According to the Small Business Administration (SBA), there are 647,000 small businesses in Washington, accounting for 99.5% of all the businesses in the state. These small businesses employ a whopping 1.4 million residents of the state – 50.7% of the total workforce in Washington. However, small businesses also face challenges, the major one being the economic challenge. So is it possible to get a small business loan in Washington State?
Securing a small business loan in Washington is competitive, significantly when the banks have declined the application.
But if you are a small business owner and looking for a small business loan, keep your worries calm. This article will help you understand where you can get financial help starting or growing your business in Washington.
Small Business Loans Options in Washington
Here are some of the most common loans you may want to explore:
1. SBA Loans
Backed by the SBA, SBA offers these loans to approved lenders such as banks and credit unions. You can use these loans for various purposes, including commercial real estate and working capital.
The primary benefit of SBA loans is their competitive interest rates and extended repayment terms. However, you may face a delayed and lengthy application process while applying.
2. Commercial Mortgage
Commercial mortgages are best used to purchase or improve property or buildings for businesses purposes.
If you have an established small business with an improved credit score, you have a better chance to qualify for these loans. If you are looking to launch a new venture, a commercial mortgage can help in this regard too.
Microloans for business are generally $50,000 or less. These are offered by nonprofits and peer-to-peer lenders and don’t require collateral. Microloans can be a good option to fund everyday business expenses and small purchases.
However, since the amount is not significant enough, it may not cover your more enormous expenses.
4. Business Lines of Credit
Business lines of credit are the best alternative to term loans. In this, you receive a revolving line of credit and not a lump sum of money upfront.
Additionally, you will be able to borrow money any time you like, up to your maximum credit limit. A business line of credit is your best resource if you do not know how much money you need precisely.
5. Invoice Factoring
In this, you sell your invoices to a factory company at a discounted price, and in return, they give you the funds all at once.
The factoring company then collects the payments from your customers, typically within 30 to 90 days. Invoice factoring is ideal for you if you have too many pending payments, with little hope of a fast return.
How to Get Approved For a Small Business Loan In Washington
Here are the main factors that decide your application approval:
1. Revenue/Cash Flow
If your business is making strong sales and is better positioned to repay the loan, you are likely to get approved quickly.
Not all lenders require good credit, but many lenders will check personal credit and set a minimum FICO score to qualify.
3. Time in Business
In an ideal case, businesses don’t need to borrow for the first two years in business. So, many lenders offer loans to businesses in the market for at least 2 years.
If your business is new and needs a loan, alternative options are available, like credit cards, crowdfunding, and vendor financing.
How to Apply For a Small Business Loan in Washington State
If you have found your lender and right loan, fill out a loan application. Online applications tend to be better and easier to fill out, but bank loans application may take time and a lot of documentation.
Need a quick helping hand to get your approval? Specialty Capital got you covered. Reach out to us with your business loan requirements, and we will take you to your business goal.