As a small business owner, one of your goals is likely to grow. The thing is, you might be ready to expand but lack the capital to do so. A business expansion loan can help. Here’s what you need to know about this financing option to help you fuel your business growth.
Business Expansion Loans Explained
If you’re looking to scale up or keep pace with your business growth, an expansion loan can help. It provides financing for established companies. If you have a track record for success, approval is also typically easier than if you were to apply for start-up capital.
What You Need to Apply
During the application process, you’ll need to provide several documents to your potential lender, including:
- Your business plan.
- Business and personal tax returns.
- Financial statements.
- Your business and personal credit reports.
- Some form of collateral.
How You Can Use Your Funding
You can use your expansion loan for a variety of purposes. Some ways to put your funding to work include:
- Moving your business to a larger space. If you’ve outgrown your current location, you can relocate to a larger one. Give your customers plenty of notice and keep them updated during the progress.
- Opening up a second location. Another option to consider (especially if you like your current location) is to open up a second storefront.
- Hiring new employees. As you grow, you’ll need more employees to help meet increased demands.
- Locating a new market. If your current market is saturated, you can use your funds to look for a new, untapped one with less competition.
- Expanding your product line. Adding to your product line can be expensive. An expansion loan can help you through the development and creation phases.
Deciding if an Expansion Loan Is Right for You
Before you apply, you need to decide if an expansion loan is the right choice for you. Some things to consider include:
- Why you want to borrow the money. You might be able to qualify for financing, but you shouldn’t take out a loan just because you can. Figure out the reason why you want to apply.
- If you’ll be able to manage your growth. You need to be able to manage additional employees and products, and possibly a second location. This may mean that you need to hire another manager or find a partner.
- If you can afford the loan. Price out your plan and consider all costs associated with it to make sure that your idea is sustainable.
You can find business expansion loans at traditional banks, credit unions, and online. Compare several lenders to ensure that you find the right one to help you achieve your business growth goals.