Small Business Expansion Loan

Acquiring a small business expansion loan does not have to be as difficult as it may seem. At this stage you have already proven your business model to be sound and are gearing up for growth. Lenders are amiable to these conditions as long as you do not grow too fast. Excessive growth causes lenders heart burn; however, moderate growth is bankable.

For any commercial expansion loan request, lenders will want to see you fund a portion of the expansion. This down payment could be as little as 10% of the total expansion request. Be prepared to show the lenders you are committed to the business with a down payment. The larger your down payment the more likely a lender will be to fund the loan.

Lenders will analyze your growth and repayment from three sources. First they will want to see if the business operating as normal will have the ability to repay the loan. Next the lender will look at a liquidation scenario to determine whether or not they could recover the money loaned if you were to fail. Lastly, a lender will look to the owners, guarantors and key principles to determine what capacity exists for repayment of the loan. The last scenario occurs if all else fails.

Try to see all the angles for the growth and the risks that are represented. The more questions you anticipate the lender having the more sound your credit request will be.

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