Are you looking to expand your small business? It is quite common for small business owners to get the itch for expansion; however how do they do it? As the old adage, it takes money to make money, so you will likely require funding to offer you that push to make the business expansion take place.
In case you are considering about small business expansion through adding a retail location, expanding your product offering, or changing the course of your business model that could imply your business is presently in best form, both customers wise and financially.
However not all small business expansion plans are the same, and they can every so often have an opposite effect, sending your effective business down a way of major financial instability.
When You Can Apply For An Expansion Loan?
The funding options for small business expansion differ; but consist of adding more employees on the board, expanding your online presence, expanding the current space, remodeling, new equipment purchase, moving business locations, generating new products, franchising, expanding to new markets, getting another business, and more.
Here, we compare four of the best business expansion loans from online lenders;
- SBA Loans
A Small Business Administration (SBA) loan is a government-backed, long-term funding program made by the SBA approved lenders that allow businesses that might have been rejected by the bank to get low-interest funding. The funding can be used for many business purposes, consisting of expansion.
In case you are looking to finance your small business expansion, there are many types of SBA loans to bear in mind—one type for the larger capital needs up to $5 million and the other is for smaller needs up to $350,000. However both of the funding options can be used for the expansion based on how much amount your expansion project want. SBA loans are perfect for many small businesses, however in order to getting funding from this program you need noticeably good credit 650 and up and other strong financials to make the cut. The application process also can take weeks, so this is not an option for you if you immediately need cash for the expansion.
- Traditional Term Loan
The traditional term loan is a very easy and cost-effective financing solution for small businesses. The service does not encompass any flexibility to withdraw any additional payments made. But, the customers that are short on cash flow normally save because of its low interest rates.
Traditional term loans are flexible funding program that businesses can use to achieve any number of objectives. Whether it is for expansion or for purchasing equipment, getting that capital infusion is necessary for every business.
- Equipment Financing
The equipment financing program is mean to provide you cash to help purchase the equipment outright. You definitely pay back the total amount lent, plus the fees, for a set time frame.
Equipment financing is a great funding option if you know that your expansion requires new equipment, because the loan amount will cover just that fee. It is also easier to acquire since the equipment you purchase is served as collateral if you default on the borrowed amount.
- Business Line of Credit
The business line of credit is considered as the best type of business expansion loans for small businesses. It is a short term loan given to the businesses. The interest on these loans is exactly for the term from when the loan is taken until the repayment date. This type of funding can be used to pay the workers as well as to purchase inventory. However, this kind of loan can’t be used for purchasing property.