Six Ways to Use Small Business Loans

Very few businesses can grow over time without some type of financing. In fact, nearly half – 43 percent – of all American businesses applied for small business loans last year, according to NerdWallet. If you’re planning on joining their ranks this year, it’s important to know how you’re going to use that financing.

Knowing exactly what you’ll use your small business loan for – and how you plan on paying it back -- won’t only be important to your lender, it’s also important to your overall strategic plan to build your business. Here, we review the top six ways to use small business loans to help get you started.

Startup Costs

Getting your small business off the ground takes time—and money. If you don’t have enough capital to carry you through the first year, consider applying for a small business loan. It can help cover a variety of startup expenses, including employees, technology, and advertising.

Not all financial institutions offer small business loans to startups, however, so consider applying with a preferred SBA lender such as FirstCapital Bank of Texas. With options that cover startup costs, SBA loans offer longer terms and lower down payments than conventional term loans, making them an affordable solution.


Marketing can be key growing your business, enabling you to attract new customers and deepen your relationship with existing ones. But marketing takes money. Whether you’re undertaking a traditional print media campaign or looking to create a presence for your business via social media, email or events, a business-building marketing strategy can be a smart way to use your small business loan.


Already growing and ready to expand your business? A small business loan can help make that possible. It can be used to hire new employees, move your business to a new (and bigger) location or to purchase additional equipment. At FCB Texas, you can finance up to 90% of that expansion at a competitive rate that’s fixed for three years for easier budgeting and added peace of mind. 

But before you apply for this (or any) loan to finance your expansion, make sure to review your recent business performance and make projections for the next few years with different potential scenarios.

Debt Consolidation

If your business has several outstanding loans – or ones with high interest rates – consolidating those loans into one small business loan can make your debts much more manageable, especially if you are able to secure a lower interest rate or decrease the size of your monthly payments. You may also be able to go for loan with a longer term, which can give you more time to pay off your debt and reduce your monthly payment even further.

Product Development

Developing a new product usually takes an infusion of cash. Whether you’re adding to your product line, or are ready to enter a new market, a small business loan can give you the cash you need to hire the employees and buy the equipment to bring your product idea to life.

Securing small business loans for that equipment can be relatively simple. Most financial institutions will lend money for new equipment because they can easily calculate its depreciated value over time. But take it slow: experts suggest breaking the development process into phases and getting small business loans for each so no more money in invested until the previous phase is successful.

Seasonal Lulls

Maintaining a consistent cash flow can be tough, especially if your business is seasonal. A small business loan is one way that you can bridge that cash-flow gap during down times. The best option: a business revolving line of credit. Why? Because you can easily access the money you need when you need it – and only pay interest on the funds you actually use. Plus, with a revolving line, the money becomes available to you again as you repay what you’ve borrowed. This influx of money can keep things running during off-peak season; use it to stock up on inventory, update your equipment or make payroll.

Whatever way you plan to use your small business loan, start by doing your homework. Research your loan options, interest rates and terms (including the fine print) and the lender’s reputation. At FCB Texas, we’ve been financing businesses like yours since 1998. Contact us to find out more.