Companies That Have Taken a Business Loan & Benefitted From It
Small companies may obtain business loans from banks, credit unions and other sources like https://alchemylending.com for a variety of reasons. These banks, credit unions, and other sources either lend loans on the basis of a credit score or on the basis of business potential a company may have. Other times, the loan is issued against some kind of collateral like a piece of property or some other asset.
Lending money is always risky for the lender when you’re a small company but, regardless, it is still very common and has proven to be crucial in the case of many start-up businesses. Debt financing is an important way of financing for a business and, hence, companies benefit from it big time.
Reasons for obtaining a loan:
One of the major reasons small companies take loans is to purchase equipment and real estate. Banks lend companies loans for this reason relatively easily because they see that the company is trying to grow and expand. In addition, the real estate is used as collateral.
On the contrary, the loan given for equipment is an intermediate loan for 10–15 years. Companies can also decide to lease the equipment instead of purchasing it all at once.
Loans are also acquired by small companies for purchasing inventory. Such loans are for a short term and companies usually clear their dues when they make enough sales.
Lastly, small companies obtain loans and benefit from them for day-to-day operations. Start-up companies want to increase their working capital and these loans help them achieve that until they have sufficient capital to cover their costs.
Examples of companies that succeeded by acquiring a start-up loan:
Many companies have at some point required some amount of money to get their business off the ground and going. In this article, we will mention some of the greatest and wealthiest companies of all time that required a start-up loan to commence business.
Starbucks: Let’s consider Starbucks, one of the largest companies in the world. Today Starbucks earns revenue of $10 billion per annum! It started out in 1971 with each owner investing around $1350. however, soon after, they borrowed $5000 from a local bank. Starting with just selling coffee beans, their business grew and they started selling coffee, teas, and other drinks. Shortly after that, the business started skyrocketing and it wasn’t long after that they were opening up additional stores in multiple locations.
Domino’s: Another example is the well-known pizza brand Domino’s Pizza, which was formed in the 1960s. Domino’s also started out with a loan – they borrowed $600 from a local bank. One of the founder’s of the company left it and so, the other one continued alone. Currently, Domino’s caters in around 55 countries and earns a revenue of $264 million.
The Body Shop: Similarly, The Body Shop also started out with a loan. The founder, Anita Roddick, took a loan of £5000 to purchase skincare ingredients to start her new company. Her daughters helped her in her business when she opened her first shop in Brighton. She also engaged in social awareness activities that made her brand successful. Later, The Body Shop was sold to L’Oreal for £652 million.
Walmart: Sam Walton, the founder of Wal-Mart, instead of taking a bank loan, took a loan from his father-in-law of $20,000 to buy a new shop in Newport, Arkansas. In three years, his business took off and his revenue went from $80 to $225,000.
To conclude, many of these successful businesses have taken some kind of loan and have benefitted from it. The loans are not necessarily huge but are a little something to get them going. So, don’t hesitate and grab that loan now for you never know that, one day, it may be your company being mentioned in such lists.