Did you know that nearly all the businesses in Kentucky are small businesses (99.3% of them, anyway)? That’s a lot of small business owners who may need financial assistance from time to time.
The good news is that there is a wealth of opportunities to find financing for small businesses in the state. What could you do with a little extra cash for your business?
How a Small Business Loan Can Help Your Kentucky Business
Not clear on what a business loan can be used for? Allow me to illuminate.
For an existing business, loan funds can be used as working capital to help you cover business expenses like payroll, equipment, and office supplies. You can also use them to buy another business, renovate yours, or purchase real estate.
For a startup, a loan can be used to cover those expenses associated with launching a business. Do note that if you don’t have much of a history with your business, you may be limited in your loan options.
Types of Small Business Loans to Choose From
When it comes to small business loans, you have a few categories to choose from. Each has its own requirements to qualify for, so depending on what your credit score is, you may qualify for one or more types.
I’ve also included a few of the lenders who work with businesses in Kentucky.
Though they’re among the hardest to qualify for, loans offered through banks or credit unions typically have the lowest interest rates. Here are some of the lenders to consider in Kentucky.
U.S. Small Business Administration Loans
Another option to consider if you have good credit is an SBA loan. SBA loans are offered by lenders approved by the Small Business Administration, though the SBA itself doesn’t lend money. You can get more information on its 7(a) and 504 loan programs at SBA.gov.
Here are SBA lenders in Kentucky:
If you’re specifically looking to purchase equipment for your business and you don’t have great credit, not to worry. There are equipment loans that use the equipment you’re purchasing as collateral, which can keep interest rates down. These are typically easy to qualify for.
Commercial Real Estate Loans
And if you’re looking to purchase commercial real estate, there are loans for that, too. Similar to equipment loans, these loans use the property you’re buying as collateral for the loan.
What it Takes to Get Approved for a Small Business Loan
You already know that your credit scores matter when applying for a small business loan. Many lenders, particularly banks, also require that entrepreneurs be in business for at least two years, which means startups may have trouble qualifying for traditional loans.
Additionally, lenders may want to see financial statements and/or tax returns. Some lenders, particularly SBA lenders, may also ask to see a business plan so they can understand how you plan to use the funds.
How to Choose the Right Loan for Your Kentucky Small Business
Start by reviewing the eligibility requirements for a given loan. Once you’ve narrowed your selection to those you qualify for, look at the rates you are offered. Low-interest loans are ideal, but look at other things like additional fees, the lender’s reputation, and other services offered.
Small Business Grant Options for Kentucky
Financial assistance for Kentucky businesses doesn’t just come from small business loans. You may also qualify for grants offered by corporations, state and local governments, and nonprofit organizations.
These grants do not have to be repaid. Some have high competition. Some have specific requirements, such as your business being one run by a woman, minority, or veteran, or being in a certain industry. Still, you can’t get one if you don’t apply for one! Start with these grants.
Additional Resources for Kentucky Small Businesses
If you need more than financing and could use a little guidance on how to run your business smartly, check out these small business resources in Kentucky. They offer free training, mentoring, networking, and education.
Entrepreneurship can be a long and winding road. But you don’t have to go on this journey on your own. Whether you need cash to make it through a slow patch in your business or want someone to bounce ideas off of, there are resources in the state of Kentucky that can help you on your path to success.