Small Business Funding Loans To Expand Business

So, you want to expand your business? Look no further! We know that expanding your business can be daunting, but we are here to help.

Why Expand Your Small Business?

While making the decision to actively grow your business can seem like one which is originally very conflicting, especially if a large part of your brand is being a small business, however, there are many positives that come with taking the steps to expand your business.

One large advantage of expanding your business is being able to take advantage of ‘economies of scale’. This means that as a business you’re able to save money in terms of production costs because you’ll be buying a larger amount of items from your suppliers and so are likely to have money taken off your overall cost. Being a bigger business means you have a higher buying power and that your suppliers will rely on your custom much more so you are likely to be able to negotiate better deals for your business.

Secondly, expansion gives you a chance to reach a new and bigger customer base. You will have the ability to move to and reach new locations outside of your local area, whether this is another location in your region or even internationally. Having this ability means you can find new loyal customers elsewhere, but it’s still important to show the same appreciation for your original loyal customers as they’re the people who helped you get to this level.

Another big positive of expansion is your ability to diversify the products and services you are providing to your customers. Being able to diversify your portfolio is a big benefit as, once again, it gives you the chance to find new customers.

Types of Small Business Funding

There are many different types of funding that small businesses can receive to help expand their business. In the following, there will be descriptions of five different kinds of small business funding, these include Working Capital Loans, SBA Loans, Business Expansion Loans, Equipment Financing, and Business Line of Credit.

Small Business Working Capital Loan

The first kind of small business funding loan is one of the most popular as it is the one used to finance everyday operations within a business. There are some big positives of receiving a working capital loan, the first of these is that you are able to maintain full ownership of your business which includes still being able to decide which direction you want to take your company without the input of people who are focused on the best use of their investment. Next, this loan means that until it is spent, you will always have cash on hand which can be extremely beneficial to keep your business running as well as possible, even when things get a bit difficult. Finally, you’re free to spend this money however you want, so you’re not constrained to buying specific items just because of the loan agreement.

Here at the South Florida Funding Group, we will offer you loans to expand business between $5000 and $500,000, which you will then have between 4 and 18 months to repay the amount you’ve been lent with 18-40% interest on this amount. We do have some requirements in place that you’ll need to satisfy in order for us to consider approving a loan application, and this is that you should have been in business for 3 to 6 years with a credit score above 500 and you should be making a monthly revenue above $10,000.

Small Business SBA Loan

An SBA loan is backed by the Federal Government which is known as one of the best loans available to a growing business. It has much longer-term and provides much lower interest rates in order to keep monthly payments low.

Generally, most companies require 4 years of business history on record, in addition to a $180,000 annual revenue with a credit score above 680. However, at the South Florida Funding Group, we ask for a credit score higher than 650, with only 2 to 3 years in active business as a company while ensuring you also have no tax liens, bankruptcies or foreclosures against you in the last 3 years. We will offer you an amount between $125,000 and $10,000,000 depending on your business and needs. There is a long-range for how long your repayment plan may continue for, for example, you could be looking at one year if you agree to a ‘microloan’, however, it can increase to as long as 25 years if you have a commercial real estate loan. The interest rates on these loans can range from 5% to 15% depending on which loan you take out.

Small Business Expansion Loans

A Business Expansion Loan is generally reserved for companies that have a large scale growth plan set out in front of them to show how they intend to utilize the loan they’ve been given over time and layout the result they expect to see from using the loan they’re receiving. This type of loan has a focus on helping SMEs (small and medium-sized enterprises), but they must already be a registered and trading business. Loans of this kind are extremely beneficial for companies looking to do one of four things: product expansion, market expansion, diversifying, and growth acquisition. All of these changes and improvements require a lot of funding, but, if they’re carried out successfully can lead to large advancements in the growth of the original business itself. A large majority of companies that receive these loans use them for renovations, purchasing new equipment, or opening in new locations.

Small Business Equipment Financing

Next, there is a loan that is specifically focused on allowing companies to buy the equipment they need in order to expand successfully. The new equipment they purchase will be used in order to fulfill the increased demand that comes with company growth. This loan will be given upfront and the business receiving the loan will pay back the full total in addition to any extra fees that are cumulated over time, however, the amount that is provided in the loan cannot exceed the collateral value. Receiving this loan can mean a small business is able to improve its cash flow while also aiding any diversification they want to carry out in terms of products and services.

At the South Florida Funding Group, we will provide a small business with an equipment financing loan providing they have been in business for over 3 months and have been making at least $6000 monthly in revenue. The loan amount can be anywhere between $250,000 and $1,500,000 depending on what you’re using the money for. In terms of repaying the loan you receive, this can vary from 6 to 24 months, or it could be decided based on the term of the lease.

Small Business Line of Credit

The final type of small business funding loan is the ‘Business Line of Credit’ which gives a company a credit limit along with a maximum capital which can be withdrawn at any time. Furthermore, a large positive of this is that the business receiving the loan will only have to pay interest on the amount you actually use - this is especially beneficial for smaller businesses looking to expand with minimal costs.

Alternative Small Business Funding

Loans from banks and other financial institutions are not the only source of external financing for companies that will aid in their expansion.

Small Business Crowdfunding

Making the most of crowdfunding can be an extremely fruitful way of raising money that will help see a small business through its initial expansion. Crowdfunding means that a company can utilize multiple social media platforms and raise a campaign to reach a huge number of people who you could get on board. Additionally, this could also be useful in raising further awareness of your business as you take steps towards further expansion, which could secure you more customers in any new physical locations you enter. However, one downside of this alternative business funding idea is that it requires an extremely strong promotional strategy, alongside a lot of transparency. 

Small Business Family and Friends

Another strong way of raising capital in order to aid the expansion of your small business is to enlist the help of your friends and family. This method is generally the cheapest way to borrow money as it is likely that you’re able to negotiate a better deal in terms of repayment time and interest, etc. which can extremely benefit how much you’re truly able to invest into the business. Additionally, when borrowing from friends and family there’s a strong benefit in that you most likely will not have to give away a share of your company to investors or corporations which maintains your strong decision-making position. However, it is good to remain incredibly careful when gaining a loan to expand business in this way, as there’s always the potential to cause damage to a relationship when large sums of money are involved.

Small Business Angel Investors

Angel investors are private individuals who will provide small business funding in exchange for a specific share in the business. They can also offer advice for the business in terms of strategy, finance, and direction, etc., but this isn’t always the case as they could either be silent or active within the company. An angel investor can also be one of the business owner’s friends or family. Most angel investors are generally willing to take risks despite the outcome being uncertain, and a lot of the time they’re happy to make a larger investment if they believe there's a lot of potential in an expanding business. The typical investment from angel investors can land between $10,000 and $77,000.

Small Business Venture Capitalists

Venture capitalists also invest in companies in return for equity in the business, however, they generally invest a larger amount than angel investors. Most venture capital investments come from within a larger business as opposed to investments from angel investors as they are usually private individuals. The key motive behind venture capitalists is that they want to help another business grow as quickly as possible to get a quick return on their investment. The average investment from venture capitalists is around $7,000,000 as they usually invest in slightly bigger companies as opposed to exceedingly small businesses that are still in the early stages of their expansion.

Small Business Shares

Finally, another way of raising capital for a smaller business is to begin selling shares to people, both internal and external to the business. Releasing shares while you are a smaller company means that people are both emotionally and financially invested in your business and its potential success from the beginning. A bonus of using this method to gain small business funding is that you have a specific amount of money coming into the business on a regular basis meaning you can make plans with this safety in mind. However, there is a downside to this in that it means people who have not necessarily seen your business from the start are able to put forward opinions on how they believe your company should be functioning. Additionally, it means you’re likely to need to consider what other people want in your decision making which could lead to you losing some control of the choices made about the internal running of the company and it could be taken in a direction that you’re not entirely convinced about as many shareholders will mostly be focused on the financial side due to the return on investment they want to receive. When selling shares to your small business, it is always good to keep an eye on the percentage that has been given way, as if your ownership drops below 50% then you no longer have the majority influence within the company.

As you can see, there are many financial opportunities available for a small business funding loan to expand your business.  Contact South Florida Funding Group for alternative business funding opportunities.  When banks say no, we say yes.  Click here to see if you qualify.