A Guide to Small Business Expansion Loans
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What Are Small Business Expansion Loans?
How Do Small Business Expansion Loans Work?
Documentation fees. Origination fees Loan processing fees Late payment fees. Account maintenance fees Guarantee fees Closing fees. Prepayment penalties
What Business Expansion Loans Are Used for
Opening New Locations or Renovating
Purchasing Another Business
Launching Products or Services
Expanding Into a New Market
Pros and Cons of Small Business Expansion Loans
When Does an Expansion Loan Make Sense?
Your company’s cash flow is strong and predictable. Taking out a loan to expand business without the monthly revenue to pay for it isn’t usually a wise decision. Even if the purpose of it is to increase profits, you’ll want to make sure that your cash flow is in a healthy place before seeking out a loan. If the decision doesn’t pay off, you don’t want monthly loan payments to put your business in jeopardy. You have a clear and realistic plan for expansion. What will you spend the money on and how much will it cost? Will the loan fund the entire endeavor or will you have to find additional capital elsewhere? Before taking out an expansion loan, you want to be sure you know exactly how you will use the money and how much you need. You’ll also want to make sure that your goals are realistic and achievable, based on where your business is now and the amount of time and money you will have to invest. You anticipate the loan to increase your business’s profits. How much do you expect profits to increase with accumulation of debt? Will the increase last all year long, or will it be a seasonal increase? Business expansion is generally worth it whenever you have an opportunity to grow the business in a way where the costs of expansion (including the cost of the loan) will be less than the profits you make from expanding.
Types of Small Business Expansion Loans
Short-term Business Loans
Business line of credit
Merchant Cash Advance
Alternatives to Small Business Expansion Loans
Equity Crowdfunding Donation-based Crowdfunding Debt Crowdfunding Reward-based Crowdfunding
Direct Private Lenders
Peer-to-Peer (P2P) Lenders
Frequently Asked Questions
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