Commercial Guide: Financing Your Business Renovation

From a traditional bank loan to equity crowdfunding, here are the options to fund your renovation

bank loan renovation
Retail shop, Spectre & Co by Sweeten general contractor Joseph

If you’re looking to raise money to open a retail business or renovate an existing one, financing could come from many different directions. More than 50 percent of small businesses reported that they preferred borrowing from a bank, followed by using savings, and accessing a government-backed bank loan from the Small Business Administration (SBA), according to The Hartford’s latest report from 2015. There are also nontraditional forms of funding that are growing in popularity. Those opening restaurants, salons, or an office space will likely look into the same avenues for funding.

Each type will have its pros and cons whether it’s a typical bank loan or a newer option like equity crowdfunding. Whichever way you choose, it is always best to do your research and make an extremely calculated decision so that borrowing capital can be a smooth stepping stone to a bigger, grander enterprise. Sweeten, a free service matching commercial renovators with vetted general contractors, offers some avenues of financing to consider for your business renovation project.

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Let’s start with the obvious: a business loan from your local bank. The bar can be pretty high when it comes to getting your hands on this capital. Typically banks will require a high credit score as well as a good track record when it comes to running either your current business or previous businesses. “These are good for businesses that have been operating and have demonstrated they are profitable and in growth mode,” said Andrew Flamm from Pace University Small Business Development Center, a nonprofit that advises small business owners and entrepreneurs. For successful retail businesses looking to expand to more locations or improve the existing space, a bank loan is a great option.

Small Business Administration Loans

Small Business Administration loans are similar to bank loans. They come through a regular commercial bank but thanks to the federal government acting as a guarantor, they can be easier to get (note: easier does not mean easy). SBA loans suit those who might almost qualify for a common business loan. The government’s willingness to step in as guarantor helps push the bank over the lending line, said Flamm. One downside is there can be copious amounts of paperwork to fill out, according to Gary Levy, who works with restaurateurs through the firm CohnReznick. And even with the federal government backing the loan, the bank will still look into your credit history and business experience, but perhaps not to the same extent as a standard business loan, he said. The Small Business Development Centers have offices throughout the U.S. and are funded mostly by the SBA. There are seven SBDC locations in New York City.

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Community Development Financial Institutions Fund

CDFI is another government initiative with the goal of revitalizing communities with healthy small businesses. Funding sources come from federal dollars and some private sector capital. There are about 1,000 CDFI locations around the country and each can have a different mission, according to Amy Bunton from the Pathway Women’s Business Center. The fund provides assistance to specific geographic areas and communities in need of revitalization. Some might provide assistance and lending to women, immigrants, and minorities. “CDFI’s are designed to help entrepreneurs take advantage of opportunities that traditional lenders can’t,” said Bunton. “They offer flexible terms and rates while also often providing educational services to their borrowers.” At Pathway Women’s Business Center, entrepreneurs can take courses and connect with a mentor along with finding financing.

Friends and Family

Asking for investments or a gift from friends and family is a common way to raise funds for a business. This is a good option if you’re a new entrepreneur and unlikely to get funding from a bank or with an SBA loan, according to Levy from CohnReznick. If it is an investment rather than a gift, how that investment will be paid out can go a myriad of ways. You will also have to decide if you take money from one investor or many. If it is one investor, then you will need to negotiate if that person gets any control in how you run your business. On the other hand, “if you have 20 different investors then that is a lot of people to manage,” Levy said.


Websites like Kickstarter and Indiegogo can be a gold mine for businesses wanting capital to start or expand. These sites allow you to pitch your idea on their website and people pledge money to your project often in exchange for a reward. Perhaps you are expanding your clothing store so you might give a limited edition t-shirt as a reward to those who pledge $100.

Tens of thousands of dollars have been raised this way, even millions. It can act as a marketing campaign for your business, and generate press and social media buzz, said Flamm from Pace. “You have to outline who you are, what you are doing, and why people want to be a part of it,” he said.

On the flipside, a crowdfunding campaign can be a lot of work. During the campaign—the average length is about 45 days—expect to be promoting it heavily and answering plenty of questions from potential pledgees. Crowdfunding platforms also take a small slice of what your campaign brings in, which is five percent at Kickstarter. And one last thing, on some platforms if you don’t make the goal you set for your campaign, you will not get any of the funds pledged. So, think strategically before launching a crowdfunding campaign.

Equity Crowdfunding

In May 2016, Title III of the Jumpstart Our Business Startups legislation went into effect allowing anyone to try their hand as a venture capitalist. Previously, US law prevented investors with a net worth below $1 million and who earn less than $200,000 from investing in private companies in exchange for equity, according to Fortune. That law change has paved the way for equity crowdfunding. Instead of businesses offering rewards for monetary gifts, like in regular crowdfunding, they can now offer equity and often in bite-sized pieces. For example, Republic Restoratives, a distillery in Washington D.C., raised $300,000 through 600 investors on Indiegogo.

However, businesses need to be prepared to put their financial information and the health of their business up on a website for the world to see. “If you’re an existing business and you’re not doing so well, you have to lay out all your financials,” said Alek Marfisi from Upwind Strategies, a small business consulting firm. “Some businesses like to appear bigger than they actually are.” Since investments are often small, budding ventures, capitalists in equity crowdfunding are often attracted to “cool” projects, like a distillery, according to Marfisi. So, a business that is a solid investment but seems mundane might not attract the funding it should.

The myriad of financing options offers opportunities for start-ups to established companies. Do your research and you’ll be one step closer to getting your dream business to the next level.

If you’re thinking of renovating an office, check out our guide on workspace renovation costs.

Sweeten handpicks the best general contractors to match each project’s location, budget, and scope, helping until project completion. Follow the blog for renovation ideas and inspiration and when you’re ready to renovate, start your renovation on Sweeten.

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