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Business Loans for Marketing

marketing

Have sales slowed? Has your customer list remained the same for years? It might be time to look into new marketing initiatives. 

Marketing is promoting and increasing awareness of your products and services. Its ultimate goal is to drive new business or increase existing business. You can use marketing efforts to inform customers about new products or services, offer them discounts to increase their spend, and reward loyalty. 

Successful businesses integrate marketing into their business plan. It supports growth and guards against stagnancy – which can put you out of business, if you’re not careful. But, how can you tell if it’s time to invest more in marketing? And what’s the best way to fund this investment? 

Four Signs That it's Time to Invest in Marketing

Once you reach a break even point, or profitability, in business, it’s easy to continue coasting along. With regular customers and steady revenues, why invest in marketing? Because there may be signs of problems in your business that marketing could address.

Here are four signs that it’s time to invest in marketing initiatives.

You’re losing but not replacing customers

There’s a natural ebb and flow to business – customers move away, go out of business, or no longer need your services. Most small business owners expect some attrition – but if you’re not replacing those customers, eventually your business could be in trouble.

Analyze your customer list and last year’s sales to identify lost clients. While you can reach out and try to win back their business, you should also seek to replace their revenues with other customers. 

Your business is too reliant on a few customers

If your analysis reveals that you’re too reliant on key clients, think about investing in marketing to reach new clients and diversify your revenue streams. Calculate the percentage of revenue that comes from each client. If losing one client would threaten your ability to stay in business, it’s time to diversify.  

Industry standards for revenue diversification vary, but the old adage “don’t put all your eggs in one basket” holds true. 

Sales have slipped

Have sales slowly been slipping over time? If you’ve seen a steady decline in revenues – even if you’ve kept the same clients – it’s time to start thinking about bringing in new business. Put together a marketing plan to reach new customers.

Competitors are winning your business

Is a competitor outranking you in search results? They might be investing more in SEO and content marketing. Are you losing customers to someone with a more responsive, better-designed website?

Customers look for signals in your online presence that indicate your business’ professionalism. It’s important to keep your website up-to-date, and include modern tools like online booking or ordering. A badly out-of-date website could leave them wondering if you’re even in business!  

Best Uses for a Business Loan for Marketing

Once you’ve established a marketing budget, what are the best ways to use those funds? 

Invest in paid advertising

Paid advertisements are one of the best ways to target a market in a specific area – whether it’s Google AdWords, Facebook advertising, or other social media tools. Pay-per-click advertising can be an effective way to reach customers who are searching for your business. 

Paid advertising can also be mailers or inserts, promotions in the local paper, or mail blasts. What’s effective for your business will depend upon what you offer and where you can reach your customers. 

An effective paid advertising campaign could involve trying several ads and monitoring responses. It could take several months – and thousands of dollars – to get it right. For some businesses, this is out of reach, and a small business loan could help. 

Produce more content

Inbound marketing drives clients to your website through content. A corporate blog with tips and tricks for businesses in your target markets could bring them to your website. But effective content isn’t cheap, and could involve costly tools like keyword research and paid promotions.

Consider hiring a freelance writer, a full-time marketing person with blogging skills, or a part-time marketing person to launch and maintain a blog. A small business loan can cover these costs. 

Email Marketing

A well-crafted email blast targets your audience and brings them into your business – whether it’s for a discount on services or to place an order for a new product. For email marketing to be effective you’ll need to invest in a service or software like mailchimp, pay a marketing professional or freelancer to craft catchy subject lines and the email’s body, and possibly purchase email lists. 

Track marketing data

Just like an investment in a new product line or expansion, you’ll want to track your return on a marketing investment. Are your promotions effective at reaching your target audience? How will you know without robust digital tools?

Consider investing in software, or a service, that analyzes your marketing efforts and can recommend improvements. You’ll see better results from your overall marketing strategy if it’s data driven.

Before filling out a loan application, ask yourself these questions. The answers will guide you to the best lender and loan product to meet your borrowing needs.

Best Business Loans for Marketing

Most marketing projects will be shorter-lived in nature, with a finite time frame. Hiring a graphic designer or marketing firm to design new logos, brochures, and a website. Hiring professionals to write and execute a content strategy to drive inbound marketing. 

Because of this, the best business loans for marketing are short-term in nature, designed to fund the project to completion. 

Short-term business loan

A short-term business loan helps small business owners over a period of one to three years. You can borrow as little as $15,000 to fund a smaller marketing push, up to $750,000 for larger projects. 

Most traditional lenders prefer to work with borrowers who have credit scores above 720, with a longer repayment term and higher loan amount. This maximizes their profits. But if you have a shorter term need, an alternative lender can help. 

To qualify for a short-term business loan you need two years in business, a minimum credit score of 650, and minimum monthly revenues of $10,000. 

Bad credit business loan

Borrowers with poor credit might have difficulties getting approved for a loan from a traditional lender. Banks prefer to work with small business owners with stellar credit, multiple years in business, and excellent cash flow. But if your sales have dipped, and your marketing goal is to drive new business, they might not work with you.

A bad credit business loan helps borrowers with scores as low as 500 qualify for funding. After just two months in business you can take out a loan between $5,000 to $1.0 million, depending on your monthly revenues. While interest rates range from 12% to 45% – a reflection of the risk borrowers with low credit scores pose to lenders – it’s a great option for small business owners seeking to solve the problems that might have hurt their credit in the first place.

Merchant cash advance

Businesses that do a large volume of credit card sales are excellent candidates for merchant cash advances

When you apply for a merchant cash advance or MCA the lender analyzes your last few month’s credit sales. With this data, they prepare a projection of future sales and then advance a sum based on this amount. Repayment is easy – a percentage deducted every time you swipe a card.

A MCA’s repayment schedule aligns with your sales, which makes this loan product an excellent choice to fund marketing. Successful marketing will increase sales, so as the money you borrow is put to good use it’s also repaid. Cash flows align, assuring that the loan’s repayment plan won’t hurt your daily operations.

If you have a credit score as low as 500, two months in business, and minimum monthly revenues of $8,000, alternative lenders will offer a MCA.

Business line of credit

What if you don’t have a concrete marketing plan in place, with fixed deadlines and release dates? What if you plan to try an email blast one month, or a mailer another month, and perhaps content marketing? If you need more flexibility in a loan product, look into a business line of credit.

Similar to a credit card, lines of credit can be drawn upon as needed. When your public relations firm’s bill comes due, take the funds from your line of credit. You only make payments when you’ve taken an advance, though you may pay an annual fee to keep it open.

Interest rates range from 5% to 10%, which is much better than a business credit card. Borrowers with credit scores of 650 and above and six months in business should qualify.

Before borrowing, have a plan in place for how you’ll use the funds. Put together a budget of forecasted marketing expenditures so that you know how much to request from the lender. Then reach out to an experienced lender like Shield Funding to meet your borrowing needs