in order to expand or grow, to meet their daily expenses or simply, in order to survive. When it comes to small business owners, the majority of them will probably use their own savings and personal assets to invest in their business and sometimes, may even borrow from friends and family. Others may also use their personal credit cards to make ends meet. As a business grows, these ways of financing become insufficient to meet the business capital requirements and as such, the business needs to raise the funds from either selling their equity or from traditional financial institutions.
Small business loans
A business may go for low rate loans from large or small banks, community banks, marketplace lenders, alternative lenders, etc. The small business loans are usually the best option for small businesses, especially if you are looking for the low rate loans with least amount of hassle and unnecessary paperwork. It also takes less processing time as compared to the traditional lenders.
With the spring season setting in, it is time to make changes for the business, for the better. It is time to be prepared to pay your taxes, yet take full advantage of low cost borrowing options – thanks to the low interest rates being offered. The spring time is for sales to shoot up and an overall positive outlook for the business. The best that a business should do is to do their homework right and settle for the best possible option for low cost borrowing for the business future. There are many lenders to choose from and a business should always go for one with not only the lowest cost of borrowing but with a financial institution that they have a good relationship with.