• What is a business expansion loan?

    A business expansion loan is a source of capital for successful businesses that are poised to grow. If you have a well-defined strategy for expansion and a proven business model, a business expansion loan could be an ideal fit to evolve your customer base and increase your profits. Investing in your business often requires extra capital to help you reach an untapped market, expand your physical location or generate new streams of revenue. That’s where a lender like Live Oak Bank comes in.

  • What can I use a business expansion loan for?

    There are many uses for a business expansion loan. Some examples include:

    • Buying or constructing commercial real estate to grow your physical location
    • Opening a new location to expand your footprint
    • Renovating your existing location to operate more efficiently
    • Entering a new market to boost your customer base
    • Hiring employees to grow your team
    • Releasing new products or expanding your current offerings
    • Purchasing new equipment to improve your operations
    • Acquiring a competitor or related business
  • What are my options for a business expansion loan?

    Depending on your specific goals and path to expansion, you have multiple options for expansion loans. SBA expansion loans, including the 7(a) and 504 programs, are designed for established businesses and are based on cash flow analysis. Each SBA loan program has unique benefits and uses, so be sure to speak with your lender to understand the ideal loan type for your goals. SBA loans have specific maximum dollar amounts, so in certain scenarios, lenders may combine it with a conventional loan depending on your capital needs.

  • How do I know if an expansion loan is right for my business?

    As a business owner, it’s crucial to ask yourself the right questions and determine if now is the appropriate time to grow your business. Applying for a loan without a fully baked plan is not a wise idea, so take time to strategize. You’ll need to be sure that you can manage the anticipated growth by addressing the following:

    • Ensure that your cash flow is stable enough to support additional debt, both currently and down the road.
    • Understand how you’ll use the funds for growth and have a clear plan to help you execute on that strategy.
    • Identify a pattern of growing demand – without increasing sales and customers, a business expansion loan may not make sense.
  • What are the benefits of an expansion loan?

    Expansion loans offer flexibility and favorable terms because lenders can easily view the historical performance of the business to make decisions. Because you are an established business (and not a start-up), there are minimum equity injection requirements – which means less cash that you’ll have to put down.

    Another benefit is Live Oak’s attractive maturity rate of up to 25 years, plus the construction period. If 51% or more of loan proceeds are used for commercial real estate, including construction and soft costs, the loan qualifies for a 25-year repayment term. If the loan will be used for a combination of purposes, we utilize what’s known as a blended maturity depending on mix of loan proceeds.

    Additionally, borrowers can set up an interest reserve for the construction phase of their real estate. A portion of proceeds will be set aside to pay for interest during construction period (i.e. 12 months) so the borrower doesn’t need to worry about payments during that time. An interest-only period is also available, where the borrower pays just the interest on the loan for a set amount of time. This can be helpful for a business looking to ramp up their cash flow before taking on the full principal and interest payments.

  • What is the process and general timeline for a business expansion loan?

    The process and the timeline to receive funding varies depending on your business and the loan product. Once the loan application and all related documents are submitted to Live Oak, we’ll strive to get your loan closed swiftly. Throughout each phase of the loan process, a borrower will work with different loan team members. The three stages of every loan are application, underwriting and closing. We have a team dedicated to each stage that will be your guide, providing updates every step of the way.

  • What documents will I need to give you?

    You can expedite the financing process by taking these simple steps now.

    • Know your credit history. Your business and personal credit is more than just a score, so be ready to answer questions about any items that appear on your credit report.
    • Have your business and personal tax returns and interim financials in PDF format. Once you’re ready to move forward, having digital copies readily accessible will help reduce the time it takes to complete a loan application.
    • Understand your financial standing. Most banks will ask for information regarding your personal financial resources, assets and obligations when you’re applying for a loan.
    • Be prepared to articulate your business plan. Banks are looking to lend money to entrepreneurs who believe in their project and have completed thorough due diligence.

    Additional necessary application documents may include (but not limited to):

    • Driver’s License
    • Voided Business Check
    • Bank Statements
    • Prior Interim Balance Sheet
    • Prior Interim Profit & Loss Statements
    • Business Debt Schedule
    • Accounts Receivable and Accounts Payable Aging Reports, Inventory List

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