Business loans can be used to help your business in many ways. The most popular way a small business owner can utilize a business loan, is for the expansion of their business. In this article, we are going to discuss five great ways to use a business expansion loan for your small business.
There are many funding options available for small business owners, and a smart owner utilizes multiple sources. In this article, we are going to discuss the benefits of an SBA loan, multi-year term loan, line of credit, invoice factoring, and equipment financing, and do it with an eye on business expansion.
SBA Loan for Business Expansion
SBA loans are long-term loans where the government guarantees a portion of the money that the banks lend, which motivates banks to lend money to small business owners. There are 10-year working capital term lengths or 25-year real estate term lengths. Both term options are great business expansion opportunities for small business owners. The only difference is that if real estate is involved, you must use the 25-year term.
The biggest benefit of an SBA loan for a small business owner is the extended term length. By stretching the length of the term, monthly expenses go down, freeing up working capital for business expansion.
Multi-Year Term Loan for Business Expansion
A multi-year term loan is a short-term loan, often with term of two to five years. Multi-year term loans are similar to SBA Loans, but there are no restrictions on purchases. Because of the flexibility, multi-year term loans can be used for anything from business expansion to refinancing debt.
Business Line of Credit for Business Expansion
A business line of credit is like a credit card, but with cash your small business can withdraw. There are no restrictions on purchases, making a line of credit a great option to capitalize on expansion opportunities.
A line of credit is revolving, which means the amount available fluctuates up and down based on the amount spent and amount repaid. As you pay down the amount owed, the amount available rises back up. The line of credit gives a business owner flexibility to pursue new avenues for growth.
Invoice Factoring for Business Expansion
Invoice factoring is the process of selling accounts receivables for immediate capital. When your small business works with contracts or invoices, you can sell the accounts receivable to a factor and acquire secured money, giving you an ability to take advantage of expansion opportunities. Instead of waiting for your clients to follow through with payment, invoice factoring allows you to utilize capital quickly.
Equipment Financing for Business Expansion
Equipment financing refers to either an equipment loan or equipment leasing. Equipment loans are a lump sum borrowed from a lender for a purchase of used or new equipment. Equipment leasing is essentially an equipment rental. At the end of the lease term, a business owner can buy the equipment outright from the lender, extend the term of the lease, or end the lease and return the equipment.
Equipment financing also provides a great business expansion opportunity because it allows business owners to obtain new, state of the art equipment without the burden of a large purchase. That means you can get that new piece of machinery or the new vehicle you need to increase performance.
By taking advantage of equipment financing, you can make a positive change to your small business. You can also use equipment financing and business expansion loans to expand your business and capitalize on growth opportunities.