Is it time to take out a business expansion loan to help your company grow further?

Here are five key questions to ask before you act on getting a business expansion loan:

  1. Are we ready for business expansion funding?

Your small business growth and expansion success hinges on your ability to do one of two things: find more customers or expand your products and services.

Finding more customers will allow you to increase sales of your current products and services. Expanding your business’s products and services will give existing customers the opportunity to purchase something new and different, while also attracting new customers.

If you can’t find more customers or expand your products and services, you may want to ask: Are we truly ready for business expansion?

  1. Where are we going?

If you are ready for a business expansion, it’s time to think about the right location. Do you want to own or rent?

Buying a facility is a big commitment. Commercial mortgages are typically offered at shorter rates than residential — expect 10 to 15 years. Shorter terms mean higher payments. Is your small business prepared to handle this increase?

Renting is safer but less stable. There’s no guarantee that your space will remain available beyond your lease. Renting also means the additional cost of paying an up-front deposit, often the first and last month’s rent.

If your new space needs improvement, you must set aside funds from your business expansion loan for construction or renovation. New locations in the same market also siphon off about 20 percent of the original location’s business. Is your bottom line strong enough to absorb all of this?

  1. Do we have the right people? (And, can we afford them?)

You can’t expand without taking on new employees. Additional employees equal additional wages and benefits. While a business expansion loan can help you afford more employees, you will likely save money by hiring strategically. Make sure to consider the value of hiring the right employees for your small business; if you work in a niche industry and find it difficult to hire talent with the right skills and experience, a business expansion could be even more challenging. Your expansion won’t go well if you compromise in hiring standards to fill new positions.

Management must be able to trust employees during an expansion, because it by nature reduces management’s ability to be hands-on in all aspects of the business.

  1. Can we maintain a stable inventory?

Inventory management is one of the biggest challenges for businesses. As you consider how to grow your small business and consider your expansion financing options, think about your ability to manage an increased inventory.

Industries that see seasonal ebbs and flows in demand must put extra effort toward mastering and maintaining a stable inventory. Additional capital can help stabilize inventory by keeping products stocked at optimal levels during periods of fluctuating revenue. Without proper inventory financing and management, you’ll find that your warehouse is either overflowing with unsold products or empty and unable to fulfill orders.

  1. Where will we find business expansion financing?

Here’s where it all comes together. Unless you’re overwhelmed by cash on hand, you’ll need a business expansion loan to help cover the cost of new facilities, new employees, increased inventory and the many other realities of growth. Do you have a good source for business expansion financing?

Fundation exists to help businesses just like yours. We provide business expansion loans that can be used to secure a new facility, add new talent or master your inventory.

All of our business expansion financing is custom-designed to meet the different needs of unique small businesses. Our loans feature conventional terms, refinancing options and prepayment without penalty.

Do you need capital to finance a business expansion? Contact Fundation and explore the possibilities today!