Small business loans Illinois

Securing a business loan in Illinois can be a relatively straightforward process, but it’s important to prepare yourself. Follow these steps to help you successfully apply for a business loan in Illinois:

1. Assess your needs. How much financing does your business need? How do you plan to use the money? What are your qualifications? What kind of collateral can you offer? And how much can you afford to pay every month to repay the loan? These are all questions that will help you find the right loan type, lender and program to apply to. 
2. Do your research. Different lenders and loan programs will have different requirements and limitations on top of their interest rates and repayment terms. If you already have a relationship with a bank or credit union, ask them for more information on their business loan programs to see if they may be a good fit. Use a loan calculator to see what your monthly payment will be and what fees you may have to pay, and use that information to guide your choice.
3. Gather essential information. Most lenders will require that you submit financial statements, tax returns, a comprehensive business plan and identification documents to apply for a loan. They may also require other information, so it’s important to have all of it readily available when you apply to ensure the application process is as quick as possible. 
4. Fill out the application and review it carefully. Some lenders will allow you to apply online, which can be quicker than having to apply in person. It’s a good idea to have a professional such as a business accountant or loan officer review your application before you submit it to make sure you’ve included all the necessary and correct information.
5. Be responsive to the lender. During the application review process, the lender may have questions or ask for more documentation, and the quicker you reply, the quicker the loan can be approved. 
6. Carefully review any loan offers. Once your loan is approved, you should still look over the terms and conditions to make sure you understand what you’re signing up for, including the interest rate, repayment terms and any fees. You should also understand any penalties for late payments or for paying off the loan early. You may want to enlist the help of a business lawyer or accountant to help you understand everything fully. 
7. Follow the terms of your loan. Some loans have rules about how you can spend the money, so you need to make sure you’re following the terms of the loan. You’ll also have to make sure you repay it however you agreed to so you don’t default on the loan. It’s a good idea to set up automatic payments on your loan if you can to make sure that you make your payments on time. 

Every lender will have different requirements, and different loan products will also have their own stipulations, so it’s important to make sure you understand the application process of your specific loan. 

What credit score do I need?

Lenders use credit scores to determine the creditworthiness of a borrower – that is, how likely they are to repay the loan. Different types of loans and different lenders will have different credit score requirements. For example, a credit score of 700 or above is considered good and will probably get you in the door at many lenders. For some SBA loan programs, you may be able to qualify for a loan with a lower score, such as above 620. Online lenders and alternative lenders are more likely to accept applications from those with lower credit scores.

It’s important to remember that the higher your credit score, the better your chances of securing a loan as well as of getting lower interest rates and longer repayment terms. Lenders that give money to borrowers with lower credit scores tend to have high interest rates and short repayment terms, which can make the loan more expensive in the long run.

If your credit score is keeping you from the best rates and you don’t need financing immediately, you can work on building up your credit score by paying monthly minimums on credit cards and other debt, lowering your credit usage or building credit history. It may benefit you to wait to apply for a loan until your credit score is high enough to get you the best terms possible. 

What are the typical interest rates for business loans in Illinois?

Interest rates go up and down with the economy, so it can be difficult to predict what a typical interest rate may be. Current interest rates for traditional bank loans are between 7-9% right now, while SBA loans can vary from 11.5-16.6% depending on the type of loan and the amount you borrow. Online loans can vary from 3.5-61%, although some loan types may go as high as 90% depending on your qualifications. 

Always check with a lender regarding their interest rates and make sure you understand how much you’ll be paying back before you sign for a loan. 

How long does it take to get loan funds?

The application review and funding process for a loan can vary depending on what type of loan you apply for, how much you’re asking for and which lender you choose. Traditional bank loans can take as little as a few weeks to several months depending on their underwriting processes. SBA loans may take longer because their application and approval processes are more thorough, but you can expect an approved loan to be funded anywhere from two to six months. Some SBA loans, such as emergency loans, may fund faster.

Alternative loans tend to have shorter application processes and faster funding times. If you choose an online lender, you may get your money in as little as a few days. 

Make sure you discuss timelines with your lender so you know what you’re in for when you apply. Some applications may be more complex than others and the lender may have procedures that can speed up funding. 

What alternative types of business financing options are there?

If you don’t qualify for a loan or don’t think you can afford to repay one, there are still other options available to fund your business in Illinois. You may consider:

1. Peer-to-peer lending: Online platforms connect borrowers with individual investors, where interest rates and terms may vary based on creditworthiness.
2. Venture capital: This involves investors providing capital in exchange for equity ownership.
3. Angel investors: Individual investors provide funding to startups or small businesses in exchange for equity or convertible debt.
4. Crowdfunding: Business owners can raise small amounts of capital from a large number of individuals through online platforms.
5. Invoice financing: This option allows businesses to use outstanding invoices for immediate cash flow. Lenders provide an advance on the invoices, which is repaid when customers settle their bills.
6. Equipment financing: Instead of a loan, you may be able to lease equipment through particular financing institutions. This can sometimes help you ensure that your equipment is maintained and updated more often than buying it outright. 
7. Lines of credit: These provide a flexible source of funds, allowing businesses to access a predetermined credit limit as needed. Much like a business credit card, you only pay interest on the amount you borrow, and you may be able to access the funds again once you’ve paid off the balance.

These alternative financing options serve various business needs and financial situations, providing flexibility in securing the necessary funding for your business.