Just How Important Are Small Business Loans? You Might Be Surprised!

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Working capital business loans

If you’ve decided to make the big move and open your own business, it’s an awesome feeling and it’s a really impressive accomplishment. But you’ve probably also noticed that it’s pretty stressful, especially when finances are concerned. In fact, the U.S. Small Business Administration says that insufficient funding, along with the inability to find reasonable working capital loans for small businesses, is the second most-common reason why small businesses fail.

Really — just think about how many factors affect the amount of money your business is able to bring in, and also the amount of capital you’re able to invest in better business practices. In many cases, small business owners are struggling just to make ends meet; thinking about investing any (nonexistent) extra capital into a more efficient system or additional employees just isn’t an option.

When it comes to small business loans, there are many reasons why established businesses may need a little help covering expenses — because let’s be honest here, there are tons of little expenses that end up costing a whole lot:

  • Taking up around 19.4% of a business’s total expenses, paying employee wages is the single biggest chunk of where capital goes.
  • Inventory and rent are the second and third biggest costs for small businesses, and the average business today spends around 7.7% and 4.6%, respectively, on these two things.
  • If you have full-time employees and you provide benefits for them, benefits can requires as much as 30% of total salary costs.

And the list goes on and on!

Finding reliable small business lending isn’t always easy, but it’s sometimes essential in order to keep your business afloat. In fact, you aren’t just saving your business when you receive small business loans — you’re protecting the jobs of your employees and you’re providing valuable items and services to people in your community.


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