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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About the author
Marjorie Weber has been educating entrepreneurs and guiding them in their search for capital for the past 16 years: combining business training programs with one-on-one mentoring. She was Chair of SCORE Miami Dade from 2010 to 2014 and is currently a financial advisor for SBDC/FIU. She also serves as an advisor to the Goldman Sachs 10,000 Small Business Program and the SBA Emerging Leaders Program and provides training for Veterans seeking an entrepreneurial path upon retirement from the service. She has been facilitating workshops under the auspices of Miami Bayside Foundation for the past 3 years. She commenced her career as a real estate investment banker in New York and Miami.She uses these long term relationships to assist her clients in accessing capital. She knows both the process and the people and has assisted in providing financing for hundreds of businesses in Miami Dade.