Small business loans Colorado

Loan application processes can be long and complicated, so it’s important to understand how to apply for the loan before you send in your application. The first best step is to research different lenders, including banks, credit unions and online lending platforms. Take a good look at what they offer and what interest rates are available to find the loan product that best fits your business needs.

The next step is to gather all the documentation you’ll need to submit with your application. This can vary by loan and by lender, but you can expect the lender to ask for:

• Financial documents
• Profit and revenue statements
• Tax returns and statements
• Credit history
• Business plan
• Business documents like licenses or proof of filing

Having these documents organized and ready will make the application process go much more smoothly.

When you’re ready to apply, reach out to your chosen lender and request their application forms or more information on their process. Many lenders will allow you to apply online and some may even provide you with an account representative to answer your questions and guide you through the process. Be prepared to give detailed information about your business’s financial situation, the purpose of the loan and what you intend to do with the funds. You may want to have a business accountant or financial advisor look over your application before you submit it to make sure it’s correct and thorough. 

Once you’ve submitted your application, keep lines of communication with the lender open and respond quickly to any of their requests to ensure your loan is processed as quickly as possible. This also demonstrates your commitment to the financial institution.

What credit score do I need?

Lenders consider your personal credit score and business credit history to determine your creditworthiness, or the likelihood that you’ll be able to repay the loan. They’ll also consider other factors like your business plan and financial situation, but credit score tends to weigh more heavily. The credit score you’ll need to qualify will depend on what type of loan you’re trying to get. 

For most traditional loans, a score of 620 or higher is usually the lowest score a lender will accept to consider your application. But the higher your score, the better your chances are of getting the best rates and repayment terms. A score of 700 or above is considered good.

Keep in mind that some specialized loans or credit products may have different score requirements. It’s always a good idea to check with lenders or financial institutions for their specific criteria. If your credit score doesn’t meet their requirements, you can use other funding options and rebuild your credit to apply at a later time. 

What are the typical interest rates on a business loan in Colorado?

The typical interest rates on a business loan in Colorado can vary widely depending on several factors, such as the type of loan, the lender and your creditworthiness. Generally, for traditional small business loans, interest rates range from 5-12% while rates for online loans can vary from 6-99%. Rates for SBA loans are set by the SBA and are tied to the U.S. prime rate, which means they’re currently between 11.5-15%. 

Make sure you understand all of the terms and conditions before you commit to a loan. While online or alternative loans may be easier to get, their high interest rates can make them difficult to afford. It’s a good idea to use a loan calculator to help you determine what your monthly payments will be after interest and fees. 

How long does it take to get funds?

The timeline for funding depends on the type of loan you get and the lender you choose. For some quicker options like online lenders, you might see the money in as few as two or three days. Traditional bank loans can take longer, usually several weeks after your application has been submitted. SBA loans might take a bit more time due to their approval and underwriting processes, and some can take as long as six months. Always ask your lender about their timeline and make sure your paperwork is ready to help speed up the process. 

What alternative business financing options are there?

Entrepreneurs in Colorado have a range of alternative funding options beyond loans. A few you might consider include:

• Business lines of credit: A business line of credit functions similarly to a business credit card, providing access to a set credit limit that can be borrowed and paid off repeatedly. Unlike with a loan, a line of credit only accrues interest on the amount you spend. These provide a flexible option for managing cash flow. 
• Equipment financing: Equipment financing is meant specifically for large equipment purchases, such as manufacturing equipment, farm equipment, kitchen equipment or trucks and vehicle fleets. Most equipment financing companies offer loans as well as leasing options. In this instance, the equipment usually serves as the collateral for the funding, which can make it easier for some small business owners to secure funding. 
• Invoice financing: With invoice financing, you sell unpaid invoices to a financial services company in exchange for a lump sum of cash. If you have a lot of outstanding receivables, this may be a good option. 
• Merchant cash advances: If you do a high volume of credit card sales, a merchant cash advance can offer you upfront capital in exchange for a percentage of future credit card sales. 
• Venture capital or angel investors: If you’re starting a high-growth business, venture capital firms and angel investors may invest in your startup in exchange for ownership stakes. 
• Crowdfunding: Many small businesses that are just starting out use crowdfunding, where individuals give money to fund the business, usually in exchange for an advanced version of the product or service.