Expanding your business can be an exciting, profitable venture—but it also takes money. This article take a look at how you can obtain the funds you need for business expansion, particularly focusing on small-business expansion loans.
Run the Numbers
Before taking out a loan for business expansion, you should have a clear plan both for how you will use the funds and how you will make payments on the loan. For instance, if you plan to purchase a new piece of equipment, you should only do so if you are reasonably certain that it will bring in enough money to make taking out the loan worth it.
Prepare Financial Documents
Another step in obtaining a loan for business expansion is proving to lenders that your business can take on the added debt. Among other things, that means being ready to provide financial statements that show your business is healthy enough to make loan payments, according to Entrepreneur.com. Other documents that you may need include tax returns, proof of collateral, legal documents (such as licenses), and a business plan.
The process of gathering these items can be time consuming, so be sure to start early.
Choosing a Lender
Entities that provide loans for business expansion include traditional banks, credit unions, online lenders, and private non-bank lenders. All have different advantages, so read up on each to see if one type fits your business’s needs and timeline more than the others.
Additionally, you should ask specific lenders questions like these:
- How much money do they typically lend out?
- Are there any minimum requirements—such as length of time in business—for obtaining a loan?
- How long does the loan-application and approval process take? (This may rule certain lenders out if you need funds quickly.)
- Will the loan require collateral?
Once you’ve decided on a particular lender, you can move forward with the application process using the financial documents you’ve gathered.
Want more tips on making your business a success? Take a look at the other blog posts from Avery James.