When you’re talking about expansion, you’re generally referring to a long-term undertaking in your business. Therefore, more often than not, you should seek out a long-term finance solution.
This is also a good time to examine whether debt consolidation is worth considering. If the company has debts, then applying for a loan that covers the cost of the expansion and the outstanding debts, is a great idea.
Keep in mind that a large loan will invariably require large collateral, often 100% security.
You might find that if your company already has considerable debt, then equity finance (where you sell shares in your company in return for a cash injection) might be a useful option.
The total amount of finance you need to raise will determine which of the following options suits you best. For larger amounts, you can consider government lending agencies, equity finance and, if your business is doing really well, a term loan.
For smaller amounts that improve cash flow to enable small expansions, you can consider debtor finance, supplier credit, personal credit, overdrafts, and asset finance (provided you need the money to buy assets).
It is also useful to investigate whether you can use a number of these options to make up the amount you require for the expansion.
What are your options?