Financing a small business expansion is one of the fastest ways of growing a small business exponentially. But business expansion is expensive. And a business cannot afford to remain small without using money to expand the organization. This poses a problem for several business owners. In this article, you’ll learn how to finance a small business expansion.
In this article, we’ll show you the various ways you can finance a small business expansion. Apart from popular funding sources like banks, other financial institutions like Camino Financial can help fund your business. Here are the various ways of financing a small business expansion.
Equipment financing
If your business expansion involves purchasing a lot of equipment, equipment financing can help with your business expansion. With this, you can purchase commercial appliances, computers, manufacturing equipment, and other expensive machinery or equipment needed for your business. If you find it hard to buy equipment or deduce that doing so will cripple your finances, equipment financing is the way to go. Many lenders require that you cough out about 20% of the equipment cost before they agree to finance the rest.
Working capital loan to finance a small business expansion
A working capital loan can help you finance your everyday business operations. If you want to expand your business, your daily running costs will increase, and you might have no choice but to turn to a working capital loan to finance this. The loan will cover your daily inventory, daily account payables, and more. To calculate how much working capital loan you need, check your old records and compare them with your projected business needs. The difference between your estimated needs and your regular business is what you need to finance your needs.
SBA loan to finance a small business expansion
SBA loans are issued by the Small Business Administration of the United States. So, SBA loans are usually more flexible than other forms of loans. You can apply for an SBA loan at the SBA’s website.
Traditional bank loan
Traditional bank loans are still the most common form of funding for businesses. If you have an expansion plan for your business that needs funding, a bank can provide you with the money you need. You’ll need to provide the documentation required, collateral, possibly guarantor, and you must have a good credit history. Also, repayment structures are typically fixed and not as flexible as other forms of funding.
Merchant cash advance to finance a small business expansion
A merchant cash advance gives you a lump sum of money at once that you can repay using a percentage of your future credit or debit card sales. So, you don’t have to repay the money until your business makes sales or generates revenue. This is a more flexible business expansion funding scheme for your business. It isn’t like other funding schemes whereby you must repay the money whether you made money or not.
Loans from alternative financial institutions
You can get a small business loan from alternative financial institutions like Camino Financial. These organizations will offer your business expansion loans even if you have a poor credit history, if you don’t have a credit history and if you are just a small business at the early stages. They are often more willing and helpful than other sources of business funding.
Conclusion
Raising money to finance your small business expansion isn’t as difficult as you may think it is. You have tons of options open to you, and it’s up to you to exploit these opportunities. Be strategic with your financing and ensure that you have solid expansion plans in place before applying for funding. The more convincing you are with your business data and application, the better your chances of receiving capital to expand the business.
