If you have an idea on a way to expand your manufacturing business and produce more (or different) product, you may be struggling with the conflict between what could prove a lucrative investment and a lack of working capital. Without proof that your business expansion will allow you to repay your loan, you may find it difficult to secure a loan for the amount you think you'll need -- but how can you make this proof before you've been able to expand? Read on to learn more about what you can do to improve your business without spending much, as well as some factors that could improve your odds of receiving a loan.
Consider your true needs
Instead of shooting for the moon, you may want to go over your various options to consider how you can determine your return on this investment without paying as much on the front end. For example, instead of seeking a loan to construct and equip a new boiler room to help power your additional equipment, you may be able to rent a mobile boiler to provide temporary power to your facility. This can allow you to "test drive" your expansion and determine whether it truly is a worthwhile investment before sinking money into your infrastructure that may prove not to be needed. You can talk to companies like Nationwide Boiler to learn more.
You may find that lenders are more willing to lend you a smaller amount of money to test drive an expansion for a set period of time than commit to a multi-decade repayment of a significant infrastructure loan that your business income may not be able to support in the future.
Choosing to go with with energy-efficient improvement and expansion options can help improve both the scope of financing you can receive, as well as reduce your business's energy costs going forward. Depending upon the type of energy-efficient investments you make, you may be able to receive an up to 30 percent federal income tax rebate on the cost of these improvements. Solar energy is one area in which the federal government has chosen to invest by encouraging homeowners and business owners to switch to solar panels. This tax credit will immediately reduce the cost of your improvements by nearly a third, and may be a sufficient reduction in cost for your business to obtain a loan.
There are also a number of local energy corporations and cooperatives that may offer you tax incentives or rebates for making energy-efficient improvements to your business (even if these improvements come in the form of an expansion that also benefits you). You'll want to fully investigate both the energy-efficient building and power options available to your business and the potential tax credits your business can receive to reduce up-front costs and lending requirements.
Investigate governmental incentives
If your expanded business is projected to employ a significant number of people, you may qualify for certain government grants or tax credits. Encouraging the expansion of good jobs is one thing nearly every state and local government has in common, and many have developed programs that will reduce the costs of expansion for those who will be bringing jobs and other economic benefits to the region.
You may want to seek assistance in writing a strong, solid business plan that will set forth the positive economic impact your business's expansion will have on your area and present it to your city or county council. Other government agencies (like the Small Business Administration) may be able to guarantee your loan or help steer you toward programs that will reduce the amount you'll end up paying to improve your business.