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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.
By Randa Kriss
Last updated on August 9, 2022
Edited bySally Lauckner

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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, like banks and credit unions, as well as SBA and online 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 5 business expansion loan

Sort by

Make selection

Lender
NerdWallet Rating
Max loan amount
Min. credit score
Next steps

TAB Bank - Term loan

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Best for Bank business expansion loans

$200,000650

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SBA 7(a) loan

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Best for SBA business expansion loans

$5,000,000650

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Credibility Capital - Online term loan

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4.5/5

Best for Online expansion loans for established businesses

$500,000650

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Funding Circle - Online term loan

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5.0/5

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 Business expansion loans for bad credit

$250,000625

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Here are 5 business expansion loan

Best for Bank business expansion loans

TAB Bank

Max Amount

$200,000

Min. Credit Score

650

Best for SBA business expansion loans

U.S. Small Business Administration

Max Amount

$5,000,000

Min. Credit Score

650

Best for Online expansion loans for established businesses

Credibility Capital

Max Amount

$500,000

Min. Credit Score

650

Funding Circle

Max Amount

$500,000

Min. Credit Score

660

Best for Business expansion loans for bad credit

OnDeck

Max Amount

$250,000

Min. Credit Score

625

Our pick for

Bank business expansion loans

TAB Bank offers term loans from $30,000 to $200,000 with a repayment period ranging from 12 to 60 months. You can use these loans for a variety of purposes to grow your business.

TAB Bank - Term loan

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Max Loan Amount
$200,000
Min. credit score
650
Est. APR
8.99-35.99%
TAB Bank offers competitive interest rates for business owners with strong credit — and can sometimes fund faster than an SBA loan.

Max loan

$200,000

Min. Credit score

650

Apr range

8.99-35.99%

Depending on your creditworthiness and your business's financials

TAB Bank offers competitive interest rates for business owners with strong credit — and can sometimes fund faster than an SBA loan.

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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
9.75-12.25%
7(a) program participants include specialized lenders like Live Oak Bank and big-name traditional banks like Wells Fargo.
Lowest interest rate

Max loan

$5,000,000

Min. Credit score

650

Apr range

9.75-12.25%

Depending on your creditworthiness and your business's financials

7(a) program participants include specialized lenders like Live Oak Bank and big-name traditional banks like Wells Fargo.
Read Review

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Our picks for

Online expansion loans for established businesses

These online lenders offer 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 three days.

Credibility Capital - Online term loan

4.5
NerdWallet rating 
Read Review

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Max Loan Amount
$500,000
Min. credit score
650
Est. APR
9.49-15.49%
Credibility Capital offers low-cost business loans that work best for small-business owners with strong credit.

Max loan

$500,000

Min. Credit score

650

Apr range

9.49-15.49%

Depending on your creditworthiness and your business's financials

Credibility Capital offers low-cost business loans that work best for small-business owners with strong credit.
4.5
NerdWallet rating 
Read Review

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Funding Circle - Online term loan

5.0
NerdWallet rating 
Read Review

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Max Loan Amount
$500,000
Min. credit score
660
Est. APR
5.99-16.49%
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

5.99-16.49%

Depending on your creditworthiness and your business's financials

Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.
5.0
NerdWallet rating 
Read Review

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Our pick for

Business expansion loans for bad credit

OnDeck offers short-term loans from $5,000 to $250,000 that can be a good option for specific business investments. To qualify, you’ll need a minimum credit score of 625 and at least one year in business.

OnDeck - Online term loan

5.0
NerdWallet rating 
Read Review

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Max Loan Amount
$250,000
Min. credit score
625
Est. APR
29.90-97.30%
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

29.90-97.30%

Based on loans originated in the half-year ending March 31, 2022

OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
5.0
NerdWallet rating 
Read Review

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How Much Do You Need?

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How can I use a business expansion loan?

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.

Where to get a business expansion loan

Banks and credit unions

Banks and credit unions can provide a variety of types 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, you’ll need to meet strict eligibility criteria, including excellent credit, strong finances and several years in business. 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 $5.5 million 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
9.75
% to
12.25
%.
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.
Funding Circle, for example, offers business term loans from $25,000 to $500,000 with repayment terms from six months to seven years. Interest rates can range from
5.99
% to
16.49
%.
Although Funding Circle has no minimum revenue requirement, you’ll need a credit score of 660 or higher and at least two years in business to qualify.
However, many online lenders have more flexible requirements and are willing to work with newer businesses and those with fair or bad credit. These lenders are also likely to charge higher interest rates and may have shorter repayment terms and lower loan amounts.
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.

How to get a business expansion loan

1. Determine if you’re ready to expand

Before you start looking for an expansion loan, you’ll want to make sure that your business is ready for growth and 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 capital 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 before taking on additional financing.
  • 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, 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. You’ll want to consider business loan rates, repayment terms, loan amounts, funding speed, among other factors when looking at different lenders. 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 address.
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.

Compare small-business loans

Looking for other types of business financing? Check out NerdWallet's list of best small-business loans to see and compare loan options.
Our recommendations are based on the market scope and track record of lenders, the needs of business owners and an analysis of rates and other factors so that you can make the right financing decision.
Last updated on August 9, 2022