How to get a loan to expand your business

For the many businesses that do not make it, there are also many businesses that do. And some businesses do so well that the business owner decides to expand. When a business owner is ready to expand their business they will usually need some type of business financing to fund their business expansion. But how does a business owner get a loan to expand their business? This article discusses just that.

Build up a credit history

One of the first things that a business owner should do so that they can get a loan to expand their business is to build up their business' credit history. To get a loan, especially to get a loan with a good interest rate, a business is going to need a good credit history. A good credit history can help prove to a bank or other lending institution that the business is likely to pay back the money that they borrow to expand their business.

A business owner can build up their business' credit history by paying back previous loans and making their credit card payments. But just building up a credit history is not enough. The business owner should make sure to build up a strong and good credit history. They can build up a strong and good credit history by making their loan and credit card payments on time and not missing payments.

Find a good lender

Just as when a business owner shopped around at different banks for a loan to start up their business, they should do the same when they are looking to expand their business. Different lending institutions and banks are likely to offer different types of loans and different interest rates on those loans. It is also possible that one lending institution may turn down a business owner while one will offer then a great loan to expand their business.

Collateral

When a business owner is trying to get a loan to expand their business it is likely that the bank will want some sort of collateral to back up the loan. There are different forms of collateral. For example a business could use their inventory as collateral to get a loan, or they could use any real estate they own as collateral for the loan. Having collateral helps the bank or lending institution feel more confident in giving a loan to a business since they know that they will somehow get their money back.

Prepare your presentation

A bank is going to want to know the plan that a business owner has to expand their business. They want to know that the money that they might loan the business owner will help the business owner make more money so that the loan will be paid back. A business owner should take a lot of time to prepare a good and thorough presentation for the bank so that they know that the business owner has put a lot of thought into expanding their business.

Think outside the box

When a business owner is looking for a loan to expand their business, they may have to look for the money in other places than just their local lending institution. A person should look into other sources. There are online lending services that may be the right choice for someone looking to expand their business. A business owner should be careful when using these sources however. They should research the company and look into the background before jumping in and giving the website all of their personal information.

Another option for business owners are family and friends. Perhaps family members and close friends would be willing to invest in the person's company. They could supply the money to help them expand just as a bank would loan the person the money.