Randall Castillo Ortega, Founder of RACO Investment, on How to Build a Business with a Business Loan


Small entrepreneurs often need an injection of cash to grow their business. In this regard, we lend them to businesses are the best solution. However, no one is attracted to the idea of ​​paying off the interest on a loan. While it is true that interest payments can be higher than what some traditional banks charge, you should look at this issue from a different perspective. Randall Castillo Ortega, the founder of RACO Investments and an SME lender in Costa Rica and Panama, explains how to use a private business loan to develop a business.

The question you should ask yourself when applying for a loan is: will the benefit my business will get from using the borrowed money outweigh my interest payments? If so, you can consider your interest rate to be fair. It’s definitely a good idea to go ahead and borrow the money your business needs.

Now that you are ready to get a business loan, you need to find the best way to invest it. Of course, it all depends on several factors, such as your needs, how much money you get and what your goal is. I recommend that you calculate the income you will earn using the ROI formula before investing your loan. That way, you’ll make sure that success is in your future, says Castillo.

It is essential to update the machinery and equipment that you use in your business from time to time. If you use old and faulty instruments and tools, your productivity may decrease. Plus, you’ll look bad if your business is customer-oriented. A business loan can be the perfect solution when you need to buy new equipment. The new equipment can increase your income and earnings, and you can use the extra money you generate to pay off the loan.

Do you know the term 2/10 net 30? It is a payment method offered by many providers and has advantages. This means that if you pay within ten days of your purchase, you can get a 2% discount. The other option you have is to pay the full amount in 30 days. Do the math for yourself. It may be a good idea to get a loan to pay your suppliers early to get a rebate.

The most effective way to grow your business is to sell more; it is so simple. But how do you get it? Successful entrepreneurs know that a well-targeted marketing campaign can boost their sales. But traditional marketing methods and even digital marketing methods require investment. A loan used for this purpose can be a great investment as it will generate additional sales.

Relatively modest spending on enterprise technology systems can provide you with huge benefits. Consider purchasing a good point of sale (POS) system and customer relationship management (CRM) system if you don’t have them already, Castillo says. You will be amazed at the information and all the benefits that these tools can bring you.

With business loans, you can grow your business by expanding your geographic coverage. This does not necessarily mean that you are opening a new office or location, or renting an additional warehouse for your products. You can grow your business by expanding the reach of your potential customers, targeting nearby customers through appropriate media ads. You can also run an online advertising campaign targeting a larger audience.

It is common for a business to go through periods of downturn or low activity. Sales and therefore income can drop dramatically in some months. However, you must continue to cover your fixed costs. You have to pay salaries, utility bills, rent, and other administrative expenses. Commercial lenders can help you meet your financial commitments. Once your business has recovered, you can repay the borrowed amount.

If you are in the business service industry, you can sell credit to your customers. Imagine you are a wholesaler selling your products to restaurants. You can beat your competition by offering more attractive credit terms. Additionally, existing customers may choose to purchase in larger quantities if you agree to longer credit payment periods. While this can mean higher sales and profits, it can also put your cash flow in a tight spot. This is where we lend them to companies that can provide you with a solution. If you decide to adopt this strategy, do so with caution. In your quest to increase sales volumes, don’t go overboard in providing terms to your customers. In some cases, waiting too long for your payments could hurt the business. At the very least, it could end up being a nuisance.

One of the biggest challenges any business faces is finding new customers. If you are successful, you can be sure of success. But how do you identify new potential customers and convince them to buy from you? The answer will depend on the type of business you have. You may need to call hundreds or thousands of potential customers over the phone. You may need to offer free samples of your product. Or sometimes you may need to hire a business consultant. All of these activities come at a cost and you may not have enough money. A loan could provide you with the funds you need. The investment may not produce immediate results, but if your strategy is successful, you will pay off in the long run.

Getting a business loan and paying it off on time can be a great way to build your business’s credit history. In doing so, you will create a solid record of payments made to your lenders. It will also help you improve your credit score. If you are planning to borrow money to grow your business in the near future, a higher credit score could be essential for getting quick approval and lower interest rates.

A better product or better service can attract more customers. Your investment in improving your product or service can help you attract more customers and grow your business. Concludes Castillo, remember that you may not need drastic changes in the products you offer. Often times, something as simple as changing the packaging or improving just one particular aspect of your products can lead to increased sales.

About RACO Investment

RACO Investment is a financial investment company serving small and medium-sized businesses in Panama and Costa Rica. It was founded by Randall Castillo Ortega, an expert financial advisor who has his roots in the import and export industry in Latin America. The company has helped many startups find the financial support they need to get started, and has also provided bridging loans to help those looking to restructure or improve their operations.

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