If your business is among the few that successfully navigate those tough early years, you might be wondering, “what’s next?” If you’re lucky or strategic enough to generate multiple income streams, need extra staff, or plan to build a physical location, you’ll need money.
When your business is growing, a slowdown in cash flow can hurt both short and long-term financial health and goals. So how can a small business keep up with the demands as it gradually becomes a mid-sized company?
Before you start to worry, think about how the Small Business Administration (SBA) can assist you. Depending on your business’s direction, maturity, and current debt, you can explore various loans from the SBA. Before applying for any loans, take some time to answer a few key questions to evaluate your business’s readiness for financing growth. Here are some ways the SBA can support your financial future:
Under the CDC/504 loan program, the SBA offers funds for businesses to purchase real estate, new machinery, and equipment, or make improvements like landscaping. If you need to renovate your existing office or facility, these funds can also help.
The SBA microloan program provides loans to small businesses and qualified non-profit groups to start and expand their operations. Loan amounts are capped at $50,000 and can be used for new equipment, supplies, or working capital. Each micro lender has its own qualifications and requirements.
The most common SBA loans are through the 7(a) Loan Program, which has no minimum loan amount but a maximum of $5 million. In the 2015 fiscal year, the average loan amount was over $300,000. Check the eligibility criteria for 7(a) loans.
The SBA doesn’t lend money directly to entrepreneurs but sets certain guidelines for loans provided by its partners, which include lenders, community development organizations, and micro-lending institutions. The SBA helps reduce some of the risks for lenders by guaranteeing loan repayment.
Review your past few quarters and make projections for the next six months to two or even five years. Consider the best and worst-case scenarios, especially if your business depends on a specific demographic, technology, or season. Involve your trusted staff members, advisors, and accountant in this process for support.
Financing a growing business is a good problem to have, as long as you understand your options and how they can help your situation. Remember, the SBA is dedicated to supporting small businesses and wants to see them succeed. For more information about SBA loan programs, reach out to the SBA directly.
Whatever you decide, don’t go it alone. Consult a professional or a SCORE mentor and ensure you’re well-informed to make the best decision for your business success.
