Any business growth strategy requires cash. Since looking for expansion capital can require a significant effort, it is always ideal for you to match the best lender with why the money is needed before you start. Different funding sources are more likely to approve a loan depending on what the growth strategy is for your company.

Here is how to help match the right lender with different business growth strategies for the highest chance of success.

Buying real estate or improving it? Try talking to a traditional bank or the SBA.

This is an area where banks excel because they have been doing this type of lending for a long time and there is a lot of precedent here where they feel comfortable. Typically, the borrower will be required to use their own capital for a 20 percent to 30 percent down payment and the property will need to be appraised to meet the loan value.

You may not be able get a loan for commercial real estate for your company at home mortgage rates; it will probably be at least 2 percent higher. If the bank will not approve a loan on their own, you can take advantage of the SBA's 504 7a program. Rates here can be between 7 percent to 10 percent. The advantage of this program is that it requires only a 10 percent down payment on loans for up to $10 million. The SBA guarantees 40 percent of the loan and the originating bank takes the risk for 50 percent of it. Loan terms can be for as long as 20 years. Excellent personal and business credit scores are usually required.

Buying equipment or vehicles? Consider traditional banks or other short-term lenders.

This is for equipment that needs to be purchased, replaced or upgraded to process or manufacture your company's product. This financing is not for personal use vehicles.

The critical issue is not to waste time pursuing lenders that will never give your company a loan for the type of business growth capital that you need. Focus your efforts to get optimal results in the shortest period of time.

Some banks still want to lend money for the purchase of equipment exclusively used in your company. This is because they can easily calculate its depreciated value in the marketplace over the next five years. These business growth loans are for typically up to $100,000 and can be for the full amount required. They need to be paid back usually within six years at a rate of 8 percent to 10 percent.

If you have limited business growth capital or lower personal credit scores, another alternative to consider is to lease the equipment from the manufacturer without owning it. In many cases, you can return the equipment at the end of the lease or purchase it for a small buyout price at that time.

Need to expand your team? Consider applying to short-term online lenders.

Capital for a business growth strategy that involves hiring additional people is inherently riskier for lenders since the loan is not attached to an asset that can be sold if your company fails. In this case, you should consider applying to one of the many short term lenders that are online. Rates can be very high, from 18 percent to 50 percent, and usually need to be paid back within 24 months. The advantage of these types of loans is that they can be easy to get approved for any company that has been in business for at least a year, since they rely heavily on personal credit history and cash flow.

Another source of immediate cash for this type of growth strategy is your company's account receivables. Factoring of this asset is appropriate when the business is growing rapidly, and quick cash is needed to fund that growth for the next few months. Remember this money is expensive and can cost up to a rate of 40 percent. Some companies get in trouble with this type of loan when their accounts receivables from sales are shrinking, since they are really borrowing against a future. In addition, most factoring loans have full recourse, so if the customer doesn't eventually pay their invoice, the money needs to be returned to the lender from the company.

Merchant financing is another possibility. This is provided by a company that processes your customer merchant transactions. The amounts and rates vary based on history and payback terms.

Developing new products? Try reaching out to your family or friends.

This type of business growth strategy is typically seen as the riskiest in the marketplace since many product introductions fail even for the most experienced management teams. While getting money this way may have personal drawbacks, these loans can be inexpensive and informal. In my experience, these loans usually carry interest rates of 3 percent or less and are typically more flexible about repayment terms. However, it is still important to establish a loan rate and repayment plan. Give yourself at least three to five years to pay it back and do not borrow more money from a person than they can "afford to lose." I recommend having this memorialized in a document signed by the lender and borrower to manage expectations. This will act as the first insurance against an unpaid loan eventually harming a personal relationship.

The critical issue is not to waste time pursuing lenders that will never give your company a loan for the type of business growth capital that you need. Focus your efforts to get optimal results in the shortest period of time.

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