How to Get a Small Business Loan in Indiana
If you’re a small business owner in the Hoosier State or hope to become one, pursuing additional business financing can be very helpful. In this blog post, we’ll take a closer look at the various types of small business loan programs in Indiana so you can familiarize yourself with all of your options.
Why Take Out a Small Business Loan in Indiana?
There are a number of reasons you may want to secure small business loans in Indiana. Since they’re flexible, you can use them to cover any business expense such as:
- Commercial property
- Rent, payroll, and utilities
- Expansion costs
Types of Small Business Loans in Indiana
When you look for a small business loan in Indiana, you may want to keep these options in mind. The type of business you have as well as your unique goals will determine the ideal loans for you.
SBA loans are backed by the U.S. Small Business Administration (SBA). This means the SBA will guarantee a portion of the funds you borrow. If you have a solid credit score, you may lock in a competitive interest rate and long repayment term. Typically, SBA loans go up to $5 million with terms of up to 24 years.
Traditional Bank Loans
Offered by banks, credit unions, and online lenders, traditional bank loans provide a lump sum of money upfront. You’ll pay back what you borrow over an agreed upon term, ranging from a few months to a few years or longer. While traditional bank loans come with competitive rates and flexible terms, you do need good credit to get approved.
Line of Credit
Lines of credit are flexible because they allow you to borrow as much or as little as you’d like up to a set credit limit. You’ll use special checks or a credit card to withdraw funds during the draw period. Fortunately, you’ll only have to pay interest on the amount you borrow. If you’re unsure of your current or future funding needs, a line of credit can be a great option.
Microloans may be worthwhile if you need $50,000 or less in working capital. These loans are typically offered by the SBA and nonprofit lenders to startups who need access to funding. In most cases, rates are lower than they are for traditional business loans. If you opt for a microloan, you may even receive coaching or guidance along with the funds.
Equipment loans are designed to help you purchase new or used equipment. If you own a restaurant, for example, you can use them to cover the cost of ovens, stoves, and refrigerators. Depending on the lender, you may be able to finance anywhere between 80% and 100% of the equipment. While terms vary, most of them are anywhere from a few months to 10 years.
Invoice factoring is when you sell your outstanding invoices to a factoring company. The factoring company can advance you anywhere from 70% to 90% of the invoices and collect them on your behalf. Once they receive payment from your customers, they’ll distribute the remaining invoice amount, minus a factoring fee.
Merchant Cash Advance
A merchant cash advance (MCA) is when a company advances you a lump sum of money. Then, you pay them back with a percentage of your daily credit card and debit card sales, plus a fee. Even though an MCA is more expensive than other business loans in Indiana, it offers quick approval access and fast funding.
Resources for Indiana Business Owners
If you own a small business in Indiana, the following resources can help you out.
- Northeast Indiana SCORE: Northeast Indiana SCORE serves small business owners in Fort Wayne, Angola, Kendallville, Warsaw, and Huntington. It provides mentorship and a variety of workshops.
- Indiana Small Business Development Center (SBDC): SBDC offers a variety of resources to small businesses in Indiana. These include business advising, training, and referrals at no cost.
- Indiana Small Business Connection (Indiana SBC): Indiana Small Business Connection hosts a small business expo, which can allow you to promote your products and services. Networking opportunities are offered as well.
- Inzyme: Inzyme is a startup accelerator in Indianapolis. It can support your small business with accounting, branding, and web development.
Conclusion: Allow Your Indiana Venture to Thrive with Indiana Business Loans
If you take the time to shop around and apply for small business loans in Indiana, you can receive the capital you need to succeed. Just make sure you understand the rates and terms before you sign on the dotted line.
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.