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4 Smart Ways To Finance Your Business Expansion


Every start-up business owner has thought of expanding their enterprise, especially if there’s promising growth in terms of revenue generation. However, thinking of it is one thing; implementing the idea is what distinguishes a successful entrepreneur from the rest.

As a small business owner, you’ll probably need more personnel, a new hosting service, a larger office space, and of course, an additional monthly rental fee. An expansion in all the sectors mentioned will give you a better chance of not only meeting the growing consumer demands but also competing with your rivals in the market.

Of course, for this dream to become a reality, you’ll need money. One thing that frustrates many entrepreneurs, even when they’re willing to take the next big step, is a lack of funding. Inasmuch as it might seem daunting, financing your business expansion shouldn’t be as difficult as many people imagine. Among the most common options, you should consider are bootstrapping and asking for help from family and friends. Once you’ve exhausted these options, you can then apply for personal loans, like payday loans. Not sure how to go about it? Browse here for more information on these types of loans.

That said, here is a detailed list of methods you can use to finance your business expansion:

  1. Bootstrapping

Before exploring other funding options, it’s important to use the money you already have in your personal or business bank account. Famously known as bootstrapping, this method involves financing your business using your savings, credit cards, credit lines, and any other available home equity lines.

The main benefit of using this form of funding is that you won’t be pressured with loan repayments in the future, especially if you run into rough patches along the way. This also means you’ll have full control and ownership over your business.

Inasmuch as it seems like a great approach for start-ups, you may not have enough money in your account to actualize your ideas. In that case, you can consider various external sources, as discussed below.

  1. Family and friends' funding

Financial assistance from your friends and family can come in handy when you don’t have enough money in your personal and business account to fund your operations. The money you receive here can be in the form of a donation or a loan. But be careful who you ask for this kind of help because it can be tricky and emotional. The wrong choice of person could lead to issues that may end up ruining your business plans.

Nevertheless, it’s a great option when you’re trying to avoid the grueling procedures of applying for a business loan from a formal institution. It is, however, highly recommended that you seek legal advice to help you set up a financial agreement with your family or friend. This way, you’ll avoid any unnecessary conflict in the future.

  1. Angel investors

Angel investors are wealthy private financiers willing to fund the growth of small ventures. Unlike venture capitalists, angel investors channel their funds to small businesses during their early stages even before they make a name in their respective industries.

One advantage of opting for angel investors rather than venture capitalists is that they invest their own money rather than a capital firm’s investment funds. As such, it’s a lot easier to strike a deal with them or make any adjustments to the agreement in the future.

It's worth noting though that these individuals only invest in businesses that show potential even in their early growth stages. Therefore, make sure your financial records show a promising future for you to have a better chance of attracting the attention of prospective angel investors.

  1. Financial institutions

If all the options mentioned above don’t work for you, you might want to consider commercial lenders. Keep in mind though that banks are quite strict when lending money to small businesses. Bank regulators consider start-up enterprises as a little riskier than established companies. As such, you might have to do a lot of convincing before you come to an agreement with these financial institutions.

If your company has been in business for several years, you may not struggle during the application process, because your assets will be used as collateral. Banks are also more likely to approve loan applications for such businesses because they’ve already generated some form of stability that’ll act as security. Your inventory, physical assets, and the amount of money in accounts receivable will determine your loan limit.

To get additional capital, it's also suggested to list the offered investment on smartmoneymatch.com/investments (there’s no charge). The procedure is:

  1. Register at SmartMoneyMatch.com/register
  2. Create the organization profile at smartmoneymatch.com/user/createorganization
  3. List the investment at SmartMoneyMatch.com/user/addinvestment