Starting a business takes a lot of hard work, but it doesn’t stop there. Sometime after the launch of your enterprise, you will have to think about expanding it. This is done not just to increase your earnings but also to prevent falling behind your competitors.
Unfortunately, many business owners find it challenging to grow their enterprise for various reasons, such as incorrect marketing strategies or the failure to listen to customer feedback. Others make the mistake of hiring the wrong people for the job. Still, many attribute their poor business growth to the insufficiency of funds needed to purchase new equipment, open a new branch, expand their product catalog, and so on.
Do you also lack enough money to grow your business? If so, there are loans you can apply for to solve this problem. Cebuana Lhuillier Kanegosyo Center is an online platform that aims to help Filipinos start and grow their businesses through a range of financial solutions catering specifically to entrepreneurs. In this post, we’ll be sharing the reasons why getting a loan to grow your business in the Philippines might be your best option.
Ways To Expand Your Business in the Philippines
Before we dive into what a business expansion loan is and how it can drive your business growth, let’s talk about the different ways to expand a small business.
Angel Investing and Crowdfunding
Finding an angel investor is one way to secure funds to grow your business. Angel investors, also known as angel funders, private investors, seed investors, or business angels, are wealthy people who provide money to fund small businesses. In exchange, they are usually granted a certain level of control over the enterprise, such as by being given ownership equity or a seat on the board.
On the other hand, crowdfunding refers to the method of obtaining funds from multiple people via crowdfunding platforms. Many business owners who secure funds in this manner offer rewards to their investors. For example, investors may be given discounts on products or advance purchase opportunities.
Relatively successful business enterprises may venture into franchising opportunities. This strategy involves selling the rights to your business’ name, products, and services to another party, known as the franchisee. As the franchisor, one way you can benefit from this partnership is through initial startup fees and yearly licensing fees to be paid by the franchisee.
Not all businesses are prepared to franchise, though. Signs that your business is ready to franchise include having a solid customer base, reliable suppliers, and a dependable workforce.
Business Expansion Loans
Business expansion loans refer to money you can borrow from banks, private lenders, or other financial institutions to help you grow your business. These loans are categorized into many types, including invoice financing, merchant cash advances, short-term loans, and equipment financing.
Entrepreneurs use their borrowed money for various purposes, depending on their plans for their business. For instance, the funds can be used to buy new machinery, hire more staff, expand facilities, develop additional products, add a remote branch, or even purchase an existing business.
Benefits of Getting a Small Business Expansion Loan
There are several ways for entrepreneurs to acquire financial backing to grow their businesses. However, opting for a business expansion loan can have several benefits for you, such as:
Flexibility of Use
Various businesses have different requirements regarding their growth. The good thing about business expansion loans is that business owners can opt to apply for a short-term loan for purposes such as meeting capital expenses. On the other hand, they can go for a loan with a longer repayment period if they want to grow their business on a larger scale.
Ownership and Control
With business loans, your only responsibility to the lender is to meet the repayment terms. In contrast, when you obtain funds through angel investing, you may need to relinquish a part of your business ownership and control to the angel investor, depending on your agreement. Franchising can have the same drawbacks. As a franchisor, you have very limited control over what the franchisee will do with the branch that they own and manage.
Improved Credit Score
Getting a business loan can improve your credit score if you can it pay back on time. A higher credit score gives you the opportunity to secure more loans in the future at lower interest rates or with extended repayment periods.
Multiple Sources To Acquire Business Loans
Banks aren’t just the only lenders who offer business loans. You can get them from private company lenders, other financial institutions, and government agencies. One lender you can turn to is Cebuana Lhuillier Kanegosyo Center, which offers small and easy loans for businesses in the Philippines.
How To Apply for a Small Business Expansion Loan
The steps to apply for a loan to grow your business in the Philippines may vary depending on the lender, but you can read the list below to give you a general idea of what you’ll need to do to apply:
Determine the Amount of Money You Need To Borrow
For starters, you’ll need to determine how much money you need to borrow for your business expansion. You can do this by listing what you will use the funds for, such as to purchase equipment, open a new location, or develop a new product or service. In this way, you can easily do research and come up with a ballpark figure on how much money you’ll need to achieve your expansion plan.
Check Your Credit Score
Your credit score is an important factor in getting approved for a business loan. A good credit score is established by paying your debts on time and spending within your credit limit. To check your credit score, you must obtain a credit report from the Credit Information Corporation (CIC), the only centralized registry of credit data in the Philippines.
Know Your Loan Options
It’s always best to research your loan options to be able to compare them and find the best one that meets your needs. You can check out various lenders to learn about their business loan products and the details of each, such as repayment terms, maximum loan amounts, and so on.
Prepare Necessary Documents
This usually depend on the lender and loan product, but some of the most common business loan requirements are:
- Business License and Permits
- Business Tax Returns
- Bank Statements
- Business Plan
- Financial Statements
- Legal Contracts and Agreements
- Incorporation Documents
Let Cebuana Lhuillier Kanegosyo Center Help You Grow Your Business
Finding a reliable lender to help you secure a loan to grow your business in the Philippines is easier now, thanks to Cebuana Lhuillier Kanegosyo Center’s packages and products. Our Paglago Bundle is designed specifically to help you expand your business.
Moreover, Kanegosyo Center was created with a vision to help out Pinoy entrepreneurs achieve their dreams for their business. This is why we offer easy business loans for new businesses to meet the different needs of various enterprises.
To start, apply to become a Kanegosyo Center member here. Membership is free with no expiration!
FAQs About Small Business Loans in the Philippines
What Are Smart Ways To Use a Business Expansion Loan?
You should use your business expansion loan wisely to ensure it does contribute to your business’s growth. Some smart ways to use a business loan include purchasing inventory or new equipment, hiring new employees, investing in marketing services, opening a new branch, or expanding to a new market.
What Are the Usual Requirements for Small Business Loans?
Some common requirements for small business loans are business and license permits, incorporation documents, bank and financial statements, personal and business tax returns, and balance sheets. In addition, you may need to disclose your other debts.
What Factors Do Banks Consider When Approving Loans?
Banks may consider all or some of the following before they approve a loan application:
- Debt-to-Income Ratio
- Time in Business
- Capacity To Pay
- Credit Score
- Collateral (for Secured Loans)
- Income and Employment History
- Annual Business Revenue and Profit
Business loan expansions are a great way to secure funds to expand one’s business because they come in multiple options, depending on your business requirements. With a business loan, you still possess full ownership and control over your enterprise. Plus, it enables you to improve your credit score, among other benefits.
Helping our kababayans start and grow their business is our expertise here at Cebuana Lhuillier Kanegosyo Center. We are here to support and assist every Filipino entrepreneur through our diverse lineup of small business financing solutions. Contact us today to learn more about how we can serve you!