8 Ways to spend your small business loan effectively

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Congratulations! You’ve compared rates and terms to find something which suits your needs, been through the small business loan application process, and finally been approved for a cash injection.

But what next?

The answer you choose to this question will have big implications for your business. This guide explains how to use your small business loan to take your business to the next level.

How to grow your business

business documents on office table with smart phone and laptop computer and digital graph business with social network diagram and three colleagues discussing data in the background

The guiding principle is to focus on things which facilitate growth and expansion, as well as make sensible spending decisions which lead to a Return on Investment (ROI) on the money you have borrowed. The worst case scenario is using your loan ineffectively and having to borrow more money later.

Our best advice: keep your business goals in mind.

If you’ve been through the small business loan application process it’s quite likely your goals will be fairly well established, as you will have had to demonstrate effective business management to be accepted; make sure your spending reflects these!

Don’t spend just because you can, and don’t let the flush feeling make you too generous with the company credit card.

How to spend your small business loan

young multiethnic business people group walking standing and top view

A small business loan opens up many options for growth and expansion. Here are some of the things businesses often spend their loans on:

  • Inventory

A loan can provide cash flow to allow you to replenish existing stock and to buy new stock at the most opportune time. A fresh, up to date inventory broadens the reach and appeal of your product range, hopefully leading to more customers made happier by a bigger choice.

Retail stores are a prime example of businesses who can benefit from spending on inventory.

The benefits include wider product selection, happier customers and more repeat custom.

  • Equipment

Large purchases become more attainable with a small business loan. You may decide to buy existing machinery or vehicles to broaden the capability of your business or to upgrade existing ones to increase their efficiency.

Logistics firms can benefit from outlay on expanding the size of their fleet, or replacing vehicles with more efficient models.

The benefits include more effective machinery, a more efficient fleet, and reduced maintenance and upkeep costs.

  • Marketing

Attracting new customers and keeping existing customers loyal is a goal of pretty much every business.

With a small business loan, you may decide to hire new staff to increase your internal marketing capacity, or to invest in marketing software and systems. Almost any business can benefit from increasing its marketing spend!

The benefits include increased brand visibility, better marketing insights and a higher chance of generating a return on investment (ROI).

  • A new website

With nearly 60% of searches coming from mobile devices, having an out-of-date website is now a cardinal sin.

Many businesses baulk at this type of expense, but the penalties associated with being behind the curve – both in terms of brand perception and customer conversions – are increasingly punishing.

As with marketing, almost any business can benefit from a refreshed web presence.

The benefits include modernity, higher search engine rankings which lead to more traffic and potential customers and enhanced brand perception.

  • Hiring and training

Investing in your staff is a win-win; they feel secure and valued in their job, and you benefit from their improved expertise and efficiency.

A loan opens up opportunities for staff development or allows you to hire new staff members.

Companies with active sales departments could benefit from expanding their team, for example.

The benefits include a more engaged and motivated workforce, better staff retention, and increased internal resources. 

How to make your loan go as far as possible

Business team meeting in office

The administrative side of things is less glamorous than your new bank balance, but keeping on top of this side of things ensures sensible and effective use of your small business loan, and prevents common business spending mistakes.

Here are our top 3 tips: 

  • Keep the loan in a separate account to your usual business account, and transfer money across as and when it is required.

This step adds another layer of consideration to purchases, making it hard to spend impulsively. The worst-case scenario is spending creep, where daily business spending eats into the loan and reduces your capacity to make big investments.

  • Don’t spend the loan all in one go.

For small business owners, a sudden influx of cash can be exciting and empowering, but it is very important to stay disciplined. Think each planned spend through and compare them to your business goals. Stick to a budget so you know where your money is going. Additional money represents a fantastic opportunity to take your business to the next level if used correctly. 

  • Maintain a good relationship with your lender.

Keeping a dialogue with your lender and making payments on schedule (or even ahead of schedule if circumstances allow) is a good way to ensure a healthy relationship. If you need to borrow more at a later stage, delay payments temporarily, or discuss any other unforeseen circumstances, a good rapport provides a better foundation for this type of conversation. 

At Access Commercial Finance, we have years of experience helping small business owners to take their businesses to the next level. If you have questions about how to apply for a small business loan, how to spend your loan effectively, or how to avoid common business spending mistakes, get in touch. We’ll be happy to answer your questions.


Malika Street

Malika Street

With over 5 years as a copywriter for several top UK marketing, funding platforms, banking & property investment firms. Malika has produced top-quality articles for readers throughout the UK.