As a business owner you will no doubt have to decide at some point if you want to expand your company or not. When should you pull the trigger on this expansion? This comes down to a number of factors, and not all of them are so obvious. If this is the time to expand, you may need to borrow money to do it, and there are factors to consider in this decision as well. We will discuss whether or not you should apply now for a business loan in today’s discussion.
First, we should discuss your business plan. If you don’t have a business plan creating one should be your first step. If you require assistance with this you should contact the local SBA office in your area. They can assign an agent to your company to walk you through the process of setting up your plan and making sure nothing has fallen through the cracks. Already have an existing plan with an existing business? Time to update the plan, you are making a major change to your company and you have to use the same diligence in planning the impact of this change. It is not enough to just say you are making enough to expand, you have to judge the potential success or failure of your new expanded company before you apply now for a business loan.
Even if you paid for your initial business by getting a loan, it may not be your best option for your expansion. For one, you will definitely get better terms from venture capitalists if you are expanding an already successful company. This is much less of a shot in the dark than investing in an idea that is not yet a company. Chances are you can get all the funding you need without giving up too much equity in your company. This isn’t to say a loan is always the wrong choice, but you should reevaluate your options given your new circumstances.
If you don’t have a clear plan to make your expanded company profitable, and pay for the loan you really shouldn’t apply now for a business loan. If on the other hand you have a clear plan, and you are able to find a loan with rates you can afford, it can be a great way to move your company to the next level.