Owners know a healthy business is a growing business. But when you’re getting ready to enter a new market, launch a new service, or procure equipment, coming up with the necessary capital can be a challenge. A business loan or line of credit may be key to growing your business and revenue. Before you approach a lender, prepare for this important step by following these three strategies.
- Fine-Tune Your Plan
When it comes to financing expansion, careful research is essential. Study your past sales, research your market, and look at your competitors to make sure your business is growing in the right direction. Take time to understand the obstacles and costs. These may include new expenses, a bigger workload for you and your staff, the challenge of bringing your business to a new market, or new competitors. This can show you where your strategy requires adjustment and may help you find the best time to begin expansion.
- Forecast Expansion Cost.
An effective forecast will help you understand the price tag of your expansion. For example, if your retail business is opening a second location, determine your facility, staff, and inventory expenses based on your experience with your first location. Also, research the performance of similar-sized competitors in comparable markets. A new location, new service line, or other expansion may not become a revenue driver right away; set a realistic timeline for how long it will take this investment to break even and ultimately become profitable.
- Watch Your Credit.
Securing the financing you need at the best possible terms requires a good credit rating. For many small-business owners, especially Sub S and sole proprietors, your individual credit is just as important as your business’s credit. Staying current on all your accounts is essential. As you prepare to finance your business expansion, request your credit reports, so you’ll know your personal and business credit scores. If there are any errors in these reports, contact the credit rating agency immediately.
Your best financing option will depend on the size of your business, scope of your expansion, and capital needs. Lending options include:
- Term Loan. Ideal for a one-time expense, such as renovating or expanding your facility.
- Equipment Financing. Designed for big-ticket equipment purchases, such as for construction, manufacturing, or IT.
- Business Line of Credit. A useful solution for other short-term cash flow needs.
At Sun National Bank, we offer a wide array of flexible lending and credit solutions tailored to the needs of small businesses.
The information contained herein is for general informational purposes only and does not constitute tax, legal, or business advice.