Business loans for business expansion

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Standing still is rarely an option for any successful business. It is a highly competitive and fast-moving market out there – with those content simply on biding their time facing the prospect of going under and the laurels going to those that effectively grow and expand.

Even in the face of the uncertainties over Brexit, many companies are looking to diversity and innovation along with business expansion, according to a report by the Confederation of British Industries (CBI) in a paper published in 2018.

Although the working capital available to your company might have achieved some measure of stability, however, if you want to grow, expand or diversify that is likely to require additional finance – and one of the most ready and widely available sources is the debt finance provided by business loans.

The cost of expansion

There are several areas of investment you might need to consider in your quest for business expansion, including the need to:

  • re-equip and re-fit your premises and production processes, for example;
  • invest in new plant and machinery;
  • launch a marketing campaign for the promotion of new product lines and services;
  • acquire and re-locate to new headquarters;
  • takeover and buy out a rival company; or
  • expand your fleet of vehicles.

Business loans may provide you the wherewithal to accomplish these and many other targets for expansion.

Secured loans

If you are prepared to offer company assets of suitable value as collateral against the borrowing, a considerable sum may be borrowed, with repayment terms potentially stretching over tens of years.

When collateral is offered in this way, secured business loans may be offered at attractive rates of interest – although you bear the risk of forfeiting those assets, of course, in the event of defaulting on the repayments.

The most common type of secured borrowing is a mortgage – when the advance is secured against a major physical asset – and may be appropriate for the purchase of commercial property, ships and boats, or aeroplanes.

Unsecured loans

Smaller business loans – of, say, up to £100,000 – may be unsecured and the repayment terms are typically for a shorter duration.

Without the protection of any collateral, lenders may charge a higher rate of interest but you avoid the need to place any assets at risk if you default on repayments – any such failure is likely to result in legal action to recover the debt, however, and your credit rating may be severely affected, so making it more difficult to borrow or obtain any form of credit in future.

Even though you may be paying a higher rate of interest than on a secured business loan, the shorter repayment term means that the total amount of interest payable may still be entirely acceptable.

Business loans for business expansion

Whether it is a secured loan which you arrange for a major capital purchase, with borrowing spread over several tens of years, or an unsecured loan for the acquisition of less expensive assets, which you may repay over just a few years – or even less – business loans may provide the essential additional funding required for you to grow, expand or diversify your business.