For every successful small business, there comes a time when decisions must be made about the best path to funding growth.
Whether your business needs a cash injection, a new location, an equipment upgrade or is ready for expansion, there are a range of options to help you get you where you need to be financially. However, each company’s needs may be different, requiring its own strategy and approach.
Here’s how you can match your small business‘ financial needs with options to fund its future.
Focus on your business needs
While this seems like an obvious first step, it’s easy to lose sight of what your small business really needs to take the next steps. Take a step back and look at your business plan and finances from a broad, long-term perspective, and not just here and now.
Having a long-term plan in place will help you and your lender determine the best loan options for your specific needs. Ask yourself how this loan will make you more profitable, better positioned relative to your competitors, and give you the agility to grow your customer base or your product or service line.
Avoid the one-size-fits-all trap
Once you have your plan ready, it’s time to figure out which type of loan is right for you. It’s important to remember that it’s okay to have more than one loan for your business, as long as you have the sources of income and cash flow to repay them.
Talk to your lender about all of your options based on your plan, and don’t just focus on one or two loan types that may be less favorable to you in the long run.
Find the right partner
As mentioned, there are many options for financing your small business. Look for lenders who will work with you and advise you on the different options. Your first option may be the best, or some additional discussions may lead to loans you may not have considered before that help you execute your plan more effectively.
Do your homework
While your lender should provide details of your loan options and help you choose the best solution(s), I recommend that you have at least a basic understanding of common small business financing options, including:
• Small Business Term Loans — Term loans offer fixed or variable rates for up to 10 years and can be used for a variety of needs, including working capital, vehicle purchases, debt refinancing and more. Additionally, some lenders offer “express” loans that can be approved quickly with lower amounts borrowed and shorter terms, a great option for busy entrepreneurs and small businesses that need quick and easy access to finance. ‘silver.
• Small Business Lines of Credit — Lines of credit are ideal for providing cash flow if your business experiences seasonal shifts in working capital, as well as unexpected changes or fast-moving business opportunities that you want to take advantage of.
• Small Business Administration Loans (SBA) – SBA 7(a) loans are a popular option due to their low cash outlay, long repayment terms, and government backed support, allowing for flexible credit requirements for borrowers who have difficulty obtaining a loan. traditional bank financing. SBA 7(a) loans can be up to $5 million and offer repayment terms of 10 to 25 years at modest rates.
• Equipment finance loans — Whether your small business needs equipment or sells equipment, effectively financing these purchases and transactions is essential. There are even tax advantages to using the financing to purchase equipment or software for your business!
• Small Business Home Loans — Buying the property where your business is located is an attractive option for many small business owners because it establishes cost certainty, can generate revenue and reinvest in your business. Additionally, these loans have fixed rates of up to 20 years and terms of up to 25 years, facilitating long-term growth plans while building equity and value.
Wherever your small business is on its growth journey, stay connected with your lender and business support system, including tax and legal professionals, to build a cohesive team ready to help when the time comes. came for you to seek financing.
Candice Caruso is Senior Vice President, Head of Government Guaranteed Lending at WSFS Bank. She brings over 20 years of experience in the financial services industry, including 12 years as a corporate finance expert, and has been featured on Bloomberg Radio, CNBC’s Closing Bell, The Wall Street Journal and Franchising World. .