Small businesses are driving the U.S. economy’s growth, a trend that appears unlikely to slow down any time soon.
In fact, a recent Harvard Business School study indicated small businesses lead to the creation of more than 66 percent of all new jobs. Also, small businesses employ at least 50 percent of the private sector workforce and have delivered 65 percent of total net job creation in the United States since 1995.
Clearly, small businesses play an important role in today’s business environment. But the business world remains unpredictable, and for small business owners, it is essential to keep a close eye on your day-to-day operations to identify opportunities and risks.
For example, one question you may want to consider: How can I invest in my own business?
Many small business financing options are available that can help you transform your ordinary business into an exceptional one. However, not all of these options are identical, and what may work for one business operator won’t necessarily serve as the best choice for another.
So what does it take to fund a successful business expansion? To better understand financing for business expansion, let’s take a closer look at five of the most common financing options for small business operators.
1. Work with Local Small Business Development Centers
Building your business may seem like a long, lonely road, at least until you discover the support available from Small Business Development Centers (SBDCs).
SBDCs are designed to meet the needs of business operators in a particular community and provide technical assistance to small business owners and entrepreneurs. They also promote local and regional economic development by offering business advising, training and other resources to help you get your business on the right track.
Today, you can enjoy a wide assortment of services from SBDCs, including:
- Support for the creation of your business plan.
- Assistance with your manufacturing efforts.
- Disaster recovery support.
- Help with your market research.
- Exporting and importing guidance.
SBDCs are available nationwide and are supported by the U.S. Small Business Administration (SBA). There are currently 63 host networks across more than 900 delivery points as well, ensuring you should have no trouble finding an SBDC near your home.
Pennsylvania business operators can reap the benefits of local SBDCs, too.
In the Keystone State, Shippensburg University, Harrisburg Area Community College (HACC) and other local colleges and universities boast SBDCs that provide classes, counseling and other resources for small business owners and entrepreneurs. As a result, you can call or visit an SBDC any time you choose and receive additional support for your business.
2. State Programs
State programs are available that empower business operators to move one step closer to achieving their personal and professional goals.
For Pennsylvania business operators, two of the most common state programs for small business expansion include SBA 504 and the Pennsylvania Industrial Development Authority (PIDA) financing programs.
The SBA 504 financing program offers a terrific option if you’re looking for a low-interest loan to jump start your business or keep it operating. This program is available to for-profit businesses that meet a number of eligibility requirements, including:
- Perform tasks or provide goods and services within the United States.
- Have developed a “feasible” business plan.
- Possess management expertise related to the industry in which a business operates.
- Able to show that you have the ability to repay the loan based on the projected operating flow of your company.
- Intend to use the loan for a specific purpose relative to a company’s day-to-day operations.
In addition, under the SBA 504 financing program, your business must have a tangible net worth of less than $15 million and an average net income less than $5 million after taxes. You’ll also need to provide a “Statement of Personal History” that show you have followed the laws and regulations of your community and have been willing and able to repay loans in the past.
The PIDA financing program gives you the ability to access low-interest loans and lines of credit to ensure you can get the financing you need to foster and retain full-time jobs in the Keystone State. This program offers loan applications that are supported by a network of certified economic development organizations (CEDOs) as well.
However, it is important to note the PIDA program is designed to provide financing for only a few uses, such as:
- Land and building transactions
- Construction and renovation expenses
- Machinery and equipment investments
- Lines of credit for working capital and accounts receivable
- Multi-tenant facility projects
- Industrial park tasks
To apply for a PIDA loan, you can meet with a CEDO in the county where your business is currently operating or plans to operate in the future. You can collaborate with a CEDO to find out if you qualify for a PIDA loan, and a CEDO will outline all of your financing options.
3. Grants
Many grants are available that could help you take your business to new heights. These grants can offer long-lasting value and are available to companies across all industries.
For instance, you can learn about a vast array of grants at any time simply by searching the web. Many sites are updated regularly — ensuring small business operators can discover new grants throughout the year.
Grants also commonly are offered to small businesses in up-and-coming areas. And in some cases, you may be able to benefit from a grant by establishing a small company in a new city or town.
There are many pros and cons associated with applying for grants that a small business must consider, including:
- Significant financial opportunities — A grant is like a financial gift, and as such, does not have to be repaid.
- Easily accessible — Many grant sites provide plenty of helpful information to ensure small business operators can find and apply for grants without delay.
- Unlimited options — Grants are available consistently, guaranteeing small business operators can qualify for a wide assortment of grant opportunities.
Comparatively, some of the problems commonly associated with grants include:
- Time-intensive — You may need to commit several hours or even days to complete all the necessary paperwork for even a single grant application.
- Extensive planning — You’ll need to justify your purpose as part of a grant application, which may require you to create charts, graphs and other visuals that show how your business is planning for the future and how it would use the grant funds.
- Steep competition — Dozens, hundreds or even thousands of small businesses may compete for a single grant, which means you’ll likely face plenty of competition along the way.
Grants offer a mix of risks and rewards for small business owners. But if you are fortunate enough to earn a grant for your business, you can benefit from extra financial resources that could help you improve your company’s day-to-day operations.
4. CAEDC Internal Financing
Did you know that the Cumberland Area Economic Development Corporation (CAEDC) offers internal financing options for small business owners and entrepreneurs? As the Keystone State’s fastest-growing county, Cumberland County goes above and beyond the call of duty to assist local business operators and will work with you to guide your company to long-lasting success.
CAEDC empowers business operators to finance a Cumberland County company thanks to a low-rate, fixed-term loan and a minimal down payment. It even provides a vast array of financing options to help you launch and maintain a successful business, including U.S. Department of Agriculture loans, Revolving Energy loans, Tourism Infrastructure loans, Small Business loans and Community Development grants.
Perhaps best of all, CAEDC provides businesses with fast, easy access to economic incentives that promote healthy and sustainable growth.
Some of the business incentives available in Cumberland County include:
- Enterprise zones
- Foreign trade zones
- Keystone Innovation Zone (KIZ)
- SBA Historically Underutilized Business (HUB) Zones.
CAEDC also provides expert insights into what it takes to launch or relocate a business to Cumberland County. From tax credits information to a large range of lending options, CAEDC will make it easy for you to learn how to create a successful business and ensure your company thrives for years to come.
5. Crowdfunding Platforms
Crowdfunding platforms are becoming exceedingly popular among small business operators, and perhaps it’s easy to understand why. These platforms enable business owners to reach out to a large group of investors quickly, highlight their products and services and request direct funding.
There are many benefits to using crowdfunding platforms, such as:
- Fast access to capital — Connect with investors from across the globe so you are better equipped to act upon your business idea.
- Limited risk — Ask investors for support, and investors who are interested in your company can donate funds to help your business grow.
- Improved marketing — Provide details about your brand and mission and generate financial support for your company simultaneously.
- Proof of concept — Highlight the value of your business and convince others that your company is worth funding.
- Extra feedback — Brainstorm ideas with investors who are interested in helping your company grow.
In addition, there are numerous crowdfunding platforms available, including:
- Kickstarter
- Indiegogo
- RocketHub
- GoFundMe
On the surface, crowdfunding platforms appear to be perfect for small business operators. But even though these platforms provide quick, easy access to a large group of prospective investors, they are far from flawless. In fact, crowdfunding opportunities offer no guarantee of business success. And even if you receive financial support from investors via crowdfunding platforms, you’ll still need to do plenty of work to ensure that your company can succeed.
How Can I Accelerate My Business Expansion?
Today’s small business operators are optimistic about their growth opportunities, and rightfully so! The global economy continues its upturn from the Great Recession, creating new opportunities for small business owners every day. Plus, the commitment and resolve of many small business operators remain strong, and those who are dedicated to doing what it takes to succeed usually can thrive in any business setting.
The majority of small business operators remain confident in their day-to-day efforts, too. For example, a recent study of small business owners conducted by financial services company The Hartford indicated 79 percent of respondents took a conservative approach to their everyday operations last year, up from 75 percent in 2014. Also, the study showed 52 percent of small business owners were confident that the economy became stronger in 2015, an increase from 33 percent in 2012.
Moreover, The Hartford study revealed there were several key traits that many small business operators shared, including:
- Unafraid to take risks when necessary — Business operators who took risks often were more successful than those who avoided risks at all costs.
- Prepared to search for talented support — Having a large pool of qualified candidates to fill roles within their organizations played an important role in the success of many small businesses.
- Ready to use technology to their advantage — Social media is providing small business operators with an opportunity to respond to customer feedback faster than ever before. And as a result, these business owners are able to better assist customers with their requests and concerns.
- Open to receiving professional guidance and assistance — Taking a team-oriented approach that focuses on receiving professional support when available has helped many small business owners transform fledgling companies into profitable ones.
When it comes to accelerating business expansion, there may be roadblocks that slow you down. Fortunately, many helpful resources are available to ensure you can overcome these hurdles consistently.
At CAEDC, we operate as a 501(c)(3) non-profit corporation that is committed to helping you find the necessary financing for business expansion. We are located in South Central Pennsylvania and provide many business financing and grant solutions. And if you ever have concerns or questions along the way, we’re always happy to respond to your queries at any time.
In addition, we specialize in financing in a number of key business areas, including:
- Real estate acquisition and construction
- Working capital
- Machinery and equipment
- Land
- Building
- Refinancing
Want to learn more about how we can help your small business accelerate its expansion? Contact us today to find out how our team can provide you with a custom financing program to fit your project, offer below-average interest rates for your small business loan and provide other financial assistance.
