Having a Virtual Office is Good for the Bottom Line
If you are a business owner looking to expand into a new geographical area, a lender may be reluctant to provide you with a loan for a brick-and-mortar office space. Commercial spaces cost a great deal, and unless you already have a strong client base in the area to which you are looking to expand, buying or leasing a building can be a major risk. Given the amount of capital required and the risk involved, a lender may feel uncomfortable giving you the loan you need.
A virtual office is a far less significant investment. When you opt to do business from a virtual office, you save a bundle on your overhead costs. You are not responsible for property taxes or administration fees—you pay your company's rent to the virtual office provider, and that is the end of your financial obligation. Thus, a virtual office is far less of an investment on your part. Having a low overhead cost means you keep more of your revenues, which means you are more likely to be able to pay your loan. Thus, lenders will see you as less of a risk because you have a higher profit margin.
Your Virtual Office Leasing Agency Can Be a Reference
If you have been working out of a home office, you may struggle to be approved for a loan. Many lenders require borrowers to have references, and you may not have built up such references if you work from home. Even if you rent your primary residence, commercial and residential tenancies differ in myriad ways, so a residential landlord is a less than ideal reference when applying for a business loan.
In contrast, a virtual office leasing company can act as a strong reference for you when you apply for your loan. Your virtual office provider can attest to the fact that you pay your business' rent on time every month, which is exactly what a lender will want to hear.
A Lender Gives You Credit; A Virtual Office Gives You Credibility
Working from home has many benefits, but one major disadvantage arises when you apply for a business loan. When evaluating your application, a lender wants to see that you are credible. A lender wants to see that you are serious about making your business succeed. If you work from home, you have few financial resources invested in your business. By renting space in a virtual office, though, your lender will see a corporate address and corporate contact information. It is then clear to the lender that you have invested something valuable into your business, with the hope that you will receive a larger return. The fact that you have skin in the game serves as evidence that you will be responsible and dedicated; it demonstrates that you are committed to your business and that you want to maximize your returns on your investment. Having a virtual office proves to lenders that you take yourself and your business seriously, which means your lender can take you seriously, too.
Acquiring a business loan can be difficult in the present economic climate, but for many business owners, getting funding can be the difference between success and failure. A virtual office can demonstrate to lenders that you are serious about succeeding, that you know how to manage money, and that you pay your bills on time. To a lender, this all makes you less of a risk—and a more likely candidate for a business loan.