Financing Your Business Expansion
Business & Finance

Financing Your Business Expansion

There are many options for debt-based expansion financing, including a traditional term loan or SBA loan. For small business loans or equipment purchases, equipment financing may be best. A commercial mortgage is another option. Once you have decided which option is best for your business, consider the type of financing you need. This article will help you navigate the options. After reading this article, you will know how to finance your business expansion. You can also find more information about business loans by industry.

Equipment financing

There are many different types of financing available for your business. An equipment loan is a good way to expand your business, without having to worry about securing a traditional bank loan. You’ll need a detailed business plan that will help guide your growth and help you qualify for an equipment loan. You will also need to provide documentation that proves you can repay the loan. The following are some of the common loan types and their requirements.

A business owner with a good credit score can qualify for a small equipment loan. There are several different types of equipment loans, each with slightly different requirements. The requirements for each type of loan will vary based on your business and personal credit, but most lenders will want to see a history of revenue-generating activity and bank statements. The latter will help lenders determine how much of a risk your business represents. However, you should always aim to get the best credit score possible to maximize your chances of receiving a loan.

Merchant cash advance

If you are interested in expanding your business but are facing limited cash flow, you may want to consider a merchant cash advance. This type of funding lets you turn future credit card sales into cash. As long as you can repay the loan in six to twelve months, a merchant cash advance is an excellent option. You should carefully analyze your options before signing a contract or obtaining a loan. Listed below are some benefits of merchant cash advances.

Low credit scores may not be an issue. Merchant cash advance providers are used to working with businesses with less than perfect credit and often do not require collateral. Payments may change based on the amount of money a business makes, and will not remain the same even if sales decline. While this method can be less stressful than a traditional installment loan, the APR is likely to be high. A merchant cash advance provider will also tack on a variety of fees and administration charges that can make your business financially strained.

Convertible preferred stock

For small businesses that are considering expanding their businesses, convertible preferred stock can help them achieve this goal. The stock is convertible, and founders can use the additional capital to pay off existing debt or expand their business. However, when issuing this type of stock, entrepreneurs must consider the ramifications for the common stock. Aside from the risk of losing value, the stock is a way to reward investors and boost the company’s financial performance.

Another benefit of convertible preferred stock is its flexibility. There is no stated maturity or cumulative dividends, so the holder can tailor the preferred stock characteristics to fit their business. For example, Eurasian Capital offers short-term and long-term financing to help business managers meet their financial goals. Community banks and thrift holding companies often offer convertible preferred stock. If your business is interested in acquiring convertible preferred stock, ask a lender about the process.

Commercial mortgage

If you’re considering a commercial mortgage to fund your business expansion, you need to make sure you can afford it. While the mortgage amount you can borrow may be high, you need to consider your monthly expenses, including your current debt service coverage ratio. Failing to meet monthly obligations can lead to serious credit damage, leading to repossession by your lender. You may be able to qualify for a commercial mortgage even if you have bad credit, but the interest rate will likely be significantly higher than it is with a traditional mortgage.

A commercial mortgage is a great way to finance your business expansion, while also providing tax deductions and good interest rates. Specialist commercial mortgage brokers can help you navigate the mortgage process and find the best product for your business. They also can give you a good idea of how long lenders take to assess your application. A specialist commercial mortgage broker can also assist you in completing the application process. Once you’ve found a mortgage lender, you’ll need to choose the loan amount, which can be as high as ten years.