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Financing Growth with a Business Expansion Loan

Written by Banks Editorial Team
5 min. read
Written by Banks Editorial Team
5 min. read

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How do business owners achieve their annual objectives? There are many factors in play, such as networking, developing skills, and finding talented workers, but every business needs money to survive and thrive. Even if a business has a strong balance sheet, it may not have enough funds to expand operations. A business expansion loan can cover the gap and help your company reach more customers.

National Business Capital - Business Loans
SBA, Term and Working Capital Loans to grow your Business. Fast Funding with Affordable Rates if you need immediate Working Capital. Get a dedicated Business Finance Advisor.

What are Business Expansion Loans? 

Business expansion loans are exactly what they sound like. When business owners need capital to reach new business milestones, they use business expansion loans. These loans can help you purchase equipment, hire more workers, and invest in other resources that help your business grow. You can get fixed-rate or variable-rate loans depending on which type of business loan you prefer, but they are suited for growth-oriented business owners.

Should You Expand Your Business?

Business expansion makes sense for many companies. It’s a full embrace of the hustle culture and the idea that if your business is not growing—it’s dying. There’s some truth to that statement, as not growing your business can make you vulnerable to growth-oriented competitors seeking more market share. However, expansion isn’t free, and rushing into it too quickly can become stressful if you incur a lot of business debt. Some people lose their businesses because they overextended themselves with risky investments and excessive debt accumulation.

Business owners with a proven, scalable model can benefit from a loan, especially if they use debt products responsibly. Prudent money borrowing combined with the right business model can generate meaningful growth for your company and help you hire more people. Some business owners enjoy that they can provide jobs to people in their communities and serve customers. It can make sense for your business to seek out a business expansion loan, but you should consider your ability to repay the loan and how you would use the funds before getting started.

How to Use a Business Expansion Loan to Grow Your Business

A business expansion provides valuable capital, but companies have to know how to use funds to successfully expand their companies. Business expansion loans represent potential, but you have to tap into them with the cash you receive. Here are some ways you can use a business expansion loan to grow your business. 

Open a New Location

A physical location gives your business a footprint in the community. Your company can get customers with the initial location, but one location limits your growth. Consumers may not have the bandwidth or time to drive 30-60 minutes one way to your store. Opening a new location establishes your presence in another community and can make the commute more doable for some of your customer base. Businesses that can profitably open new locations can scale their efforts and expand their foot traffic.

Revamp Your Existing Business

Every business owner wants to do better than the prior year, but it may take a few investments to get your business back to growth. Business owners can invest in online assets such as content and social media to grow their online presence. These investments can help a company reach more people.

Expand Your Market

Advertising, organic marketing campaigns, and social networks can help you expand your market share. These resources require investments, and a business expansion loan can fill in the gap. There is always a new customer your company can reach, and marketing efforts put you in front of those people. While it’s great to get new customers, business owners should also use marketing strategies that retain existing customers. It’s easier to convert someone who has bought your goods or services than a prospect who has never heard of your company. Retargeting campaigns can build brand loyalty and provide a solid foundation that enables business expansion.

Grow Your Team

A company’s founder can get a lot done for the business. Founders have the most drive because they are heavily invested in their businesses. However, even the most dedicated business owner can’t do everything on their own. You may run into a skill issue if you have to write code for your website or make many cold calls. Even if you have these skills, you will eventually hit your ceiling since time is a limited resource.

Growing your team solves this problem. You can hand off some of the responsibilities to your staff, and building your team also reduces the stress of your current workers. Overstressed workers may leave your company and search for other opportunities. Growing your team doesn’t only increase the number of workers for your company, but this expansion effort can help you retain top talent.

National Business Capital - Business Loans
SBA, Term and Working Capital Loans to grow your Business. Fast Funding with Affordable Rates if you need immediate Working Capital. Get a dedicated Business Finance Advisor.

Add More Products and Services (or Make Them Better)

Offering more products and services increases the potential value of every customer. A customer may buy multiple goods and services for each visit instead of one offer. Providing several choices can also help you get new customers. Some people will not want to buy your core product or service, but they may end up buying one of your other offerings. Adding more products and services also lets you test more price points. You can have lower-priced products for consumers with tight budgets and expensive products for consumers who want the best possible product or service.

Adding offers to your selection isn’t the only way to grow. You can also make investments to improve your product offerings and deliver more value with your services. In addition, a better customer experience encourages people to return to your company and refer you to their friends.

Purchase New Equipment

Many companies use equipment for their day-to-day operations. For example, an entrepreneur may need to buy a new computer because their old computer is slow and has issues. A restaurant may need an extra oven in response to heightened demand. Trucking companies frequently purchase new equipment as old trucks become hazardous and don’t work as effectively. You can use a business expansion loan to fund these investments, and since lenders let you use equipment as collateral, you can even get a lower interest rate.

Buy an Existing Business

Growth via acquisition skips years of building a new brand and finding new customers. When you acquire a company, you get access to the company’s customers, locations, and other assets. You can integrate them with your brand, similar to how Amazon makes some of its services accessible at Whole Foods locations. Amazon spent billions of dollars to get Whole Foods’ locations, brand image, and customer base that, in turn, they could then promote their services to.

What You Need to Consider When Getting Business Expansion Loans

A business expansion loan doesn’t guarantee that your company will grow. It simply provides capital, and the way you use that capital impacts your results. Here are some things to consider before getting one of these loans:

  • How you will use the funds: Which areas of your business can benefit from the loan proceeds? Identify where the funds will go before you take out a loan. 
  • Your ability to repay the loan: Only take out a loan if you believe you can repay it. If you feel nervous about paying a loan, consider asking for less money and extending the loan’s duration to minimize monthly payments. Getting a lower interest rate by building your business credit score and comparing lenders can also help you save.
  • Do you need the loan: Some businesses can use funds from within or wait a few months to generate enough cash flow. However, many businesses may have to move forward with a loan to secure enough capital for their objectives.

How to Get Business Expansion Loans

Business expansion loans help companies become more efficient and reach more customers. Receiving more capital provides more versatility, but you need to get a loan first. That’s where National Business Capital can help.

National Business Capital is a lending platform that helps business owners access loans ranging from $25,000 to $5 million. Business owners can get the following types of loans from National Business Capital:

  • Small business loans: These loans provide upfront capital and require monthly payments.
  • Business lines of credit: You only pay interest when you borrow against the principal. Some business owners hold onto credit lines as backup reserves they don’t intend to use.
  • SBA Loans: These are the hardest loans to get, but they also have the best interest rates and terms.
  • Equipment Financing: A loan specifically for equipment. Securing equipment as collateral can help you get a lower interest rate.

Many founders use loans to expand their businesses. If you want to get a loan with National Business Capital, you can visit their website and fill out this simple form. Filling out an online application with National Business Capital will not impact your credit score.

National Business Capital - Business Loans
SBA, Term and Working Capital Loans to grow your Business. Fast Funding with Affordable Rates if you need immediate Working Capital. Get a dedicated Business Finance Advisor.

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