How to Get a Small Business Loan in Iowa
Whether you own a small business in the Hawkeye state or hope to do so one day, small business loans can help you meet your financial goals.
In this blog post, we’ll review everything you need to know about pursuing small business loans in Iowa.
Common Uses for Small Business Loans in Iowa
Fortunately, small business loans are flexible. You can use them to cover a wide array of expenses to run or grow your venture. Some of the most common uses for small business loans in Iowa include:
- Startup costs
- Commercial real estate
- Debt consolidation
- Inventory and supplies
Types of Small Business Loans in Iowa
Not all small business loans in Iowa are created equal. In fact, there are numerous funding options available to you including:
Traditional Bank Loans
Traditional bank loans are offered by banks, credit unions, and online lenders. Often, they come with low interest rates and favorable terms.
The downside with traditional bank loans, however, is that you’ll need a good credit score to get approved. Also, you may wait weeks or months before you receive business funding.
SBA loans are partially guaranteed by the U.S. Small Business Administration. If you’d like to apply for an SBA loan, you’ll need to find a reputable SBA-approved lender to work with.
While there are various SBA loans available, the SBA 7(a) is the most common. It offers up to $5 million in funding and can be used for working capital, equipment, supplies, real estate, and business expansion.
Other SBA loan programs include SBA Express loans, SBA 504 loans, SBA microloans, and SBA disaster loans.
Line of Credit
A line of credit offers funds for you to use whenever you need them, up to a set credit limit. You’ll only pay interest on the amount you withdraw, rather than the entire amount you’re approved for. Once you repay what you’ve borrowed, those funds will become available to you again. Compared to credit cards, lines of credit offer lower interest rates.
Commercial Real Estate Loan
Also known as a commercial mortgage, a commercial real estate loan can help you finance a property for your business. Depending on the nature of your operation, this might be an office, warehouse, restaurant, or hotel. In most cases, terms for commercial real estate loans range from five years or less to 20 years.
Business Credit Cards
Business credit cards are a convenient way to pay for everyday expenses. Not only can they improve your business cash flow, they may also help you build or improve your credit. Most business credit cards come with notable perks like a 0% intro APR, cash back, and travel points. Just keep in mind that you may have to pay an annual fee to use them.
Equipment loans can be a great option if you need to buy or lease equipment for your business. The equipment will serve as collateral so if you default on your loan, the lender will have the right to seize it. The good news is this secured financing option is fairly easy to qualify for and you might be able to cover 100% of your equipment costs, depending on the financial institution.
Merchant Cash Advance
A merchant cash advance (MCA) may make sense if your customers use debit and credit cards to pay you. You’ll receive the cash upfront and pay it back with a percentage of your sales plus any fees. An MCA is a fast financing option and you can get approved even if you don’t have the best credit. The caveat, however, is that it can be expensive.
Resources for Iowa Small Business Owners
As a small business owner in Iowa, you may find these resources beneficial.
- Greater Des Moines Partnership: This organization offers a plethora of online tools and a newsletter with useful information for entrepreneurs and small business owners in Iowa. A free mentorship program is also available.
- IASourceLink: IASourceLink is designed to help Iowans start, scale, or accelerate their business in the state. There’s a blog which discusses upcoming events, marketing strategies, and other tips for small business owners.
- SBDC Iowa: SBDC Iowa offers free, customized business advice to entrepreneurs and startups in Iowa. In addition, it hosts affordable workshops on various topics like how to select the right legal structure and how to perform market research.
Conclusion: Grow Your Business with Iowa Business Loans
No matter your industry, small business loan programs in Iowa can be useful. They’ll provide you with the funds you need to successfully start or grow your venture. Just make sure you choose the right loan products for your unique budget and needs.
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.