Whether it’s acquiring additional commercial space, building an extension, or renovating existing premises, financing the expansion is often the most challenging aspect of expanding your small business’ premises.

Here are five financing options to consider when you are looking to expand your business’ property portfolio.

Bank loans

Traditional bank loans are a common way to finance property expansion. Small business owners can approach their bank with a well-prepared business plan and financial forecasts and banks typically offer competitive interest rates.

In addition, the repayment terms can be negotiated to align with your business’s cash flow to give you more control of your outgoings.

Commercial mortgages

If purchasing a new property, a commercial mortgage may be suitable.

Like a residential mortgage, it allows you to spread the cost over a much longer period.

However, the terms and conditions can be complex, and professional financial advice from an accountant is essential to navigate this path successfully.

Asset financing

For businesses with valuable assets such as machinery or vehicles, asset financing can be a useful option.

This involves using existing assets as collateral to secure funding. It can be a flexible way to obtain finance without compromising cash reserves.

However, if the asset is essential to the business, it can be risky to use it as collateral. Falling behind on payments could mean that the asset is seized.

Crowdfunding

A more recently developed and innovative way to raise funds is through crowdfunding.

By presenting your expansion project on a crowdfunding platform, you can attract investments from individuals who believe in your business idea.

This method may also serve as a promotional tool, creating awareness and building excitement around your brand.

Government grants and schemes

Various governmental bodies offer grants and financial schemes to support small business growth.

These often target specific industries or regional development and can be an attractive option due to favourable terms or even non-repayable grants.

Next steps

Financing property expansion requires careful consideration of the available options and a deep understanding of your business’s financial position and growth prospects.

Each financing method comes with its unique advantages and challenges.

Engaging with an accountancy firm that knows your industry and can guide you through the complexities of financing your property expansion is essential.

To find out how we could help your small business grow to new heights, get in touch.