With Massachusetts small businesses accounting for 1.5 million of the state’s employees, it’s clear: Massachusetts entrepreneurs are a force to be reckoned with!
But that doesn’t mean they don’t sometimes need a little assistance. Whether it’s to launch a new business or grow an existing one, small business financing can provide the aid they need.
How a Small Business Loan Can Help Your Massachusetts Small Business
Small business owners sometimes struggle unnecessarily during challenging times. They assume they have to bootstrap and are reluctant to take on financial assistance because they don’t want to go into debt.
But there is such a thing as smart debt: if you take on a small business loan to invest in your company and then increase your revenues, you will be able to easily pay back the loan. That small amount you pay in interest can help create profit several times higher than what you paid!
Options for Small Business Loans in Massachusetts
There’s not just one type of small business loan for Massachusetts companies. With so many diverse options, there’s sure to be one that fits your needs.
If you’re looking for capital to grow your established business and have excellent credit, financial institutions like banks, credit unions, and some online lenders provide low-interest term loans with long repayment periods.
The U.S. Small Business Administration offers several loan programs with low interest, including the 7(a), SBA 504, SBA Express, and microloan programs. Learn more at SBA.gov.
Line of Credit
If you’d prefer to have access to cash when you need it rather than receiving a lump sum of cash all at once, a business line of credit gets you access to cash that you can borrow from, repay, and borrow again.
Merchant Cash Advance
If you don’t have good credit, you may still qualify for a merchant cash advance, which is an advance on future credit card sales. Your repayments are automatically taken from your credit and debit card transactions daily or weekly, plus an origination fee.
Business credit cards are useful when you need to make business purchases like office supplies or gas for the company truck. You can add authorized users to your cards if you have employees who need to make purchases on behalf of the company.
Another option if you have poor credit or your business is new and hasn’t yet established its credit history is a short-term loan. These have high interest rates and short repayment periods, but they can get you the cash you need in a pinch.
How to Qualify for a Small Business Loan in Massachusetts
Lenders may vary slightly in what they require for loan applicants, but most will look at your personal and business credit scores to determine eligibility.
The higher your scores, the more good offers you’ll qualify for. If you don’t have business credit established, learn how to establish small business credit to qualify for even more.
Other lenders, such as those offering short-term loans or merchant cash advances, will look at criteria other than credit, like your annual revenues.
How to Apply for a Small Business Loan in Massachusetts
If you apply for your financing with an online lender, chances are, the loan application will be quick and to the point. If you apply for a bank or SBA loan, you may have to go into a branch to apply, and you may need to provide documents like your profit and loss statement as well as tax returns.
In either situation, you will be asked questions about your business, such as its name, industry, time in business, and annual revenues. You’ll also be asked personal details, like your address and Social Security number.
After submitting your loan application and being approved for a loan, you will be sent a loan agreement with loan terms, including the interest rate, maximum loan amount, and repayment period. After you sign the loan agreement, the funds will be deposited into your bank account.
Small Business Resources to Help You Get Financing
If you apply for a loan that requires a business plan and don’t have one, there are several great small business resources in Massachusetts to assist.
The Small Business Development Center Network has locations in Boston, Amherst, Salem, and many other cities, and offers several technical assistance programs as well as workshops and government procurement assistance.
The Women’s Business League is another great resource if you’re a female entrepreneur. It offers business-related events and courses.
Uses for a Small Business Loan in Massachusetts
So how can you as a Massachusetts business owner use small business loans? There are so many ways!
If your business, like many, sees rises and falls throughout the year, having access to a line of credit could ensure you have working capital to get through slow periods.
If you’re in the growth phase, you might benefit from a little cash to help you open a new location, hire employees, or place larger orders of inventory.
A small business loan provides you the opportunity to help your existing business thrive.
This article was originally written on June 21, 2021.