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Business Expansion Loans: How to Finance Your Business Growth

By Randa Kriss, Olivia Chen
Last updated on May 21, 2024
Edited byChristine Aebischer
Fact checked and reviewed
You can use an expansion loan to invest in your business’s growth. Compare top options including bank, SBA and online loans.

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A business expansion loan is used to finance the growth and development of your small business, such as opening a new location, acquiring an existing company or expanding into a different market.
These small-business loans are available from traditional lenders, as well as SBA, online and nonprofit lenders.
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.

How much do you need?

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We’ll start with a brief questionnaire to better understand the unique needs of your business.

Once we uncover your personalized matches, our team will consult you on the process moving forward.

Here are 7 business expansion loans

LenderNerdWallet RatingMax loan amountMin. credit scoreNext steps

SBA 7(a) loan

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Best for SBA business expansion loans

$5,000,000650

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Bank of America Business Advantage Unsecured Term Loan

5.0/5

Best for Bank business expansion loans

Undisclosed700
Read Review

Funding Circle - Online term loan

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4.5/5

Best for Online expansion loans for established businesses

$500,000660

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OnDeck - Online term loan

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5.0/5

Best for Short-term business expansion loans

$250,000625

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Fora Financial - Online term loan

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4.5/5

Best for Business expansion loans for bad credit

$1,500,000570

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Accion Opportunity Fund - Small Business Working Capital Loan

5.0/5

Best for Microloans for business expansion

$250,000570
Read Review

JR Capital Equipment Financing

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4.0/5

Best for Equipment loans for business expansion

$10,000,000620

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Here are 7 business expansion loans

Best for SBA business expansion loans

U.S. Small Business Administration

Max Amount

$5,000,000

Min. Credit Score

650

Best for Bank business expansion loans

Bank of America

Max Amount

Undisclosed

Min. Credit Score

700

Best for Online expansion loans for established businesses

Funding Circle

Max Amount

$500,000

Min. Credit Score

660

Best for Short-term business expansion loans

OnDeck

Max Amount

$250,000

Min. Credit Score

625

Best for Business expansion loans for bad credit

Fora Financial

Max Amount

$1,500,000

Min. Credit Score

570

Best for Microloans for business expansion

Accion

Max Amount

$250,000

Min. Credit Score

570

Best for Equipment loans for business expansion

JR Capital

Max Amount

$10,000,000

Min. Credit Score

620

I'M INTERESTED IN:

Our pick for

SBA business expansion loans

SBA 7(a) loans can be used to purchase equipment or real estate, renovate an existing building and acquire a new business, among other options. These loans are available in amounts up to $5 million with terms up to 25 years.

SBA 7(a) loan

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Max Loan Amount
$5,000,000
Min. credit score
650
Est. APR
11.50-15.00%
7(a) loans are issued by private lenders and backed by the SBA. They offer long repayment terms and low interest rates.
Lowest interest rate

Max loan

$5,000,000

Min. Credit score

650

Apr range

11.50-15.00%

7(a) loans are issued by private lenders and backed by the SBA. They offer long repayment terms and low interest rates.
Read Review

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Our pick for

Bank business expansion loans

Bank of America unsecured business loans don't require collateral, have repayment periods of 12 to 60 months and fixed rates that start at 7.50%.

Bank of America Business Advantage Unsecured Term Loan

Max Loan Amount
Undisclosed
Min. credit score
700
Bank of America’s term loan offers competitive interest rates and flexible repayment terms — with no collateral required.

Max loan

Undisclosed

Min. Credit score

700

Bank of America’s term loan offers competitive interest rates and flexible repayment terms — with no collateral required.

Our pick for

Online expansion loans for established businesses

Funding Circle offers term loans of up to $500,000 to fund your expansion project. You’ll need at least two years in business to qualify, but if you’re approved, funds can be available in as little as two days.

Funding Circle - Online term loan

Read Review

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Max Loan Amount
$500,000
Min. credit score
660
Est. APR
15.22-45.00%
Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.
May fund quickly

Max loan

$500,000

Min. Credit score

660

Apr range

15.22-45.00%

Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.
Read Review

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Our pick for

Short-term business expansion loans

OnDeck offers short-term loans from $5,000 to $250,000 that can be a good option for specific business investments. Repayment terms are available for up to 24 months.

OnDeck - Online term loan

Read Review

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Max Loan Amount
$250,000
Min. credit score
625
Est. APR
27.20-99.90%
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
May fund quickly

Max loan

$250,000

Min. Credit score

625

Apr range

27.20-99.90%

OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
Read Review

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Our pick for

Business expansion loans for bad credit

You may be able to qualify for a short-term loan from Fora Financial with a minimum credit score of 570 and six or more months in business. Loans are available in amounts up to $1.5 million and can be used for a range of growth projects.

Fora Financial - Online term loan

Read Review

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Max Loan Amount
$1,500,000
Min. credit score
570
Fora Financial can be a good fit for borrowers who may fall short of qualifying for traditional bank financing or young but established small businesses looking for speedy financing.

Max loan

$1,500,000

Min. Credit score

570

Fora Financial can be a good fit for borrowers who may fall short of qualifying for traditional bank financing or young but established small businesses looking for speedy financing.
Read Review

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Our pick for

Microloans for business expansion

Accion offers smaller-sized loans to business owners who may not qualify for other funding options. This nonprofit lender also provides training and coaching to help its borrowers grow their businesses.

Accion Opportunity Fund - Small Business Working Capital Loan

Max Loan Amount
$250,000
Min. credit score
570
Est. APR
8.49-24.99%
Accion is a good option for businesses that haven't been able to secure traditional financing. The lender targets its funding efforts toward minority, women and low-to-moderate-income entrepreneurs.

Max loan

$250,000

Min. Credit score

570

Apr range

8.49-24.99%

Accion is a good option for businesses that haven't been able to secure traditional financing. The lender targets its funding efforts toward minority, women and low-to-moderate-income entrepreneurs.

Our pick for

Equipment loans for business expansion

JR Capital offers equipment loans up to $10 million, with no down payment required and competitive rates and repayment terms. Funds can be available in as little as 48 hours.

JR Capital Equipment Financing

4.0
NerdWallet rating 

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Max Loan Amount
$10,000,000
Min. credit score
620
Est. APR
6.99-18.00%
JR Capital provides fast equipment loans and leases, specializing in trucks, trailers and heavy equipment.
4.0
NerdWallet rating 

Max loan

$10,000,000

Min. Credit score

620

Apr range

6.99-18.00%

JR Capital provides fast equipment loans and leases, specializing in trucks, trailers and heavy equipment.

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How Much Do You Need?

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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.

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 good to cover gaps in cash flow, or short-term needs; however, they can also be used for business acquisitions, 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 that’s being purchased, making them relatively low risk for lenders.
Equipment loans may help your business gain assets that add to your ability to bring in 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 for the purchase of 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. For example, the fixed rates on an unsecured business loan with Bank of America start as low as 7.50% and the loan term can be as long as five years.
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/CDC 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/CDC loans, on the other hand, must be used for the purchase of 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
11.5
% to
15
%.
Compared to 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 in 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. For example, Accion Opportunity Fund considers other factors in addition to your credit score and offers loan amounts from $5,000 to $250,000 with interest rates as low as 8.49%.
Plus, nonprofit lenders usually provide business assistance, such as training, coaching and other educational resources, in addition to funding.

Pros and cons of a business expansion loan

Pros

Cons

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, you should 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.

Find the right business loan

The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.
Last updated on May 21, 2024

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.

Learn more

Frequently Asked Questions