When your business is well established domestically, expanding globally sounds like the logical next step. It offers plenty of appealing opportunities for growth and increased market share.
However, the capital needed for such an expansion can often be prohibitive, particularly for many small businesses with limited resources. But it isn’t impossible, and there are options available that make it significantly easier. One of the quickest and simplest methods to get the funds you need is to apply for a small business loan.
In this blog post, we’ll look at everything you need to consider before applying for a loan. Read on to discover the best approach for overseas investment.
Benefits of expanding overseas
Expanding a small business globally offers plenty of potential benefits long-term. These include:
Access to new markets
Breaking into overseas markets opens doors to exciting opportunities that may not be available in the UK. By expanding globally, your small business can reach new customers, tap into emerging markets and capitalise on growing demand for your products or services.
Diversification of your business
Diversifying into new markets reduces your dependency on where you’re already established. It means there’s less risk of your business being at risk of an economic downturn or shifting trends in one region. By developing across different markets, your business will become more resilient to an unpredictable global economy.
Potential for higher profits
International expansion can lead to significant revenue growth for your business. By reaching a larger customer base, you can enjoy greater sales volumes, lower production costs and even increased profit margins.
The different type of loans for overseas investment
When it comes to raising the funds necessary for an overseas investment, there are several options available. You should consider each carefully before making a decision.
Traditional bank loans
Pros: These offer stability and reliability, with funds being granted based on your creditworthiness and collateral. Additionally, they provide competitive interest rates and structured repayment terms.
Cons: It’s a lengthy and rigorous application process requiring documentation and collateral. Approval can rely on your credit history and financial stability.
Government-backed loans
Pros: Government-backed loans often come with favourable terms, including lower interest rates and longer repayment periods. In many cases, these are specifically to support small businesses that are seeking to expand internationally.
Cons: These loans may have stricter eligibility requirements and demand additional paperwork. There are also longer approval times due to government regulations and oversight.
Online lenders
Pros: Applications for online lenders typically come with fewer restrictions on how funds can be used. Funds can be granted far faster than other options available. In addition, many offer unsecured loans, meaning they don’t require collateral.
Cons: The rapid growth of the online lending industry has led to the emergence of predatory lenders who offer loans with unfavourable terms and hidden fees.
Seeking professional advice from financial advisors or consultants is strongly advised before making a decision on which type of loan is best for you.
Ready to invest overseas?
Expanding your small business overseas can unlock plenty of exciting opportunities. But it also requires careful planning and research. By understanding different financing options available, you can increase your chance of successfully securing a loan that helps you achieve your global ambitions.
If you’ve done your research, and you’re ready to apply for a loan to help your business expand globally, Funding Triangle can help you.
