How entrepreneurs use SBA loans to grow their businesses

  • October 6, 2019

As a successful entrepreneur, you want to do more than survive. You want to thrive. And figuring out how to grow a business at a satisfactory rate can be challenging. Fortunately, small business owners have options when deciding how to grow a company, even in competitive environments.

Often, expanding or growing an existing business comes at a financial cost. Measured growth can occur, but the rate of growth is limited by the amount of available funds after expenses are paid. Entrepreneurs can use outside funding such as a government-backed U.S. Small Business Administration (SBA) loan to pay for the resources needed to gain new customers and enter new markets.  

Let’s take a look at five ways you can use an SBA loan to grow your business.

1. Stop paying rent

Say “goodbye” to lease negotiations by purchasing a building or other physical space that your business currently occupies.  It’s possible to purchase commercial real estate with an SBA loan that has affordable monthly payments. Owning the property may also have tax advantages. Consult with a professional tax advisor for details.

2. Secure expansion capital

When physical work space is an issue, business owners might be prompted to search for a larger facility. Extra room for new employees, equipment, and customers is made possible with a physical expansion. A new or additional location provides extra square footage for operations and can attract new customers in the local, regional, national, or international market.

3. Relieve cash flow concerns

Businesses can experience economic slowdowns for a variety of reasons. New and established companies might encounter cash flow challenges, which could hamper production levels or diminish the ability to provide the superior customer service that contributed to your initial success. Additional short-term or permanent working capital in the form of an SBA loan can be used to:

  • Refinance a current loan that has less than favorable terms
  • Fund the salaries of additional personnel
  • Support the growth of another division or line of the business
  • Close the financial gap created by slow-paying customers (account receivables)
  • Stabilize finances when inventory is slow-moving

4. Satisfy equipment needs

As businesses flourish, so do needs for additional equipment and supplies to handle the increased demand. New or upgraded machinery and updated technology could help improve operational efficiency, resulting in increased profits for the business.

5. Maintain a competitive advantage

Expanding service offerings is one way businesses can succeed in a competitive marketplace. Acquiring an existing business that offers related services can provide you an opportunity to create additional income with your existing customer base. An SBA loan can make such acquisitions a possibility.

Our experienced, in-house lending team is here to quickly process your application and determine if you qualify for an SBA loan. Let’s talk about your SBA loan and how you can grow your business starting today.

Live Well, Bank Well