How to Get a Small Business Loan in Idaho
Of course, just because your business is based in Idaho, it doesn’t mean qualifying for a loan will be simple. In this post, we’ll review the knowledge and resources you’ll need to obtain a small business loan in Idaho.
Why Apply for an Idaho Small Business Loan?
Idaho has the eighth-lowest state and local tax rates in the U.S. This low tax rate, plus a fairly business-friendly regulatory environment, make Idaho a great place to apply for a loan. Unlike in other, more regulated states, in Idaho you can focus more on funding growth projects rather than navigating red tape.
Idaho has a plethora of loan options available, which we’ll review in the next section.
Idaho Small Business Loan Options
Idaho is home to both large and small banks. Wells Fargo and US Bank have large presences, with 90 offices in 59 cities and 54 offices in 35 cities, respectively. Smaller bank options include D.L. Evans Bank, Washington Federal, and Zions Bank.
In addition to plenty of banks, you can also find alternative lenders including:
- Online small business lending companies
- Invoice factoring companies
- Revenue-based lenders
Between the traditional and alternative lenders in Idaho, you can find any kind of loan program. We’ll detail a few of the most common loan types in Idaho below.
Commercial Term Loans, Lines of Credit, and SBA Loans
Most banks, credit unions, and online lending companies provide commercial term loans of some variety. Of course, loan terms such as length, amount, and rates as well as application processes will vary from lender to lender.
Generally speaking, banks and credit unions will offer loans with larger amounts, longer terms, and more affordable rates. However, banks and credit unions also tend to have lengthier application processes, more documentation requirements, and more stringent approval criteria.
These same general guidelines also apply to business lines of credit. Both traditional and online lenders provide them, but with different approval criteria and terms.
The Small Business Administration (SBA) also provides term loans and lines of credit through their 7(a) program. Compared to non-SBA term loans, SBA financing requires even more paperwork and can be difficult to qualify for. However, SBA loans tend to have the most affordable rates since they’re backed by a government agency.
Revenue Based Financing
As the Washington Post explains, revenue based financing “Falls somewhere between traditional bank loans and venture capital.”
With a revenue based loan, the borrower receives a sum of money that they repay with interest. The repayment amount is calculated based on daily or monthly revenue and ranges between three and five percent. Usually, this type of financing is a better fit for companies with good unit economics.
Also, unlike traditional loans, revenue based loans have less stringent financial requirements. As long as you can show sufficient profitability, you have a chance to be approved.
Invoice factoring isn’t a loan, but instead is an advance based on a “factor” that’s applied to your invoice. Essentially, you sell your invoices at a discounted rate in exchange for funds upfront. In Idaho, invoice factoring is a relatively fast way to turn your invoices into cash.
Also, whether you’re approved for invoice factoring depends more on the creditworthiness of your customers than yours. If you’re struggling to qualify for a business loan because of bad credit, invoice factoring is an option to consider.
Preparing Your Application for an Idaho Business Loan
Preparing your application for a business loan in Idaho follows a similar process to any other state. Depending on the type of loan, you may need:
- A business plan detailing how you plan to use and repay the loan.
- Financial performance documentation such as balance sheets and income statements.
- Business documents to prove ownership and compliance with any legal requirements.
- Personal and business tax returns and bank statements
Finance Your Success in The Gem State
Idaho is one of many states that has seen a large influx of people as remote work has become increasingly popular. Business owners in the state are positioned to capitalize on the growing population of affluent Idahoans.
Still, even perfect positioning isn’t enough if you don’t have the funds to catalyze your business’s growth. So once you’re prepared to expand your business to Idaho, use a loan to fund your expansion.
Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.