Expansion capital is the money needed to expand the business. It refers to the capital or expense undertaken to expand the business to generate increased profit. Expansion capital includes funding for expansion into new markets, expansion overseas, new premises and more.
It can enable your business to:
- Expand its product or service proposition
- Enter new markets
- Target new geographies
- Acquire other businesses
The aim is to help your business grow as much as possible. A lender offering expansion capital will invest a sum of money into your business with the money paid back over an agreed period.
This form of funding is usually suited to businesses seeking to accelerate their growth without giving up control. Investors will typically plan for a three to five year holding period, but will invest for longer if it will help your business to grow. You could choose to appoint an external advisor to support you through the process, but not everyone chooses to do so.
Benefits of expansion capital
- Repeat funding: Follow-on investments are common in the expansion capital world, and are part of an ongoing dialogue with your investor.
- Scale that suits you: You and the investors can set goals and strategies to grow at a pace that suits the business.
- Retain control: You can access large sums of money, in return for a share of the business.
- Help and advice: The investor will take a seat on your board, so you can expect direction and guidance from a business expert.