Business Expansion Funding With an MCA
Business expansion funding tested without the new site's revenue.
Who should read this: owners opening a second location, adding a service line or taking on a large new contract.
What is the ramp problem?
The ramp problem is that expenses for an expansion start immediately but revenue from it builds slowly, and the remittance starts on the first business day after funding. A second restaurant may need months to reach its expected covers. A new route may need weeks to fill. During that stretch, the original business is carrying rent on two sites and the advance at once.
Equipment for the new site and opening Inventory are covered separately.
We're not a funder.
We don't fund deals ourselves. We shop yours with funders who do, so you see more than one offer.
Only funders that fit.
Your file goes to funders that work with your industry and your deal size. Nobody else sees it.
You make the call.
Every offer comes to you in writing. Nothing happens until you pick one.
- What it costs to apply
- Nothing. Applying costs you nothing, and Afterfirst MCA charges you no fee.
- Credit
- Ask us how each funder checks credit before you agree to anything.
- Speed
- We call you back and talk with you before your file goes to any funder.
- Offers
- Every offer shows the total payback, the payment amount, how often it comes out, and the term.
How long a new location takes to ramp
A new location's ramp varies widely by industry, market and concept, so the only reliable guide is the owner's own history and a cautious plan. Funders don't credit projected revenue from a site that has not opened.
Using the first location's early months
Start from how the first location performed in its early months, if records exist. Then assume the new site does worse, not better.
A first expansion with no benchmark
A first expansion has no internal benchmark. Owners in that position should plan for the existing business to carry both sites for longer.
Setting cash aside before opening
Setting aside a reserve before opening reduces how much the existing business must absorb each week. An advance can be sized smaller when a reserve exists.
Keeping the reserve in its own account
Holding the reserve in its own account keeps it from being spent on daily costs at the first site. It also makes the plan easy to show a funder.
Build-out costs that run past estimate
Build-out costs often run past the first estimate. Keep a margin in the plan so an overrun doesn't force a second advance mid-ramp.
How we test an expansion file
We test it by removing the new venture from the math. Take the current business's actual deposits, subtract the new location's expected costs during the ramp, then subtract the proposed remittance. If that number stays positive through the slow months, the plan survives a ramp that goes worse than hoped.
| Line | Question |
|---|---|
| Current actual deposits | What comes in without the expansion? |
| Ramp costs | Rent, staff, build-out draws before the new site earns |
| Proposed remittance | The payments the offer adds |
| What is left | Positive through the slowest months? |
Which structures suit business expansion funding better?
Longer-term structures such as a term loan or SBA-backed financing usually suit expansion better, because their payments are spread over the years the new site will earn. Those take longer to arrange and ask for more documentation. An advance can fill a narrow piece, such as a deposit on a lease, while the longer financing closes. Our team shops advances only, and we point owners toward those other channels when that is the better route.
Owners already paying an advance are shopping a Second position, and Factor rate vs APR shows how a short term raises the estimated cost of a long ramp.
Before opening another site
Can a merchant cash advance fund a second location?
A merchant cash advance can fund part of a second location, and some owners use one that way. Funders look at the existing location's statements because the new site has no history. The payments falls on the original business until the new one ramps.
How is expansion viewed as a use of funds?
Funders generally accept expansion as a business purpose. They read the current account to see whether it can carry the remittance on its own. A plan that relies on the new site to pay the debit reads as higher risk.
Should I take one large advance for the whole expansion?
A single large advance carries a large payment from day one, before any new revenue exists. Some owners fund only the first phase and seek longer financing for the rest. Match each piece of the plan to money that pays back on the same timeline.
Sources
- The SBA's Guide to expanding to new locations tells owners to prepare a business case and financial statements before asking for more money, the same preparation any business expansion funding request needs.
Afterfirst is not a funder; all offers are subject to funder underwriting.
Cost, credit, speed and stacking
Cost
Credit
Speed
Stacking
Send one file.
See what fits.
Call 877-FUND-654 with questions.