How to Qualify for Kentucky Business Loans
If you’re a small business owner in the Bluegrass State or hope to become one, a small business loan can be invaluable. This blog post will review small business loans in Kentucky and how they may benefit your particular venture.
What to Do with a Small Business Loan in Kentucky
In a perfect world, you’d have the cash on hand to cover all your business expenses. Since this is unlikely, Kentucky small business loans can be beneficial. These loans are versatile, so you can use them to pay for a variety of expenses, including:
- Startup costs
- Commercial real estate
- Expansion costs
Types of Small Business Loans in Kentucky
When you shop around for small business loans in Kentucky, you’ll find many options. The lender and loan type you select will determine the eligibility requirements and application process. While some lenders will approve most business owners and offer fast funding, others have stringent criteria and a lengthy process.
Small Business Loans
Banks, credit unions, and online lenders usually offer small business loans.
If you pursue a bank loan, you’ll need strong credit and sufficient annual revenue to qualify. Also, it might take weeks or months to receive your funds. However, it may be easier to qualify for funding from an alternative lender, as they typically have a faster loan application process.
Also known as a business mortgage, a commercial mortgage can help you purchase a property like an office space or warehouse or land for your business. Commercial mortgages differ from residential mortgages because they come with variable interest rates. You may also use them to renovate or expand a commercial property.
The Small Business Administration (SBA) partially guarantees SBA loans.
There are several types of SBA loans, which come with low rates and longer repayment terms of up to 25 years. Some of the most popular SBA loans you might want to consider include:
- SBA 7(a) Loans
- CDC / SBA 504 loans
- Disaster loans
Your business will depend on equipment to operate smoothly. However, purchasing equipment is challenging for many business owners due to high costs.
Whether you need computers for your sales reps or ovens for your chefs, an equipment loan can come in handy. Even though most equipment loans offer low rates and lengthy terms, funds must be used for the cost of new or used equipment.
Invoice factoring is a short-term financing solution. You can use it to borrow money against the invoices your customers owe you. Invoice factoring is worth considering if you have slow-paying customers and want to avoid cash flow issues, especially if you have trouble qualifying for traditional financing.
Business Credit Cards
You can use business credit cards to cover everyday business expenses like rent, utilities, and office supplies. Most business credit cards offer rewards like cash-back, travel points, and discounts on office supplies. As long as you repay your balance in full every month, a business credit card can help you build or improve your credit.
Merchant Cash Advances
If you collect credit card and debit card payments from your customers, you may want to explore a merchant cash advance (MCA). You’ll receive an upfront payment in exchange for a portion of your future card sales. You can pay back your advance through a percentage of your daily sales or fixed withdrawals from your bank account.
Crowdfunding may be a good option if you own a startup. You can use a crowdfunding platform to find investors who support your business. Some examples of crowdfunding sites that can help you meet your goals are Kickstarter, Indiegogo, Crowd Supply, and Fundable.
Resources for Kentucky Business Owners
If you own or manage a small business in Kentucky, these resources should be on your radar:
- Kentucky Small Business Development Center (SBDC): Kentucky SBDC offers free, confidential business advising services. It also hosts webinars on various business topics every Wednesday.
- Greater Louisville Inc.: Greater Louisville Inc. supports small business owners in the Louisville area. The organization provides connections and networking opportunities you may find valuable.
- KY Innovation: The mission of KY Innovation is to attract and retain entrepreneurs in Kentucky. It offers funding opportunities and information on incubators throughout the state.
- Louisville SCORE: Louisville SCORE partners with the SBA to deliver free mentorship and low-cost workshops to small business owners throughout Kentucky. Its website is also full of tools and templates for startups.
Conclusion: Explore Kentucky Business Loans
If you’d like your venture to succeed, Kentucky business loans can provide you with the capital you need to get up and running or grow your venture. Once you review your business plan and understand how to improve your operations, you should start weighing your business funding options.
However, before you accept a business financing offer, read the fine print and ensure you’re clear on all the terms and conditions.
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.