Planning to seek outside financing to expand your business? Here are 8 options and tips.
Creating and maintaining accurate financial records and forecasts will improve your chances of success.
If your business is showing a consistent profit, offers a product or service for which there is strong demand, and has growing sales and loyal customers, there is money out there to help you.
Here are eight expansion financing sources to consider if conventional bank financing is not available:
1. SBA EXPRESS LOAN PROGRAM:
This program offers loans of $350,000 and under with minimal amount of paperwork. Offered through lending institutions.
2. SBA 7(A) PROGRAM:
This program offers larger loans for a variety of expansion expenses and special needs. To increase your chances of success, look for a lender that closes many 7(a) loans.
3. COMMUNITY DEVELOPMENT FINANCIAL INSTITUTIONS (CDFIs):
These community-focused lending institutions participate in a program run by the U.S. Treasury Department. Loan limits typically are in the $100,000 to $300,000 range and occasionally as high as $500,000.
4. ANGEL INVESTORS:
These high-net-worth individuals invest their own money in small businesses, often in industries in which they have experience. You can find angels through local or national angel groups or through your networks of contacts.
5. VENTURE CAPITAL FUNDS:
These entities require operating history and strong growth potential.
6. BANKS AND CREDIT UNIONS:
Don’t rule out conventional loans and lines of credit from banks and credit unions.
7. PEER-TO-PEER LENDING:
If the amount you need is fairly small, you may be able to borrow enough money from other individuals on online peer-to-peer lending sites.
Crowd funding enables business owners to solicit donations on crowd funding sites such as Indiegogo, Kickstarter and Peerbackers. In 2012, a provision of the JOBS Act expanded crowd funding to enable entrepreneurs to solicit investments totaling less than $1 million via crowd funding without registering with the SEC.
The SEC is still finalizing regulations that will affect crowd funding investments. The new crowdfunding regulations were published this year.
Micro lending and alternative lenders. There are some options in Miami Dade for local businesses. The resources and the types of businesses that interest them are constantly changing. They have to be contacted individually to see if your business qualifies for their lending policies.
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