How to Secure Financing for Capital Improvements

If you're a company trying to expand and make improvements, it'll often take outside financing. 

Small businesses make up the majority of enterprises in today's economy. While these businesses are the lifeblood of the economy, 78% of these companies are self-funded. 

At some point, there typically comes a time that you need to look into financing for your capital improvements. So, what are your options?

These tips will help you out when you need to make capital improvements but aren't sure where to begin. 

Explore Grant Programs

Look into capital improvement grants when you're interested in funding your next big project. Grants are the best-case scenario for many businesses since it's money that you won't have to worry about paying back. 

These grants are issued by companies, organizations, and governments. The most common form of grants comes about when the federal government issues money to each state during budget season. 

From there, the state will allocate funds to businesses that meet the criteria. Companies are aware of these grant programs and put together extensive application packets so that they can receive the funding that they need. 

You'll need to put your heads together with your company's top minds and grant writing professionals to make sure that you are approved. 

Find a Business Loan

Next, loans are among the most common forms of business funding that companies take advantage of for capital improvements. Applying for and using these loans requires a clear understanding of what you need and how much you'd like to finance. 

Consider the details of the loan, including the term, interest rate, termination clauses, and others. Understanding the details of the loan can prevent you from biting off more than you can chew and will make sure that your loan can fund the entire project. 

There are a variety of financial institutions that specialize in helping businesses through these projects. Find out the types of businesses they fund so that you can get the best loan for your needs. 

Research the company's background and credibility so that you can get the best business loan possible. 

Tap Into Your Cash Reserves

Capital lending aside, many companies also start with their own money when undergoing a project. This is why it pays to have plenty of cash reserves on tap that you can take advantage of. 

Budget your finances accordingly so that you're able to have enough money on tap for the projects that you come across. It's best to earmark a percentage of your budget each year toward expansion and improvement projects. 

Keep tabs on these funds and make sure that the money is kept in a business checking or high-yield savings account. This way, the money is secure and even gaining interest for you. 

Start a Private Fundraising Campaign

Fundraising should always be a skill that you have as a business owner. Business loans are always available, but you can also lean on the support of the community. 

Technology and the internet have made this more possible than ever, as there are platforms set up to advertise these campaigns and keep track of the money. You can incentivize people to participate in the campaign and should make your goals as transparent as possible. 

When people know that they are participating in the growth of a business that they believe in, it's easier to garner support. 

Choose the Pay-as-You-Go Route

There are also plenty of situations that let you plan for future projects that you don't even know you'll need. Government municipalities often participate in pay-as-you-go initiatives. 

In these situations, you will pay into a general fund regularly. Once you have a project on your hands, you will be able to earmark the money for your capital improvement. 

Many government-funded projects are paid for this way due to their convenience and flexibility. 

A Line of Credit

Just like private individuals keep track of their credit ratings, the same applies to businesses. Business owners can take out lines of credit that will help them fund their projects. 

Look into your options based on your creditworthiness to make sure that you are able to get the money upfront and in full. From there, you will keep paying down your balance, along with any interest that comes with the territory. 

Companies enjoy these lines of credit whether they decide to use it for the entire project or just part of it. 

Using Bonds for the Project

Always look into bonds when you're funding your next big capital improvement project. Bonds are a form of corporate debt that can be transferred, collected, and traded as an asset class. 

There are a variety of bond programs that you can look into when you're interested in making capital improvements. Understand your company's bond rating to know how much you're eligible for and to fund your entire project one step at a time. 

Consider Improvement Programs

Finally, there are a variety of improvement programs you can look into based on different types of improvements and technology. For instance, companies today can receive eco-friendly improvement grants and rebates. 

If your project involves things like installing solar panels or looking into eco-friendly utility upgrades, you might be eligible for some money. 

Look Into Funding Your Capital Improvements

The tips above are helpful when you're looking into making capital improvements. 

Tiger Capital can help you when you're interested in funding your next big venture. To learn more about our products and services, contact us on our site or call (888)710-6265.