Business Expansion Loans: How to Finance Your Business Growth
You can use an expansion loan to invest in your business’s growth. Compare top options including bank, SBA and online loans.
A business expansion loan is used to finance the growth of your small business, such as opening a new location or expanding into a different market. These small-business loans
If you have stable cash flow and a well-developed strategy for growth, an expansion loan might be a good choice for investing in the future of your business.
Below, compare some of the best business expansion loan options and learn how to find the right financing for your needs.
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Business Expansion Loans: How to Finance Your Business Growth
| Loan | NerdWallet rating | Best For | Max loan amount | Min. credit score | Next steps |
|---|---|---|---|---|---|
 SBA 7(a) loan with Fundera by NerdWallet | Best for established business that can’t qualify for bank financing | $5,000,000 | 650 | with Fundera by NerdWallet | |
| Pros
Cons
| |||||
 Fundomate- Business funding with Fundera by NerdWallet | Best for flexible qualification requirements | $500,000 | 600 | with Fundera by NerdWallet | |
| Pros
Cons
| |||||
 iBusiness Funding - Online term loan with Fundera by NerdWallet | Best for established businesses that can’t qualify for bank or SBA loans | $500,000 | 660 | with Fundera by NerdWallet | |
| Pros
Cons
| |||||
 Fora Financial - Online term loan with Fundera by NerdWallet | Best for borrowers with bad credit | $1,500,000 | 570 | with Fundera by NerdWallet | |
| Pros
Cons
| |||||
 JR Capital - Equipment financing | Best for equipment loans | $10,000,000 | 620 | ||
| Pros
Cons
| |||||
 OnDeck - Online term loan with Fundera by NerdWallet | Best for fast funding | $250,000 | 625 | with Fundera by NerdWallet | |
| Pros
Cons
| |||||
 Bank of America Business Advantage Unsecured Term Loan with Fundera by NerdWallet | Best for inexpensive financing | Undisclosed | 700 | with Fundera by NerdWallet | |
| Pros
Cons
| |||||
 Accion Opportunity Fund Small Business Working Capital Loan with Fundera by NerdWallet | Best for low-or-moderate-income business owners | $250,000 | 600 | with Fundera by NerdWallet | |
| Pros
Cons
| |||||
Business Expansion Loans: How to Finance Your Business Growth
Max loan amount
$5,000,000
Min. credit score
650
Min. annual revenue
Undisclosed
See Your Loan Optionswith Fundera by NerdWallet
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
Min. annual revenue
Undisclosed
with Fundera by NerdWallet
Pros
- Large borrowing maximums.
- Interest rates are capped.
- Long repayment terms available.
Cons
- Collateral is typically required.
- Longer processing times than online lenders.
Max loan amount
$500,000
Min. credit score
600
Min. annual revenue
$120,000
with Fundera by NerdWallet
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
Min. annual revenue
$120,000
with Fundera by NerdWallet
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.
Max loan amount
$500,000
Min. credit score
660
Min. annual revenue
$50,000
with Fundera by NerdWallet
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
Min. annual revenue
$50,000
with Fundera by NerdWallet
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
Min. annual revenue
$240,000
with Fundera by NerdWallet
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
Min. annual revenue
$240,000
with Fundera by NerdWallet
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.
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
Min. annual revenue
Undisclosed
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
Min. annual revenue
$100,000
with Fundera by NerdWallet
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
Min. annual revenue
$100,000
with Fundera by NerdWallet
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
Min. annual revenue
$100,000
with Fundera by NerdWallet
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
Min. annual revenue
$100,000
with Fundera by NerdWallet
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.
Max loan amount
$250,000
Min. credit score
600
Min. annual revenue
$50,000
with Fundera by NerdWallet
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
Min. annual revenue
$50,000
with Fundera by NerdWallet
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
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
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
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
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
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
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
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 online lenders
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
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
✅ Can boost long-term revenue
✅ Can preserve ownership
Cons
❌ Can be expensive
❌ Potential for setback
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
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
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
4. Submit your application
The business loan application minimal documentation
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
How can I get money to expand my business?
What type of loan would a business take out to expand?
Should I get a loan to expand my business?