Business Expansion Loans: How to Finance Your Business Growth From Our Partners
Business Expansion Loans: How to Finance Your Business Growth From Our Partners
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SBA 7(a) loan
Best for established business that can’t qualify for bank financing
Max loan amount
$5,000,000
Min. credit score
650
Est. APR
10.50-14.00%
Pros
- Large borrowing maximums.
- Interest rates are capped.
- Long repayment terms available.
Cons
- Collateral is typically required.
- Longer processing times than online lenders.
SBA 7(a) loan
Best for established business that can’t qualify for bank financing
Max loan amount
$5,000,000
Min. credit score
650
Est. APR
10.50-14.00%
Pros
- Large borrowing maximums.
- Interest rates are capped.
- Long repayment terms available.
Cons
- Collateral is typically required.
- Longer processing times than online lenders.
Fundomate- Business funding
Best for flexible qualification requirements
Max loan amount
$500,000
Min. credit score
600
Est. APR
18.00-75.00%
Pros
- Cash can be available in as little as 24 hours.
- Can get a discount for prepaying your loan.
Cons
- Rates can be high compared with traditional banks.
- May have to pay an origination fee.
Fundomate- Business funding
Best for flexible qualification requirements
Max loan amount
$500,000
Min. credit score
600
Est. APR
18.00-75.00%
Pros
- Cash can be available in as little as 24 hours.
- Can get a discount for prepaying your loan.
Cons
- Rates can be high compared with traditional banks.
- May have to pay an origination fee.
iBusiness Funding - Online term loan
Best for established businesses that can’t qualify for bank or SBA loans
Max loan amount
$500,000
Min. credit score
660
Est. APR
15.22-45.00%
Pros
- Cash can be available within two business days.
- Competitive rates among online lenders.
- Terms up to seven years.
- iBusiness Funding also offers SBA loans up to $5 million.
Cons
- Charges an origination fee.
- Must be in business for a minimum of 24 months.
- Minimum credit score is higher than some other lenders.
iBusiness Funding - Online term loan
Best for established businesses that can’t qualify for bank or SBA loans
Max loan amount
$500,000
Min. credit score
660
Est. APR
15.22-45.00%
Pros
- Cash can be available within two business days.
- Competitive rates among online lenders.
- Terms up to seven years.
- iBusiness Funding also offers SBA loans up to $5 million.
Cons
- Charges an origination fee.
- Must be in business for a minimum of 24 months.
- Minimum credit score is higher than some other lenders.
Max loan amount
$1,500,000
Min. credit score
570
Pros
- Cash can be available quickly.
- Get a discount for prepaying.
- No collateral required.
- Low minimum credit score requirement.
Cons
- Charges a factor rate that makes it more difficult to compare costs with other lenders.
- Can’t build business credit.
- Longest loan term is 18 months.
- Charges an origination fee.
Fora Financial - Online term loan
Best for borrowers with bad credit
Max loan amount
$1,500,000
Min. credit score
570
Pros
- Cash can be available quickly.
- Get a discount for prepaying.
- No collateral required.
- Low minimum credit score requirement.
Cons
- Charges a factor rate that makes it more difficult to compare costs with other lenders.
- Can’t build business credit.
- Longest loan term is 18 months.
- Charges an origination fee.
Max loan amount
$10,000,000
Min. credit score
620
Est. APR
5.99-18.00%
Pros
- Funding available within 48 hours.
- Competitive rates and repayment terms.
- Flexible payment options available, including deferment options for certain industries.
- No down payment required.
- Can be used to build business credit.
Cons
- Must have good credit to qualify for no prepayment penalties.
- Charges an origination fee.
JR Capital - Equipment financing
Best for equipment loans
Max loan amount
$10,000,000
Min. credit score
620
Est. APR
5.99-18.00%
Pros
- Funding available within 48 hours.
- Competitive rates and repayment terms.
- Flexible payment options available, including deferment options for certain industries.
- No down payment required.
- Can be used to build business credit.
Cons
- Must have good credit to qualify for no prepayment penalties.
- Charges an origination fee.
Max loan amount
$250,000
Min. credit score
625
Est. APR
27.20-99.90%
Pros
- Cash can be available within the same business day (does not apply in California or Vermont).
- Accepts borrowers with a minimum credit score of 625.
- Streamlined application process with minimal documentation required.
- Can be used to build business credit.
Cons
- Cannot fund North Dakota-based businesses.
- Requires frequent (daily or weekly) repayments.
- Interest rates can be high compared with traditional lenders.
- Charges origination fee.
OnDeck - Online term loan
Best for fast funding
Max loan amount
$250,000
Min. credit score
625
Est. APR
27.20-99.90%
Pros
- Cash can be available within the same business day (does not apply in California or Vermont).
- Accepts borrowers with a minimum credit score of 625.
- Streamlined application process with minimal documentation required.
- Can be used to build business credit.
Cons
- Cannot fund North Dakota-based businesses.
- Requires frequent (daily or weekly) repayments.
- Interest rates can be high compared with traditional lenders.
- Charges origination fee.
Max loan amount
Undisclosed
Min. credit score
700
Pros
- Bank loan with competitive interest rates.
- No collateral required.
- Bank of America’s Preferred Rewards program can offer interest rate discounts and other perks.
Cons
- Can be slow to fund.
- Prepayment fees may apply to early repayments.
- Must be an existing Bank of America customer to apply online.
- Charges an origination fee.
Bank of America Business Advantage Unsecured Term Loan
Best for inexpensive financing
Max loan amount
Undisclosed
Min. credit score
700
Pros
- Bank loan with competitive interest rates.
- No collateral required.
- Bank of America’s Preferred Rewards program can offer interest rate discounts and other perks.
Cons
- Can be slow to fund.
- Prepayment fees may apply to early repayments.
- Must be an existing Bank of America customer to apply online.
- Charges an origination fee.
Accion Opportunity Fund Small Business Working Capital Loan
Best for low-or-moderate-income business owners
Max loan amount
$250,000
Min. credit score
600
Est. APR
8.49-24.99%
Pros
- Loan amounts from $5,000 to $250,000.
- Customized loan terms.
- No prepayment penalty.
Cons
- Slower processing speed compared with online lenders.
- Charges an origination fee.
- Not available in all U.S. states.
Accion Opportunity Fund Small Business Working Capital Loan
Best for low-or-moderate-income business owners
Max loan amount
$250,000
Min. credit score
600
Est. APR
8.49-24.99%
Pros
- Loan amounts from $5,000 to $250,000.
- Customized loan terms.
- No prepayment penalty.
Cons
- Slower processing speed compared with online lenders.
- Charges an origination fee.
- Not available in all U.S. states.
What is a business expansion loan?
Generally, expanding your business means finding new ways to generate revenue. An expansion loan gives you capital to invest in your small-business growth. Although you may face certain restrictions based on your lender and loan type, most of these business loans can finance a variety of expansion plans.
Here are some common ways to use a business expansion loan:
- Hire new employees to grow your team.
- Purchase new equipment or upgrade what you already own to improve operations.
- Renovate your existing location to accommodate added foot traffic, a new product or service, or increase efficiency.
- Open a new location to reach a larger customer base and expand your geographical footprint.
- Create and launch a new product or service to draw in additional customers or better serve your current customers.
- Expand into a new market to acquire more customers and increase revenue.
Did you know...
A business expansion loan is different from a business acquisition loan. While the two share similarities, a business acquisition loan is specifically designed to finance the purchase of an existing business or franchise. If you’re looking to grow your business through an acquisition, read NerdWallet’s list of best business acquisition loans.
Types of business expansion loans
Business lines of credit
Similar to credit cards, business lines of credit are a revolving source of capital, which means you can spend up to a certain limit and only pay interest on the money you have drawn. Once you’ve paid down your balance, you can continue to draw on the same line.
Business lines of credit are available from banks and online lenders, and are generally used to cover gaps in cash flow, or short-term needs; however, they can also be used for equipment purchases or expanding your inventory or product lines to aid business growth.
Equipment loans
Equipment loans are business loans that are used to purchase large pieces of equipment or machinery. They are available through banks, online lenders and specialty lenders. Equipment loans are a type of asset-based lending that are secured by the equipment you’re buying, making them relatively low risk for lenders.
Equipment loans may help your business gain assets needed to grow revenue, making them a good long-term investment for business growth.
Commercial real estate loans
Commercial real estate loans function similarly to consumer mortgages, and are used to buy business property, such as office space, warehouses or storefronts. You can finance commercial real estate purchases with banks or credit unions, online lenders, CDFIs or SBA lenders.
Owning commercial real estate can help your business grow by making space for expanded business operations, save you money on a commercial lease or even bring in rental income on investment properties.
Where to get a business expansion loan
Banks and credit unions
Banks and credit unions can provide a variety of business expansion loans, such as term loans, business lines of credit and equipment financing. These lenders typically offer loans with low interest rates, long repayment terms and high maximum loan amounts.
However, to qualify for a bank loan, and low interest rates, you’ll need to meet strict eligibility criteria, including excellent credit, strong finances and several years in business. And with some loans, you may also need to put up collateral to secure your loan.
SBA lenders
SBA loans are issued by participating lenders, typically banks and credit unions, and partially guaranteed by the U.S. Small Business Administration. Several types of SBA loans, including 7(a) loans and 504 loans, can be used to expand or grow your business.
SBA 7(a) loans can be used for a wide variety of purposes and offer loan amounts up to $5 million. Repayment terms are available up to 25 years.
SBA 504 loans, on the other hand, must be used to buy existing buildings or land, new facilities, machinery or equipment. These loans max out at $5 million (they can go up to $5.5 million for select projects) with repayment terms up to 25 years.
Although interest rates on these loans can range, they’re subject to guidelines set by the SBA. Currently, SBA 7(a) loan rates vary from
10.5
% to 14
%.Compared with bank loans, SBA loans can be easier to access — although, in most cases, you’ll still need good credit, solid finances and multiple years in business to qualify.
Online lenders
Online lenders can also offer a range of different financing options — long-term loans, short-term loans, business lines of credit, equipment financing — that can be used to expand your business. Compared to bank and SBA lenders, online lenders typically have streamlined application processes and can fund loans within a few days.
Maximum loan amounts, repayment terms and interest rates on these loans vary widely from lender to lender. To get the most competitive rates and terms from an online lender, you’ll typically need good credit, strong finances and a few years in business. However, many online lenders have more flexible requirements and are willing to work with newer businesses and those with fair or bad credit.
If you’re looking to finance a large expansion project, note how a loan with higher interest rates and shorter repayment terms may impact your cash flow. You’ll want to make sure that you can afford the amount and frequency of your payments before you take on any debt.
Nonprofit lenders
Nonprofit lenders typically offer loans to borrowers in traditionally underserved communities, such as women, veterans and minority groups. These organizations often issue smaller-sized loans (i.e., microloans) but are more willing to work with newer businesses and those with fair or bad credit.
If you’re looking to finance a smaller expansion project, or can’t qualify for other loan options, a nonprofit lender in your community may be a good option. Nonprofit lenders usually provide business assistance, such as training, coaching and other educational resources, in addition to funding.
» MORE: Top nonprofit business loans
Pros and cons of a business expansion loan
Pros
If you don’t have a lot of cash on hand, a business expansion loan can help you capitalize on opportunities to add long-term value to your business by purchasing commercial real estate, vehicles or revenue-generating assets.
Taking a business loan rather than selling company equity will help you access capital without sacrificing ownership in your business.
Cons
Depending on the type of loan and your business’s qualifications, business financing can be expensive and end up costing you more in the long run. Make sure you are thoughtful about your loan purpose and can afford the monthly payments.
Even if a great opportunity presents itself, if your business doesn’t have the cash flow to support an additional debt payment, a business expansion loan may end up setting you back further.
How to get a business expansion loan
1. Determine if you’re ready to expand
Before looking for an expansion loan, you’ll want to make sure that your business is ready for growth and that you’re prepared to take advantage of new financing. Here are some questions to ask yourself to help you make that decision:
- Do you have a well-developed plan for expansion? Your plan should specify how you’re going to use any potential loan funds and how your growth plan is going to impact your business in the long-run.
- Do you have steady cash flow? You’ll need steady cash flow to repay any debt you take on, as well as manage regular business expenses. If your cash flow can’t support your expansion plans, it may be worth waiting until loan payments fit into your budget.
- Is your business in demand? Ideally, you’ll want to expand your business when you’ve seen an increase in sales or a growing customer base — and when you think there is an opportunity to continue this momentum.
Once you decide that you’re ready for an expansion loan, confirm how much funding you need and determine which type of business loan is right for your needs.
2. Evaluate your qualifications
Most lenders will consider your personal credit score, time in business and annual revenue when underwriting your loan application. If you’re getting a business expansion loan to buy property or equipment, the lender may request a valuation or appraisal of that property or equipment.
Some lenders may also look at your cash flow, financial accounts and available collateral, among other criteria. You’ll want to review your business qualifications ahead of time so you know where you stand.
3. Compare lenders
You should explore and compare multiple lenders to find the best business expansion loan for your needs. When looking at different options, consider factors such as business loan rates, repayment terms, loan amounts, funding speed and customer service. It can also be helpful to research the lender and read reviews from other small-business owners.
4. Submit your application
The business loan application process will vary from lender to lender. Typically, online lenders require minimal documentation, whereas banks and SBA lenders will be more detailed.
In general, you can expect to provide:
- Basic information about your business, such as your business name and tax ID.
- Business and personal bank statements.
- Business and personal tax returns.
- Business financial statements, such as profit and loss statements and balance sheets.
- Basic information about the business owners, such as Social Security numbers and addresses.
After you submit your application, it can take anywhere from a few days to a few weeks — or more — to receive funding. Online lenders may be able to fund your business expansion loan within a few days, whereas banks and SBA lenders may take a few weeks or even months.
Frequently asked questions
To get money to expand your business, you can tap into your personal savings, get venture capital from investors, set up a crowdfunding campaign or take on debt through a small-business loan. You could also apply for free funding in the form of small-business grants.
You could expand your business with an SBA 7(a) or 504 loan, a standard bank loan or a term loan from an online lender. You could also use equipment financing, a line of credit or a microloan. The right loan type will vary based on your needs.
An expansion loan can be a good option if you’ve determined your business is ready for growth and it can handle taking on new debt. Ideally, you’ll find a loan option that offers favorable interest rates and repayment terms, so that you can move your business forward in the most sustainable way.
Last updated on January 2, 2025
Methodology
NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer small-business friendly features, including: transparency of rates and terms, flexible payment options, fast funding times, accessible customer service, reporting of payments to business credit bureaus and responsible lending practices. We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodology for small-business loans and our editorial guidelines.
Wondering if you qualify?
It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.
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