How to Get a Small Business Loan in Michigan
The top industries in Michigan include:
- Professional, scientific, and technical services.
- Real estate
- Retail trade
Whether you aspire to own a business or have been an entrepreneur in the Mitten State for years, there are many financing options that can help you meet your goals. Here’s everything you need to know about small business loans in Michigan.
Uses for Michigan Business Loans
Whether you’re a startup or established small business owner, you may benefit from small business loans in Michigan. You can use them to cover startup expenses, like inventory, marketing, incorporation fees, payroll, and taxes.
Michigan small business loans might also help you expand your products or services or open up new locations in Michigan or other states. In addition, you might take advantage of business financing to update your current building or equipment.
Types of Small Business Loans in Michigan
When you shop around for small business loans in Michigan, you’ll find no shortage of options at your disposal. Remember that the lender and financing product you choose will determine the eligibility requirements and loan application process.
Working Capital Loans
Working capital loans are intended to cover working capital or short-term expenses that allow you to run your business. These may include rent, utilities, inventory, or payroll. While working capital loans vary from lender to lender, they’re usually fast and easy to secure. Their main drawback, however, is that interest rates tend to be higher.
SBA loans are partially guaranteed by the Small Business Administration or SBA. The most common types of SBA loans are 7(a) loans, CDC/504 loans, and micro-loans. You can use an SBA loan to pay for a variety of business expenses, such as commercial real estate, inventory, working capital, debt refinancing, and other business expenses. If you meet their rigorous requirements, you may lock in a low rate and lengthy repayment terms.
Equipment loans provide capital for the purchase of new or used equipment.
If you own a restaurant, for example, you may use an equipment loan funds to pay for ovens or other cooking devices. Since the equipment itself will serve as collateral, equipment loans are easy to qualify for. However, if you default on your loan, the lender will seize your equipment.
Business Credit Cards
Business credit cards and personal credit cards are similar. You’ll be able to use them to cover everyday expenses, like office supplies and gas. Oftentimes, business credit cards come with perks like sign up bonuses, cash back, airline and travel rewards. Just make sure you pay your balances off in full and on time or you may find yourself in a cycle of debt.
Commercial Real Estate Loans
Commercial real estate loans can come in handy if you need to buy land, an office space, warehouse, or other type of commercial property. These include traditional commercial mortgages, SBA 7(a) loans, conduit loans, and commercial bridge loans. You can also use commercial real estate loans to renovate existing properties.
You should consider invoice factoring if you need immediate capital but don’t want to apply for a traditional loan.
It requires you to sell some or a portion of your business’ outstanding invoices to a factoring company in exchange for fast cash. The company will then collect payments from your customers on your behalf.
Merchant Cash Advance
Merchant cash advances (MCAs) are a lot like invoice financing. If you choose an MCA, you sell part of your future debit and credit card sales to a company in exchange for an upfront lump sum of cash. The cash advance provider will receive your card sales until you remit the amount you owe.
Useful Resources for Michigan Business Owners
If you own a small business in the Great Lakes State, consider the following resources.
- Michigan Small Business Development Center (SBDC): This organization provides free one-on-one consulting and trainings to entrepreneurs and startups. There are ten offices across Michigan.
- Small Business Association of Michigan (SBAM): SBAM has supported entrepreneurship in Michigan since 1969. As a member, you can enjoy educational and training opportunities as well as discounts on everyday business expenses.
- Northern Lakes Economic Alliance (NLEA): Founded in 1984, NLEA helps small business owners in the Antrim, Charlevoix, Cheboygan, and Emmet Counties in Northern Michigan. It offers a variety of tools to businesses with the desire and potential to create great jobs with benefits.
- Southwest Michigan First: Southwest Michigan First strives to create jobs and grow the economy in Southwest Michigan. This organization provides funding options and hosts a variety of events throughout the year.
Launch or Grow Your Venture with Michigan Business Loans
With small business loans in Michigan, you can receive capital necessary to start or grow your small business. Before you commit to a loan program, however, make sure you weigh the pros and cons to ensure it’s right for your unique 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.