Is Your Small Business Ready for Growth? You may be able to serve more customers if you open a second site or increase your income by expanding your product line.
Whatever your business growth needs, you need cash and capital to make it happen. Finding the right loan is the key to the future success of your business.
Is your business ready for expansion?
How do you know if it’s time to expand your business?
Consider the market you are in. Have you saturated what you can do there and is there a new market you want to capture? Do you find new customers drawn to your product and know that with a little marketing you could be successful in expanding your reach?
Or maybe you’ve considered a new product that you could sell. All you need is the working capital to buy inventory, resell it, and resell it.
Perhaps you have the opportunity to buy a competitor and take more market share. Or maybe you are so busy that you need to hire more help.
These are all signs that now is the right time to grow your business.
How to finance business expansion
Opportunities require investment, and not all businesses have the capital to grow. Fortunately, there are several types of loans to help borrowers do just that.
The idea is that by borrowing money to help your business grow, you will earn more money, which will make it easier to pay off debt. It is an investment in the future of your business!
In this article, we’ll take a look at your options for small business loans that you can use to hire staff, pay for marketing, renovate your space, or even use to refinance old debt.
Small Business Loan Options for Business Expansion
Now let’s take a look at your small business financing options, from working capital loans to credit cards. Keep in mind that there are a variety of options available to you, regardless of your credit profile. Financial institutions like banks, credit unions, and online lenders all offer a variety of financing options.
Established businesses with good credit can take advantage of favorable loan terms from a traditional bank or credit union that offers term loans. These generally offer the lowest interest rates.
Some lenders are allowed to offer SBA loan programs like the SBA 7 (a) loan and microloans. These loans, backed by the Small Business Administration, can be easier to obtain than traditional loans and also offer low interest rates. SmartBiz is one of those lenders.
If you like the idea of having access to cash when you need it (rather than having it all at once like with a loan), consider taking out a business line of credit. You just have to pay back what you borrow. OnDeck offers a great line of credit option.
If you are looking to grow by purchasing new equipment, an equipment loan is ideal. The machinery or vehicle you buy serves as collateral for the loan, which can help you get lower rates. Check out LendSpark for affordable terms.
Commercial real estate loans
Maybe expanding is like adding a new location to your business. In this case, a commercial real estate loan can be useful. These have long repayment terms (25-30 years, usually) and a low interest rate. SmartBiz is an option worth considering.
Short term loan
Maybe you just need a quick injection of cash to buy inventory or supplies and know you could pay them off in a matter of months. If you don’t have the high credit scores required for a long term loan, consider short term loans like those offered by LendSpark.
Business credit card
If you just want a way to pay for your purchases when you make them, consider a business credit card. Look for one with a 0% introductory APR and rewards.
Is a Business Expansion Loan Right for Your Business?
Small business owners who have the opportunity to grow their business may not do so if they don’t have the capital on hand. But that shouldn’t limit you, as there are so many loan options available.
Ask yourself if the investment you would need to make (hire help, market, buy stocks) would earn you enough profit to cover the loan debt. If the answer is yes, a business expansion loan might be a good idea.
What to Consider When Choosing a Small Business Expansion Loan
There are many types of loans that you can use for small business expansion, and each of the lenders in that space will have different criteria for qualifying small businesses for financing.
What is your credit situation, including your business and personal credit score? If you have exceptional credit, you may be able to get low interest rates, which will lower your financing costs and your monthly payments. If your credit isn’t good, the cost of the loan you get may be more than the profit it could help you make.
How long have you been in the business? A startup that has been around for less than two years may not qualify for an SBA or bank loan and may need to consider a short-term loan.
Carefully consider the loan amount you want to apply for. It can be tempting to buy more than you need, but can you afford the repayment terms if your monthly payment is high?
Another thing to know: some loans will require a down payment or a guarantee. Do you have cash or assets available for this?
Also, consider the potential costs of a loan that are not obvious. For example, are there prepayment penalties if you want to prepay the loan? Late fees if you miss a payment deadline? These can increase the cost of the loan.
How to Prepare for a Small Business Expansion Loan
Once you know your eligibility, you can narrow down the types of funding you are eligible for.
What you will need for the application process will vary depending on the type of loan you are applying for. A traditional loan or SBA loan may require you to provide a business plan and financial data, while an online application may only want to know your annual income.
Plan to apply well before you actually need the funds, as some loans, especially those offered by banks or the SBA, can take weeks to process and fund.
What could a cash injection do for your business? What dreams could you achieve if only you had the capital? A Small Business Expansion Loan Could Make These Dreams Come True!
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