Business renovation loans are designed to help small businesses access capital to remodel and improve their existing property. If you run a small business, here are three times when you may want to use a business renovation loan.

1. Refreshing a Franchise Location

Many franchise agreements allow the franchisor to demand a storefront refresh after a certain number of years, and these refreshes aren't inexpensive. 

As a franchisee, the costs associated with changing everything from the layout to the signage at your location can cause a financial strain when it's time to refresh. Not doing a refresh, though, could be a violation of the franchise agreement.

If you don't have the cash available to complete a refresh on schedule, a business capital loan can help you pay for the project. When compared to the potential consequences of breaking a franchise agreement, a loan is highly preferable.

2. Expanding a Restaurant's Seating

For some businesses, such as restaurants, their size directly impacts how many customers they can serve and how much revenue they're able to bring in. A restaurant can only seat as many diners as will fit in its dining area, after all.

If you have a bustling restaurant that can't meet diner demand, expanding your seating area is one way to potentially increase customer traffic and revenue. A business renovation loan can help pay to put on an addition that expands the number of tables your restaurant has.

In this situation, a business loan must be compared to purchasing a different location — for your restaurant could move to another, larger building. Should your restaurant relocate, however, you could lose a substantial portion of your customer base if they aren't willing to drive to the new location. A loan allows your restaurant to grow right where it is so no customers stop coming.

3. Improving a Business's Operational Efficiency

Sometimes a business doesn't need to increase its front-of-house capacity but instead, has to improve back-of-house operational efficiency. For instance, a retailer might need more storage for inventory in their backroom, or an eatery may want a more efficient line for cooking with fewer employees.

If your business could reduce expenses — and thereby, improve its net profits — by improving back-of-house operations, a business renovation loan might make sense. What you save in ongoing operational costs could more than make up for the cost of taking out one of these loans.