Borrowing money to fund expansion

Posted in: Blog, Funding, Uncategorized by Brian Cauble on September 13, 2009

You have a few options if you need a decent, but not huge, amount of money. There are three main types that I can think of that would apply in this situation: Debt Financing, Equity Financing, and Commercial Finance.

Debt financing means taking out a loan. Not all loans are created equal and some will want you to put up your personal property, others will not. I would consider going to the Small Business Association. It is their mission to help people like yourself. Also check with any bank that you have a long standing relationship. They will definitely want to look at your business finances to determine if they think you will be able to pay them back.

Equity financing means taking an investor. When you need 50,000 to 500,000, Angel investors can be a good option. The key is they will be looking for a good return on their investment. So if your company is likely to grow slowly, I doubt they would be interested. The Birmingham Angel network is one place to look at.

Commercial finance means borrowing from a lender based on your business assets. If you have anything worth money in your business (real estate, equipment, stocks, A/R, etc), you can borrow against this. Porter capital is a local firm that does this. It is a loan, but only against your business assets.

I hope that helps you get the money you need. For what it is worth, I am discussing having Superior bank talk in November about this subject at a meeting.