6 Ways to Invest Your First Small Business Loan

4 min read · 2 years ago


How should you invest your small business loan? These six ideas will show you where your first investment can do the most for your company’s growth and development.

When investing your first small business loan, you will want to make sure that you get the highest possible return on your investment (ROI). This means spending it on the areas of your business that stand to make the most impact on your bottom line. 

You will need to refer to your business plan and the strategy that you’ve put in place as a start-up company. From there, choosing the right investment strategies will ensure that your business has the resources it needs to carry out your plans and processes. 

To kick off your financial brainstorming session, here are six ways you could invest your first small business loan to accelerate growth, inspire income, and help your business take shape.


Where to Invest Your First Loan for Business

There are many reasons why you may have secured a loan for business. Perhaps your company needed real start-up capital or a cash injection to grow a product line. Maybe you’re ready to test your model and see your vision come alive. 

Whatever your reasons—the next step is the most important: what do you do with those borrowed funds so that you end up with a positive return? More specifically, how do you actively increase profits and drive business growth with whip-smart investment strategies?

If you were improving your house, investing loaned money in a kitchen remodeling project would be better than putting in a swimming pool. One improves overall value, while the other creates an ongoing expense. 

Where you invest will determine if your loan is fruitful or not. Here are some of the best ideas to get you started—consider each of them carefully when choosing where to put your money!


#1: Create a Cash Safety Net

A great way to immediately free your small business from the constraints of the day-to-day hustle is to create a cash buffer or safety net. After all, cash flow is king!

A cash buffer will act as a contingency plan if the flow is ever interrupted. You’ll have immediate access to working capital to take care of business. By keeping a cash reserve, your company will be able to operate at full capacity without interruptions—and through problems—even as they arise.

The return is simple—even through lean times, your company will be able to pay salaries, partners, and takes care of expenses on time, every time. Companies with a buffer bounce back from negative cash flow quicker and more consistently than companies without one.  


#2: Business Improvements

Your business loan would also be put to good use on specific business improvements. If you’ve identified an area of your business that needs to be improved to expand your customer base or profit margins, then a small business investment there makes sense. 

  • Revamp your business plan or pivot to a new market
  • Expand your product or service offering
  • Get a business website with an online store 
  • Invest in a new POS system
  • Track your finances better
  • Upgrade important technology
  • Update your legal status

You can also do everything mentioned above with a single service to keep costs low. This will give your business the sound infrastructure it needs to reach new heights.

#3: Marketing Returns

One of the best places to invest your small business loan is in your marketing efforts. This is especially true if you’re just starting and need a way for people to reach your company online. Creating a web presence and driving traffic to your platforms is instrumental to business expansion.

You should also consider investing in marketing analytics tools to help you better measure the performance of your campaigns, website, and other types of content. 


#4: Customer Satisfaction

Of the many kinds of investment strategies you could choose from, one focused on customer satisfaction, retention, and conversion is a safe bet. Your customers are the lifeblood of your company—keep them happy, and you will grow. 

Think about improving your customer experience, whether that means investing in faster shipping, better packaging, or a fun rewards program that they can access from your website.

#5: Employee Development

A business loan usually sees real returns when you invest it in your employees. Whether that means expanding your workforce to alleviate pressure or allowing existing employees to develop much-needed skills—what you put into your team matters.

Your business growth is directly tied to how your people perform, so investing in initiatives like mentorship, training, or creating mechanisms for feedback, pay off in the short and long term. 


#6: Personal Development as a Leader

It’s an understatement to say that your leadership is important! Strong leaders who invest in themselves tend to grow their companies faster than others. If you need to develop a skill, attend a seminar that will make you better at leading your company—it’s a high return investment.

Use your small business loan on that course on negotiation that you always wanted to take. Attend those workshops on how to create a powerful brand identity. Buy leadership books! Become a well-rounded leader that will be able to increase profits at every stage of growth.

When you choose to invest your loan in one of these core growth areas, you’ll see a good return. Just remember the six areas that are safe for investment. The first is to create a cash safety net to stay on track and in the green, even in lean times. 

The second is to make sound business improvements like using this groundbreaking business infrastructure tool that enhances everything from your business plan to your finances and online business presence. 

You can also invest in making your marketing returns and customer experiences better. Finally, look at developing yourself and your team for longer-term results. 

Use your small business loan in any of these six key areas to enjoy significant growth in the future!