Small Business Loans in Idaho

Small Business Loans in Idaho

Small Business Loans in Idaho

Over 99% of businesses in Idaho are small businesses. Yes, you read that correctly. With small businesses booming in Idaho it is no wonder why business owners in the state need access to not only small business resources, but also small business loans, to remain competitive and to grow. 

How a Small Business Loan Can Help Your Idaho Small Business

There are many challenges businesses in Idaho face, and many require capital. If you need to:

  • Invest in office space
  • Increase production
  • Import or export goods
  • Hire employees
  • Invest in inventory or materials

A small business loan can be a good option. If you don’t have a current growth plan for your business, aren’t sure what the next step is for your business, or have capital to invest then a loan probably isn’t the right fit. However, you may want to investigate possible types of financing to better understand what may be available when you do need and want financing. 

Types of Small Business Loans to Choose From

Here are some of the most popular types of loans to choose from:

Business credit cards

Business credit cards share a lot of similarities to a personal credit card. They can allow you to get rewards, access a line of credit, and of course build credit. But with a business credit card you can build business credit. 

Of course just like with any credit card you need to pay on time and make sure you understand the terms of use and rate you are getting. Another great thing about business credit cards is that if you have a good personal credit score and good income you can usually qualify quickly. Even startups may be eligible.

Lines of credit

Lines of credit allow you to have access to a certain amount of capital, but don’t require you to use it all. For example, you can get a $15,000 line of credit but if you just need $2,000 for a website revamp and $5,000 for new equipment, you can use just $7,000 and have the extra $8,000 on hand if something comes up. Plus you will only be paying interest on the $7,000 balance instead of the full $15,000 credit limit. Lines of credit are very good for short-term borrowing and working capital needs. 

Term loans

Term loans let you borrow a set amount of money and pay it back over a specific period of time. Usually that means monthly payments for 2—5 years, but some term loans (including some SBA loans) may go as long as 20—25 years. These are great for projects where borrowers need predictable payments over a longer period of time. 

Commercial real estate loans

If you are purchasing real estate for your business you will probably want to look into commercial real estate loans. Certain SBA loans are also used for real estate purchases. Repayment periods are typically much longer than other types of small business loans. 

Equipment financing or leasing

Equipment can be expensive, and whether you are starting out or just need to be more careful with cash flow, equipment financing or leasing may be a great option. It can help your business avoid tying up significant amounts of capital for equipment purchases. There may even be tax advantages associated with certain types of leases.

Invoice factoring or financing

If you have a B2B business, invoice factoring or invoice financing may be a great option. This financing basically involves ‘selling’ invoices to another company at a discount for money today. While you won’t get the full amount of the invoice, you will be able to get paid faster to improve cash flow. The business owner’s credit is not a major factor here; the credit of the business that owes the invoice will carry more weight. 

Merchant cash advance

If you have a history of strong revenues and you need small business financing quickly, merchant cash advances may be an option to consider. The amount you get will be based on past revenues and they can typically be closed quickly. Good credit is not required, but costs are often higher than other types of financing so make sure you understand the cost, and whether you can still make money on top of it.

Microloans 

Microloans are great for companies that have trouble qualifying for other loan options and that need smaller loan amounts. Often made by nonprofit lenders, loans are typically for a few thousand dollars, and can go up to $50,000 (or more).  

Crowdfunding 

Crowdfunding has become more popular over the years as a funding source for small businesses and startups. It allows an entrepreneur to offer equity or rewards from the business from groups of investors or backers. There is also the option to use crowdfunding for a loan.

SBA Loans

If you are a small business that is having trouble accessing capital with favorable terms you will want to check out loans guaranteed by the U.S. Small Business Administration. SBA loan programs include everything from small microloans to multimillion dollar 7(a) loans and CDC 504 loans. Good credit is typically required, though lender eligibility standards vary. 

Small Business Loan Options for Idaho

If you aren’t sure what kind of term loans, business credit cards, microloans, or other loan options are right for your Idaho small business you will want to check out these offers in addition to those available from loan lenders.

Business credit cards

Lines of credit

Term loans

Commercial real estate loans

Equipment financing or leasing

Invoice factoring or financing

SBA Loans

What it Takes to Get Approved for a Small Business Loan

It can be tough to get approved for a small business loan, especially at a great interest rate. There are certain criteria that banks and lenders are likely going to evaluate. Typically those four criteria are:

  • Financials
  • Credit
  • Time in business 
  • Industry

Financials

Lenders usually want to see your business bank account statements so they can assess your business income. They may also want to see your financial statements and tax returns, though this is more common with banks and credit unions than online lenders. So make sure your bookkeeping is up to date and that you are using a business bank account. If you don’t have these documents for your business, reach out to your accounting professional or contact your local SBDC for training. 

Credit

Of course, good credit scores— personal and business— can make it much easier to get approved. However, if you don’t have a good credit score in one or both of these categories there are still financing options available to you. The types of financing that are better for those with lower credit scores tend to be merchant cash advances,  invoice factoring, microloans and crowdfunding.

Industry

There are certain industries that are considered to be “‘restricted industries” by certain financing companies so it is important to look at what industries are supported by the company you are trying to get financing through. There’s no sense applying for financing if you will automatically be declined due to this factor.

Time in business

If your business has two or more years in business you’ll be in a much better position to get financing. That being said, younger companies can still get financing, although if your company is a startup (or less than two years old), you may need to look more to microloans, crowdfunding, business credit cards, etc.

How to Choose the Right Loan for Your Idaho Small Business

Numerous factors go into choosing the right you need to consider when looking at loan options for your small business. You need to think about:

  1. How you’ll use the funds
  2. When the funds will be used (short-term, intermediate or long-term)
  3. Fees and interest rates for each loan
  4. Your ability to afford the loan payments 
  5. The ROI of the financing after you’ve accounted for costs 
  6. What financing options are available to you based on qualifications
  7. The industry you are in and how that will affect the financing you get

What’s right for your business may not be the best option for another. Start by finding out what types of financing your business may qualify for, then narrow your options based on the use of funds and time frame for borrowing and repayment. 

Small Business Grants for Idaho

Grants tend to be very competitive for small businesses because they essentially offer free money. So why doesn’t every small business go for the grant route? 

It’s because finding and getting grants takes work. You have to put a lot of time in finding them,  applying, and potentially answering followup questions. Many grants are for smaller amounts of money so they may not meet all your capital needs. 

Still, it’s worth at least a little time searching grant databases like Grants.gov (for government grants) or Opengrants.io or GrantWatch.com for a variety of grants from private and government sources. You may find the perfect opportunity for your small business. 

Additional Resources for Idaho Small Businesses

There are numerous organizations helping Idaho businesses. Take advantage of these programs, many of which are free. 

Start your search at the State of Idaho’s official website at Idaho.gov/business. You’ll find information about starting or running a business, taxes, licenses and much more. There’s also a link to a Coronavirus Resources section for small businesses affected by the pandemic, including information about programs like the Paycheck Protection Program (PPP).  

Minority small business owners should check out the Minority Business Development Agency which helps small business owners access capital, land contracts, and find different markets. The MBDA also has business centers, advanced manufacturing centers, export centers, and federal procurement centers where you can get help.

Idaho has one of the highest veterans of the Armed Forces rates in the U.S., and veterans in Idaho should check out Boots to Business, a program designed to help military members who want to become entrepreneurs. 

The Idaho Small Business Development Center (SBDC) is another excellent resource dedicated to empowering small businesses by providing no-cost, confidential consulting and low-cost training to entrepreneurs throughout Idaho. It has locations in Boise, Twin Falls, Idaho Falls, Pocatello, Lewiston and Coeur d’Alene, allowing it to serve businesses anywhere within the state. Get help with everything from creating a business plan to social media marketing to exporting. 

This article was originally written on February 18, 2022.

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