Small Business Loans in Mississippi

Small Business Loans in Mississippi

Small Business Loans in Mississippi

Almost 50% of over 6,700 Mississippi business owners surveyed said that financial resources were the biggest barrier they faced when starting their business according to a report by the Mississippi Secretary of State.

With so many businesses in Mississippi struggling to get the financial resources they need, it is important to make sure that they have access to as many tools as possible to succeed. Small business loans are one of those important tools for starting and growing a business. 

How a Small Business Loan Can Help Your Mississippi Small Business

You probably already have an idea of how financing could help your small business. Perhaps you want to:

  • Hire more staff
  • Get new equipment
  • Order more inventory
  • Build an online store
  • Rent office space
  • Start exporting

And even if you don’t have a plan for your small business loan yet, it can be a good idea to have capital on hand for opportunities (or challenges) that arise. Luckily there are many different finance options out there to meet your small business needs.

Types of Small Business Loans to Choose From

Before looking at all the different loan options out there, it may be helpful to get a run down of the most popular options:

Business credit cards

These provide small business owners with access to a line of credit, and as a bonus, most will help you build business credit if you pay on time. If you have a good personal credit score and sufficient income you can likely qualify quickly for a business credit card, even if your business is new. 

Crowdfunding 

You have probably heard of Kickstarter, but crowdfunding goes much further than just that one platform. Typically, crowdfunding works one of three different ways— you can either grant equity from your business in exchange for an investment, take out a loan from multiple individuals on the platform, or you can offer rewards in exchange for investments. Crowdfunding is startup friendly. 

Lines of credit

Get access to financing when you need it with a line of credit. Once you’re approved you can borrow up to the credit limit. When you pay back the financing you get access to those funds again. Interest is charged on the amount borrowed. Popular for working capital and short-term financing needs.

Term loans

Ideal for specific projects, term loans let you borrow a lump sum amount of money and pay it back with predictable payments, usually over 2-5 years or more. 

Commercial real estate loans

When you want to purchase real estate for a bricks and mortar business, a commercial real estate loan can provide the financing you need. 

Equipment financing or leasing

Financing or leasing equipment can help preserve cash flow while allowing your business to get the equipment it needs to grow. Certain types of leases offer tax advantages. 

Invoice factoring or financing

For businesses who invoice other businesses, using invoices to get financing can help the business get paid faster. Invoice factoring is often available to business owners with low credit scores. 

Merchant cash advance

One of the fastest types of financing is merchant cash advances. Here business gets approved for an advance against future revenues, based on past revenues. Good credit is not usually required. 

Microloans 

If you need a smaller loan amount, consider a microloan. With a loan amount of less than $50000 (and often a few thousand) and lenders that make these loans are often non-profit organizations and they are often available to borrowers who traditionally have trouble qualifying for a traditional small business loan. They also come with technical assistance to help businesses succeed. 

SBA Loans

Loans guaranteed by the U.S. Small Business Administration are designed for qualified small businesses having trouble accessing capital at reasonable terms. More than a dozen SBA loan programs are available including 7(a) loans, SBA Express, Microloans, Export loans, Disaster Assistance and Loans, and more. 

Vendor financing

Your suppliers or vendors may be willing to let you “buy now, pay later.” This type of financing is often flexible and can help with cash flow. It can also build business credit. Ask your suppliers or use this list of net-30 vendors to get started.

Small Business Loan Options for Mississippi

If you’re looking for a business loan for your Mississippi business, you can of course start with local community banks and credit unions. Here are options to consider: 

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

Just like personal loans have certain requirements, there are several factors that will affect eligibility for small business loans. The four main factors that affect your ability to get a small business loan are:

  • Business revenues/financials
  • Credit (business and/or personal credit)
  • Time in business
  • Industry

Financials

When you apply for a personal loan, the lender wants to know your income. And when you apply for a business loan the lender wants to know the income of your business. 

Lenders will often require business bank statements to verify whether you meet their minimum income requirements. Some lenders, especially traditional lenders such as banks or credit unions, will also require business tax returns and/or business financial statements.

Credit 

While good personal and business credit will help increase your loan options, there are still financing options for those with lower credit scores. If you don’t have good credit. you may want to explore crowdfunding, invoice factoring, merchant cash advances and microloans instead of more traditional lenders.

Industry

You may be surprised to know that when it comes to getting a loan for your small business, lenders will consider the industry you are in. Certain industries are more favored by certain lenders, and some there are some they won’t lend to. These are often referred to as “‘restricted industries.”

Time in business

The longer your business has been around, the more comfortable lenders will be about giving you a loan. If your small business has been around for five years, for example, it’s much less risky than one that opened six months ago. 

What Loan is Best for Your Mississippi Small Business

The loan that is best for your small business depends on multiple factors. You need to consider:

  1. How you’ll use the funds
  2. How quickly you need— and can get— financing
  3. The cost of the loan (interest rate and fees) 
  4. What loan payments you can afford
  5. The types of financing options for which you can qualify

Try to research financing options before you need a loan. You’ll have more time to evaluate your options and make an informed decision. 

Small Business Grants for Mississippi

Small business grants are coveted by many small businesses as they provide money that doesn’t have to be paid back. Naturally, grants are competitive so they may not be the best option for someone who needs a guaranteed amount of funding by a certain date. But every year, millions of dollars in small business grants are made by foundations, government agencies and private businesses. 

Plan to spend time searching for and applying for grants, using resources such as Grants.gov, Opengrants.io and state-specific resources listed below. 

Additional Resources for Mississippi Small Businesses

Want more help for your small business? A great place to start is with the State of Mississippi’s small business website: Y’all Business. You’ll find numerous business resources including a detailed list of associations and organizations that work with entrepreneurs. 

It also publishes resources for businesses impacted by the Covid-19 pandemic, including CARES Act programs such as PPP and Economic Injury Disaster Loans. Though those programs are now closed to new applications, you may find information about new initiatives available to business owners in the state. 

The Mississippi Small Business Development Center (SBDC) offers free one-on-one counseling, training events, business services, and funding assistance to in-state small businesses. They will also help you with free cybersecurity training. And SCORE mentors offer free business mentoring.

If you are a woman or minority business owner in Mississippi, and are looking for loans, grant programs, or business certifications then you will want to check out Mighty Mississippi, published by the Mississippi Development Authority. You’ll find information about certifications, technical assistance and education programs.

This article was originally written on February 10, 2022 and updated on February 11, 2022.

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