So, you want to expand your business?
After years of long, hard work developing demand, you’ve grown and are at a crossroads of opportunity. Do you continue on your current track or invest in yourself and that new opportunity to change the trajectory of your business? With small business financing, you can take advantage of that new opportunity.
These situations are not unique to any one business. But, is there a common sense approach to knowing if a bank is a right fit for your needs? If yes, what options for financing exist to help your business expand or grow?
Banks are generally the right fit for business financing if:
The business has been in operation for 2+ years
The business is profitable and can support the payments on the needed debt
The owners have experience in the industry and a good credit history
The business has collateral to support the loan
The five C’s
In banking, that list is known in short form as something called the “Five C’s of Credit:”
Character & Collateral
It’s ideal if all five conditions are met, but is not always necessary. If your business has a weakness in one or two of the Five C’s, a bank may still be able to assist you by using an enhancement, such as a Small Business Administration (SBA) Guaranteed Loan to support your business.
How do SBA programs help fund small businesses?
SBA programs allow the bank to offset risks while ensuring we don’t do something too risky. Let’s look at some examples:
Perhaps your business needs new equipment for an expansion opportunity. A bank’s conventional loan term of 5 years may make the payments too high to be feasible. However, an SBA …