Business growth is a common goal among entrepreneurs, but it virtually always requires money to grow a company. Luckily, there are several financing options that can help give a business a growth spurt. Keep reading to learn more about them.
Loans backed by the Small Business Administration (SBA) are a huge help to any business hoping to expand. They are often used for purchases like real estate or vehicles. For instance, take the SBA’s 504 loans: According to the organization’s Stephen Umberger, these loans are meant to give small businesses “the same type of long-term, fixed-rate financing” that bigger companies can obtain with ease. They require a relatively low down payment, making it easier for small businesses to access the funding they need to grow.
Equipment Access Options
If your business growth relies on accessing equipment, then an equipment loan may be the way to go. Generally speaking, these require a 20 percent down payment, though that may vary depending on the agreement. The equipment purchased with the loan usually acts as collateral, securing the loan. (If you don’t think you will need the equipment for an extended period of time, consider an equipment lease instead, which won’t tie you to the equipment long-term.)
Short-term lenders provide another avenue leading toward business growth. For instance, traditional banks may balk at giving a loan out for expanding a company’s team, but short-term lenders tend to be more amenable to that type of arrangement. Short-term lenders weigh factors like cash flow and personal credit history more heavily than a company’s time in business, so they can be ideal financing partners for newer businesses that need a helping hand.
Friends and Family
Finally, friends and family may be willing to provide a loan to help with business growth. To maintain clarity and avoid hurt feelings down the line, approach these arrangements carefully and record everything in writing.
For more tips on building a thriving company, take a look at Pendleton Commercial Financing’s latest blog posts.