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6 Primary Business Expenses Your Small Business Loan Should Cover

Written by Banks Editorial Team

Updated April 22, 2021​

4 min. read​

If you have taken a small business loan, prioritizing your business expenses can make your capital last longer. Getting access to loan capital can feel like a breath of fresh air. Finally, your business can move forward and you don’t have to worry about finances.

While it’s true that you won’t need to worry about where you’ll get the money to pay your bills and invest in growing your business, you still need to concern yourself with how you spend your loan.

Statistics show that 29% of small businesses cite running out of capital as the reason for going out of business. Some businesses run out of money because they didn’t borrow enough money, while others didn’t prioritize their expenses. You can avoid a similar fate by being smart and frugal with your loan.

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Prioritize Necessary Business Expenses

No matter how necessary some business expenses are to the overall function of your business, it’s not automatically a priority. For example, you’ll need a powerful email marketing application at some point, but when you’re just launching your business, you can start with free or cheap software.

Which expenses are a priority? That depends on your industry and your individual needs. If you need help identifying your priority expenses, the following list of critical expenses – in order of importance – will help.

Primary Business Expenses

1. Legally Required Fees

The number one priority expense for every small business should be the fees you’re legally required to pay in order to operate. These can include:

  • Property taxes (commercial or residential, depending on where you work)
  • Business insurance policy fees
  • Car registration and insurance, if applicable
  • Certifications, permits, and licenses
  • Federal and state income taxes
  • Any other expense legally required for you to operate your business

Failure to prioritize legally required fees can result in hefty fines, potential jail time in some industries, and being forced to close down your business.

Once you’ve taken care of your legal obligations with your loan money, your next priority should be safety and security.

Physical Safety

If you’re operating out of a physical location with employees, spare no expense getting the building up to code to create a safe working environment. If your employees work out in the field, make sure they have all the protective equipment necessary to stay safe.

Talk to a lawyer and find out if you’re required to carry workers’ compensation insurance. It’s a good idea to carry this insurance even when not required; however, it’s not optional for many businesses.

Last, spend time developing your organization’s health and safety manual. For some industries, a health and safety manual is critical for everyday operations. For instance, health regulations are strict in the food industry and it’s up to businesses to train employees to current health department standards.

In some states, certain employees are required to get state certified food handler cards, while managers are required to take more extensive training courses. A health and safety manual will be helpful to refer to while training new hires and reinforcing policies and violations with existing employees.

Physical Security

Is your company dealing with sensitive information that requires a secure building with restricted access? If so, don’t hesitate to invest in electronic locks, key cards, and other high-tech security measures. This type of security will be a significant expense, but it’s critical to have in place from the start if you want to protect your information and equipment.

Digital Safety and Security

If you’re using any kind of digital infrastructure, you need to prioritize cyber security. For example, if you’ve got a website, cloud hosting, cloud applications, servers, or networks, you’re a potential target for hackers. Statistics show that hackers target small businesses more frequently than any other organization because they expect to encounter less sophisticated cyber security protections. Most of the time, they’re right.

Connect with an IT security specialist to secure all of your digital business components as quickly as possible. You don’t want to leave your cyber presence unprotected, even for an hour.

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Investing in your employees – even if you only have a few – is a critically important expense. If your organization isn’t pleasant to work for, your team will go somewhere else.

To invest in your employees, you need to cover the basics like providing health insurance, a paid vacation plan, paid time off, and paid sick leave. These have been considered benefits in the past, but today they’re expected and paid sick time is now required in some U.S. states and counties.

To go a step above basics, invest in your employees’ wellbeing by getting ergonomic furniture, good quality computers, and spend time consulting with industry experts to create a training program that produces results.

4. Marketing and Promotion

Few businesses can get away with success through word of mouth alone. No matter what industry you’re in, you need a professional marketing and advertising campaign.

Unless you have a background in marketing, the worst mistake you can make is doing your own advertising after watching a few videos on YouTube. The marketing strategies you’ll find on YouTube are generally good, but they’re impossible to execute without a full marketing plan.

You need to invest in a strong marketing campaign to get your business off the ground. Marketing isn’t something you can throw a few bucks at here and there when you’ve got some extra cash. Marketing isn’t a once-off type of strategy where you run ads whenever you can. An effective marketing campaign incorporates a multitude of components that work together to achieve a specific end goal. Those components include:

  • PPC ads on various platforms like Facebook, Google, and Instagram
  • Sales letters written by a professional copywriter for your website’s landing pages
  • Ad copy written by a professional copywriter
  • Articles for your blog written by a professional content writer
  • Content marketing with content written by a professional content writer
  • Direct mail marketing
  • In-app ads
  • Email marketing campaign
  • Retargeting campaign for PPC ads
  • Advertising on prominent websites in your industry
  • Establishing partnerships with other businesses
  • Setting up booths at trade shows and conventions

These are just several marketing components that work together seamlessly through an overall marketing plan. For optimal results, these components need to be executed together as part of a larger plan rather than as individual tasks to check off of a list.

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5. Ongoing Product Development and Expansion

Once you’ve got the above expenses taken care of, it might be time to invest in product development or business expansion. Obviously, if you launched your business with a product, you’ve already done some product development. However, if you want to innovate and expand, you’ll need to continually invest in product development.

6. Continuing Education

Nobody ever truly stops learning. No matter how long you’ve been in the business, you can always learn something new. Learning new things in your industry will help you stay on top of your game and keep up with your competition.

Continuing education is also tax deductible, which means any courses, books, seminars, or learning materials you purchase related to learning are a tax write off.

Find a Small Business Loan

If you’re ready to take your business to the next level, a small business loan can help. Applying for a small business loan is fast and easy with Just fill out one application and if you’re approved, you’ll get access to offers from multiple lenders. Compare your offers and choose the loan that’s right for you. With multiple options to choose from, you’ll never have to wonder if you made the right choice.

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