How to Finance Expansions for Your Small Business

By J.R Weinger

After dedicating months to running your small business, it’s normal to want to see more growth. But before you can start thinking of the best ways to expand your business, however, gaining the appropriate funding should be your priority. And being a small business, chances are that you are not able to secure as much of a profit yet. Here are ways for you to acquire the proper funding to expand your small business.

Business Loan

Similar to many financial aspects, whenever someone needs a fast way to get the cash they need, they immediately turn to loans. When a person takes out a personal loan, they’re taking what they are approved for and then paying it off on time. Business loans are no different. The process is similar to acquiring a personal loan; however, business loans have limitations on how you can use the money. With a business loan, you can only use the money towards things that are related to it. New equipment, office supplies and better inventory are all things this type of loan can help you with. You can’t use the money to fund anything that relates to you on a personal level.

Life Settlement

Getting a life settlement may seem like a strange way to fund your small business. However, it can be a very beneficial method. Life settlements are when you take your life insurance, which is usually a whole policy, and sell it to a third-party individual. This individual will then become the new beneficiary of your policy. But that’s not all there is to it. In return for receiving the death benefit of your life insurance, the buyer pays you a percentage of what the policy is worth.

For instance, if your policy is worth $425,000 and the buyer is offering 30 percent of the value, you would receive $125,700. Keep in mind that what you are paid depends on the policy and how much the buyer is willing to part with. For more detail about how life settlements work, contact your insurance company for a comprehensive guide. It’s always a good thing to know your options before moving forward to maximize your payout.

Angel Investors

You know how some companies use crowdfunding to finance their various products, services and start-up costs? You can do the same as well. But there’s one type of person you really want to reel in: an angel investor. An angel investor is someone who donates more money than the average crowdfunder. Angel investors can usually donate more to your business and can even become a shareholder. They’re also interested in your product or service and want to see your business thrive.

In fact, there are a handful of businesses that see an overwhelming amount of success because of one person’s generous donation. While there is no absolute guarantee, you can do your best to make your business as enticing as possible. This should include a pitch that makes people take notice, an explanation of how you plan to grow your business and how funding would make that happen.