Most California businesses have humble beginnings. From a lawnmowing service to surfboard manufacturing, small businesses often “bootstrap” by making the most of limited resources. Currently, California is home to more than four million small businesses with growth that doesn’t show signs of slowing.

Once a business moves into the black and gains the opportunity to expand for greater success, it’s time to look at financing a sustainable plan. Here we detail the key sources of finance for business expansion as you create your growth plan.


Taking on debt can feel like a step into the unknown. However, if it’s been a few years since your business started and you’ve experienced positive cash flow, expansion may be a smart move.

A strong financial history is a good indication of future success. But what does that history entail? You might want to take an in-depth look for positive cash flows instead of rising sales figures, experts say.

“Business owners and entrepreneurs sometimes mistakenly assume that revenue growth is the best barometer of a company’s success,” said Wayne Ward, Senior Vice President and Regional Manager at California Bank & Trust in Los Angeles. “While revenue growth is certainly a good measurement, more important than sales is the resulting cash flow. Management should be laser focused on increasing cash flow. Coupled with creating and maintaining appropriate levels of capitalization, this best enables a business to make the decision about expansion.”


Taking the time to reflect today can help you gauge your growth potential tomorrow. Whether it’s a new location or offering more services, you should make a checklist of needs and issues.

From there, your bank can help with lines of credit and SBA loans. But the right bank will help you look at resources, not just products.

“The time to build a banking relationship is before you need financing,” Ward said. “Building a long-term relationship with your banker is as important as building a long-term relationship with your CPA and attorney. The bank can help you navigate expansion later when you really need to. The strength comes from your banker understanding your business.”

Historic growth is the key to justifying expansion. Look at several other factors as a litmus test that can show you’re ready to expand:

• Ensure that you have established a high degree of quality management and expertise, along with a stable leadership team and a succession plan.

• Show a two-year track record of cash flow increases, then lay out a plan emphasizing the company’s potential future cash flow.

• Leverage opportunities for partnerships with capitalization.

• Make projections that are viable and believable.

• Demonstrate long-term creditworthiness with your credit score.

“Have a plan that shows long-term results and stay realistic,” he said. “If you’re looking to double business overnight, that’s not likely to happen.”

Choose the right lender by making an informed judgment as to whether the bank fits your business. Ask about experience in your industry and marketplace. Review the bank’s strength, stability and record of keeping bankers on your account.


There are many options to help you scale and move forward:

• SBA 7(a) Loans1 – Financing for new equipment, adding to office or warehouse space, building out a new location or purchasing a building for your business to occupy.

• 504 SBA Loans1 – Funding to acquire commercial real estate, heavy equipment and other capital-intensive fixed assets. A 504 loan also can be used to refinance your real estate or business debt.

• Small Business Development Corporation Loans2 – Partnerships between local and national banks can offer personalized, creative financing solutions. California Southern is a leader in the state.

• Nonprofit, mission-based microlenders1 like Accion Serving Southern California leverage networks of lenders that connect entrepreneurs with financing and resources.


Since cash flow is crucial, use a calculator to allocate funds, determine timing and develop your business expansion needs and budget. Also take advantage of resources such as SBA planning tools for mergers and acquisitions and special programs for veteran and minority-owned businesses.

Once you’ve made a plan, work with your bank to get guidance every step of the way. You can expand intelligently and profitability. Contact a banker today to learn more.

Information for this article was provided by California Bank & Trust. To learn more, visit

1. Loans subject to credit approval; SBA approval required. Terms, conditions and restrictions apply.

2. Loans subject to credit approval. Terms, conditions and restrictions apply

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