While starting a small business can be an exciting time, finding the right funding can be difficult, even though it’s one of the most important steps.
Explore the various options, from traditional bank loans to alternative options, so you can prepare yourself with the right know-how to start or expand a company in Hawaii’s dynamic business landscape.
Hawaii offers a wide range of small business loans designed to meet the needs of small businesses on the island. Some options include:
Each of these options has its pros and cons. For instance, traditional business loans and SBA loans tend to come with attractive, lower interest rates and longer-term payback terms. However, they can also be more difficult to get, requiring higher credit scores or time in business to prove your creditworthiness (how likely you are to repay the loan). Alternative loans and online loans may be easier to qualify for, but they can have much higher interest rates and shorter repayment terms for the lender to make up the risk. Microloans are for smaller amounts and may not cover all your costs, and equipment loans can only be used to specific equipment.
The type of loan you choose to pursue will depend on how quickly you need the funding, what you plan to use the funding for and which loans you qualify for.
Many small businesses, especially those that are just starting out, may turn to business grants to fund their costs. These grants don’t have to be repaid, and can usually be used for any purpose. Grants come in all different levels and may be meant for businesses with certain missions or business purposes. Many are available from government economic assistance agencies, community organizations or as prizes from business incubators or supportive organizations.
To find a business grant in Hawaii, start by checking out local resources and organizations that support small business owners. Begin your search at the official website of the Hawaii State Department of Business, Economic Development & Tourism, which often provides information on available grants, eligibility criteria and how to apply.
Additionally, check out opportunities with local chambers of commerce and business development agencies. They often have insights into grants that match up with specific sectors or areas in Hawaii. Attending network events and talking to other business owners is also a great way to pick up potential grants.
Lastly, keep an eye on reliable business publications, forums, and social media groups focusing on Hawaii’s business scene. They may share updates on new grant programs or spotlight success stories of businesses that have secured funding through grants.
Remember that small business grants can be extremely competitive, so it’s important for you to be able to describe in detail what sets your business apart.
Applying for a loan in Hawaii is pretty straightforward if you have a plan and know what steps to take. Follow our guide for applying for a business loan in Hawaii:
When it comes to financing your business in Hawaii, business loans are just the tip of the iceberg. Have a look at some alternative options that serve different business needs and may be helpful if you have trouble qualifying for a loan:
Exploring these alternative funding options lets you go beyond traditional loans and find the best fit for your business’s specific financial needs. Each option comes with its own advantages and considerations, so take your time to figure out which one matches your goals and needs the best.
The required credit score largely depends on the type of funding you’re seeking and the lender’s specific criteria. Usually, a credit score of 700 or higher is considered good and increases your chances of qualifying for loans with favorable terms. However, some lenders may accept lower scores, especially for alternative or online loans. SBA loans in Hawaii will generally prefer that you have a credit score of at least 640 or above.
It’s important to check with specific lenders and review their eligibility criteria. Remember, a good credit score demonstrates financial responsibility and can lead to better opportunities for funding and lower interest rates. Keep in mind that even if your score is lower, there are alternative funding options available, including business credit cards and online loans.
The typical interest rates on a business loan in Hawaii can vary based on factors like the type of loan, the lender and your creditworthiness. Interest rates have been slightly higher since the COVID-19 pandemic, and you may see traditional bank loans with interest rates ranging from 5.75-12%.. SBA loans may have rates between 11.5-18%, while alternative lenders, such as online platforms or peer-to-peer lending, might offer rates between 6-30%, although some will go as high as 99%.
Interest rates for alternative types of funding can vary widely, as well. For instance, a merchant cash advance can charge interest rates of 40-350%, while invoice factoring may assign you a rate anywhere from 10-80%. Business lines of credit will also fall between 10-99% and equipment financing rates can be 4-45%. Your creditworthiness, how much you’re borrowing and the lender you choose can all have an effect on these interest rates.
Keep in mind that these are just estimates and actual rates can fall outside these ranges. It’s always important to compare offers and negotiate with lenders to secure the most favorable terms for your business situation in Hawaii.
How fast you get your funds depends on the type of business loan you apply for and the lender’s process. For traditional bank loans, it can take anywhere from a few weeks to a couple of months. SBA loans may take longer due to the thorough application and approval process, often ranging from 60 to 90 days, although some types of SBA loans can take up to six months.
With alternative lenders you can secure funding quicker, with funds potentially available within a week or even sooner. Additionally, some lenders offer a speedier process for urgent situations.
It’s important to discuss timelines with potential lenders upfront and make sure you have all the required documents and information ready to speed up the process. Keep in mind that factors like the complexity of the application and the lender’s specific procedures can affect how quickly you can get funds.
Finding the right funding for your small business in Hawaii involves a strategic approach tailored to your business’s unique needs. Start by thoroughly researching the wide range of funding options available, including traditional bank loans, SBA loans and alternative funding sources like venture capital and crowdfunding.
Next, evaluate your business’s financial health and determine the amount of funding you need. Consider factors such as startup costs, operational expenses and potential growth plans. Understanding your financial needs will guide you toward the funding option that fits your business the best.
Building a network is also important when looking for funding. Attend industry events, become a part of entrepreneurial communities and engage with local business organizations. These connections can lead to valuable insights on available funding opportunities and can potentially connect you with lenders and investors.
Lastly, make sure to carefully read the terms and conditions of any funding offers. Consider factors like repayment schedules, collateral requirements and any additional fees. By taking a comprehensive approach to finding funding, you can secure the best financial support for your small business in Hawaii.
Download the Swoop app to get customized suggestions on the best business loans for you. Simply answer a few questions about your business, how much you need and what you’ll use the funding for, and Swoop will gather suggestions to find the right funding. Get started today.
Daire made it happen! There is no doubt that Swoop sped up the process and found lenders that worked to our time scale rather than the other way round
Joint owner, F45 Virginia
Swoop was actually very helpful in helping us get our initial fundraising in place. Swoop was able to connect us with investors, with grant financing options and debt financing options.
Founder, SingleKey
Pedja was amazing. Super supportive, understanding of our needs and wasn't pushy at all. We've been going back and forth with Swoop for over a year inquiring about different financing options and they were patient until we were ready!
F45 Multi-studio owner
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