As you reopen your business, having access to business financing can allow you to rebuild and improve your operations. If you’re interested in growing your company with a small business expansion project, having access to financing options can allow you to improve your business’s future. That’s why many business owners turn to small business loans during this uncertain time. This blog post will explain the most notable benefits of using a term loan or business line of credit to afford your next business expansion project.
5 Reasons to Use a Business Loan for Expansion
1. Have more space to serve your customersIf your current space is cramped and you’re struggling to keep up with customer demand, financing for an expansion project might be the right choice. This is especially imperative during current times, in which social distancing can ensure your staff and customers’ safety. If your business is succeeding, you should take the opportunity to use your business loan to expand your space. This will give you more room to serve customers, hopefully increasing your sales. Using your funding for business expansion can help you pay for an addition to your existing location, or you can open an entirely new space. Regardless, your customers will appreciate this improvement to your service.
2. Offer new products or servicesExpanding your business can develop your business’s product or service options. Many small business owners use the funding for business expansion to add products or services, allowing them to reach a broader range of customers. Paying for additional inventory or tools can add up, but you can invest in new offerings with your financing. Before you spend your loan in this area, ensure that your new products or services will be helpful to your customer base. We suggest sending out a customer satisfaction survey to see what your customers are currently interested in purchasing. It could also be beneficial to review which existing products or services are best sellers so that you can add relevant options.
3. Open a location in a different geographical areaAnother expansion strategy to consider is to open a business location in a new area. You’ll be able to reach customers in a town, city, or state you currently aren’t serving. Before starting this project, ensure that this geographic location is a good fit for your business. Expanding to a new location can be expensive. Still, with access to viable loan options, you’ll be able to afford this transition.
4. Hire more employeesIf you’re planning to expand your business, you’ll likely need to hire at least a few more employees. Having the money to invest in hiring and payroll costs will lead to business success, as you can’t run your business without a strong team. Because of COVID-19, many talented professionals are seeking job opportunities, so it’s a great time to hire new employees and meet increased demands.
5. Merge with or acquire another businessIf you’d like to see your business grow, you might want to consider merging with another company or acquiring it. Doing this can help keep your existing customers while gaining a new client base. Of course, you should conduct financial planning to ensure that merging or acquiring a business will be a lucrative move.
How to Qualify for and Receive a Business Expansion LoanNow that you understand the many benefits of receiving a business expansion loan, it’s time to consider your funding options. Many reputable online lenders offer financing options for business expansion projects. Still, you’ll need to select a loan program that meets your financial needs. Typically, here is what business lenders look for when evaluating potential business loan recipients:
- Your credit scores
- Cash flow projections
- Annual revenue
- Existing debt and outstanding loans
- Time in business