Creative Financing for a Small Business Expansion

Is your small business starting to look more like a medium-sized one? If so, it’s probably time to think about expanding. The question most owners face when this important time arrives is where do you get the capital to grow the organization?

Creative financing for business expansion

Fortunately, there are numerous ways to go, but it helps to be creative when traditional resources like bank loans are not an option. For so many owners, the answer includes one or more unorthodox strategies, like turning accounts receivable into ready cash, selling a life insurance policy via a life settlement, forming partnerships with other companies, applying for Small Business Administration micro-loans, or going public.

Here are more details about each approach.

Going Public

A costly and time-consuming way to expand, taking a company public and offering ownership shares via a brokerage network can mean a massive inflow of cash for the right companies. You’ll need specialized legal assistance just to get started with the application process to earn a stock exchange listing. From start to finish, expect this major step to take at least two years.

SBA Microloans

Applying for a Small Business Administration micro-loan is a quick and hassle-free process. Unlike ordinary SBA borrowing, the micro approach is streamlined, and applicants have a much better chance for approval when amounts are not excessive. Having a healthy credit score and using it to your advantage, paired with at least two years of operations behind you make your chances of approval considerably higher.

Accounts Receivable

Selling your accounts receivable at a discount is an age-old method of raising money. If you take the time to shop around and get the best deal, and if you have enough accounts receivable volume to make a difference, doing a conversion can be one of the fastest ways to funnel cash into a growing company.

Life Settlements

If you own a life insurance policy, you can convert it into fast cash via a life settlement. Using this technique to sell to a group of investors, policy holders essentially let someone else takeover premium payments and ownership of the final payout in exchange for a negotiated price. You can review a guide on how to sell your life insurance policy for cash and get started. One of the main benefits of this strategy is that you can use the proceeds for anything you wish.

So, if business growth is on the agenda, turning an unneeded or unwanted policy into capital can be a wise move.

Partnerships

Some of the world’s most famous companies started out with single owners but later teamed up with other organizations for the sole purpose of growth. In the world of private medical, legal, and engineering practices, forming partnerships with other people is the most common way for tiny firms to become large ones.

However, any type of business can use partnering to reach new heights. It’s best to do a formal search in order to identify willing and appropriates candidates. In some cases, getting all the legal details covered can take a year or more. But for very small entities, a few months might be all that’s needed.

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