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SME Guide

How to Finance Your Business Growth Without Stress

Expanding your business often requires additional capital to invest in new equipment, inventory, staff, marketing, and other areas. But the typical finance options for growth like business loans come with headaches of paperwork, tight repayment schedules, and potential denials.

The good news is many alternatives exist today to fund business expansion in a much more accessible, flexible and stress-free way. Here are effective strategies any growing business can utilize to finance their next stage of growth without headaches:

Crowdfunding: Leverage Your Customers and Fans

Crowdfunding platforms like Kickstarter and Indiegogo allow businesses to raise funds directly from their loyal customers and brand advocates. Just create a compelling campaign page showcasing your expansion plans and potential new products.

Offer exciting rewards at various contribution levels. Market the campaign creatively through email lists, social media, influencers and PR outreach. The support of passionate fans enables raising needed capital in an easy, expedient way.

Credit Cards: Put Your Spending to Work

While caution is required to avoid high interest rates, business credit cards strategically used can provide an ongoing source of expansion financing. Charge inventory orders, equipment, marketing expenses, software, and other growth needs to credit cards offering 0% introductory APR periods (often 12-15 months).

Pay off the balance during the 0% interest period. Many cards also offer generous sign-up bonuses and points back on business spending. With discipline, credit cards give flexibility to spread out upfront costs over time.

Business Lines of Credit: Funds On-Demand

Securing a business line of credit provides flexible access to funds as needed, without requiring a loan application each time. Borrow only what you require and make interest-only payments on outstanding balances.

Lines of credit from online lenders like Kabbage and Bluevine are quick and easy to apply for. With many, you can access funds the same or next day after approval. The flexibility of credit lines fund growth on your timeline.

Merchant Cash Advances: Leverage Future Sales

Merchant cash advances provide lump-sum capital in exchange for a percentage of your future credit card and/or debit card sales. There are no fixed repayment schedules. Instead, you pay back a set percentage daily or weekly until the full amount plus fees are repaid.

Approval is faster and qualification easier versus a traditional business loan. While expensive if used long-term, merchant advances shine for providing quick capital when growth opportunities arise.

Revenue-Based Financing: Align Repayment with Growth

In revenue-based financing, you receive an upfront sum of capital to expand your business. Repayments are then structured as a percentage of your monthly or quarterly gross revenue until the amount is repaid – usually over 6-18 months. The faster your revenue grows, the faster you repay the financing.

This aligns repayment with the success and growth enabled by the capital. Lenders like Clearbanc and Capify specialize in quick, almost automated revenue-based financing that can fund growth the same week you apply.

Purchase Order & Invoice Factoring: Unlock Cash from Orders

Factoring allows access to capital tied up in unpaid customer invoices or purchase orders. An investor provides around 70-90% of the invoice/order amount upfront. You then repay them the remaining balance (minus fees) once customers pay the invoices.

Factoring turns future receivables into immediate working capital to reinvest in scaling your business. It provides funds even if you have cash flow challenges or limited credit.

Asset-Based Loans: Tap Value in Property

Asset-based loans allow businesses to leverage the value in equipment, inventory, accounts receivable, real estate or even investments to secure financing. With asset-based lending, the assets act as the collateral rather than your creditworthiness.

Loans against high-value assets like equipment, property or investments can provide sizable capital on reasonable terms. This unlocks their value to propel business growth.

Rollovers as Business Startups (ROBS): Leverage Your 401K

A ROBS lets entrepreneurs use their existing 401K retirement savings to finance a business or franchise startup or expansion without early withdrawal penalties. You form a C corporation that sponsors a 401K plan. Your individual 401K is then rolled over into the corporate plan to purchase the business assets.

While a somewhat complex strategy requiring professional guidance, a ROBS provides potentially large amounts of capital without debt or repayment. The biggest risk is the personal financial exposure if the business fails.

Family & Friends: Leverage Those Closest to You

Seeking investments from family members and close friends is an oft-overlooked financing source due to the interpersonal dynamic. But many relatives or friends may be excited to contribute equity or debt financing to a promising venture in exchange for a return.

Set clear investment terms and put legal agreements in place. While awkward if things go badly, friends and family can provide startup funding without dealing with traditional lenders.

Virtual & Pop-Up Shops: Test Concepts with Less Risk

Rather than jumping into long leases, expand retail footprints or brands through temporary pop-up storefronts or easy-to-launch virtual stores. Testing new retail concepts, locations or products online/short-term allows validating demand and optimizing operations before taking on the bigger risk of long leases and large inventory orders.

Temporary locations and lean digital storefronts limit required capital while still allowing you to test and refine expansion plans.

Grants and Contests: Free Money for Growth

Government and non-profit grants provide small businesses expansion funding that doesn’t need to be repaid – if you can win them. While highly competitive, grants are worth pursuing. Local governments and community organizations also regularly sponsor business competitions with free seed funding awards.

Programs like the Small Business Innovation Research grant support R&D and technology commercialization. For minimal effort, grants and contests offer free seed capital. Be prepared to wait months for decisions.

Direct Public Offerings: Crowdfund Capital from Anyone

A Direct Public Offering or DPO allows private businesses to raise expansion capital by selling shares or equity crowdfunding style to the public. After filing required paperwork and disclosures, you can market shares in your company to the public. Even small investments add up.

DPOs allow raising fresh capital while retaining control and avoiding burdensome lending rules. However, the administrative process is time-consuming and costs are high unless raising over $1 million.

Accelerators & Incubators: Free Resources and Mentorship

Business accelerators and incubators provide education, mentorship, resources, office space, and growth funding to startups and small businesses. While highly competitive, getting accepted to a top accelerator can be transformative thanks to access to their networks of advisors, investors, and business partners.

Even without taking on funding, incubators provide free or cheap access to services, education, and experts to enable business growth. Take advantage of local programs.

Avoiding the headaches of traditional lending by strategically tapping into these alternative sources of growth capital can help any business scale smoothly. Match options to your specific funding needs, timeline, and risk appetite. Blending several strategies provides maximum flexibility to expand on your own terms and timeline. The key is exploring all the capital options available today to fund growth without creating stress.



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