Small business loans Indiana

To apply for a business loan in Indiana, follow these steps:

1. Determine what type of loan you need. This means figuring out how much money you need for your project, what you intend to use the money for, assessing your qualifications and figuring out how much loan you can afford to repay. Loan calculators can help you determine what your monthly payment will look like, but you need to know the full terms of the loan, including fees. This is a good time to check your credit score so you can understand what options are available to you.  
2. Research different lenders: Once you know what you qualify for and the type of loan you need, you can start comparing lenders. If you have an existing relationship with a local bank, it’s a good idea to start with them and see what kind of loan programs they offer. Many lenders will provide you with a loan officer who can answer your questions and guide you through the application process. 
3. Gather the necessary documentation: Most loans will require that you submit financial statements, tax returns and identification or licensing documents, so make sure you have those in order before you apply. Many lenders will ask for a business plan and may require collateral or a personal guarantee, too. 
4. Submit your application: Make sure that you complete the required forms fully and accurately before you submit them. It’s a good idea to have an accountant or business expert review the application to make sure you didn’t miss anything. Many traditional lenders will allow you to submit your loan application, including supporting documents, online, although some require you to provide paper copies. 
5. Provide any additional information: The lender may come back to you with clarifying questions or to ask for additional documentation while they review your application. It’s important to respond as quickly and accurately as you can to help speed up the process. 
6. Review the loan offer: Once your loan is approved, you’ll receive a letter from the lender including all the terms and conditions as well as fees. It’s a good idea to have your business accountant review the document before you sign it, but you should also review it thoroughly to make sure you understand everything.

Spend the money and repay the loan: Once you’ve accepted the loan, the funds will arrive in your bank account and you’re free to spend them (within the terms of the loan, of course). Make sure you follow the stipulations of the loan agreement, including repayment terms, so you don’t default on the loan.

What credit score do I need?

Most lenders will use your credit score to determine your creditworthiness, which is your likelihood of being able to repay a loan. Your credit score is determined by a number of factors, including:

• Ability to pay monthly minimums
• Amount of credit you’re using
• Length of credit history
• Number of creditors

And more. 

The type of credit score you need to secure a loan depends on the type of loan, the lender and how much you’re asking for. Typically, higher credit scores (above 700) will have an easier time securing a loan, and will also be eligible for lower interest rates, longer repayment terms and larger sums of money. You may be able to get a traditional loan with a credit score between 620-700 if you have a very solid business plan and excellent financials, such as high annual revenue and growth projections.

SBA loans usually require a minimum credit score of 640, although higher scores increase your chance of approval. Again, the type of SBA loan program you apply for can have an impact on what credit score they require.

Alternative lenders and online financial platforms may have more flexible credit requirements. In fact, some alternative lenders will give loans to businesses with scores as low as 550. However, these loans can have very high interest rates (sometimes as high as 99%!) and very short repayment terms, which can make them much more expensive in the long run.

To improve your chances of getting the best loan for your business, it’s a good idea to work on your credit score. You may want to wait to apply for a loan and use alternative financing options until you’re more qualified. 

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

As of January, 2024, typical interest rates for business loans in Indiana were:

• Traditional bank loans: 5.89 – 12.23%
• Online loan: 6 – 99%
• SBA loan: 11.5 – 15%

Business loan interest rates go up and down with other market conditions. Your qualifications will also determine your interest rate, so it’s important to check with your lender to understand what your rates will be. 

How long does it take to get funds?

The amount of time it takes for the money to get into your bank account can vary widely based on the type of loan and the lender you choose. For traditional loans, it may take several weeks for your loan to be approved once you’ve submitted it based on the lender’s review and underwriting processes. SBA loans can take anywhere from 30-90 days for approval, and you may wait six months before the money is funded. 

Alternative lenders and online platforms usually boast much shorter application processes than other loan types. They may be able to get you funds in as little as two days if all of your paperwork is in order. 

It’s important to make sure you understand the timeline your lender usually follows so that you can prepare for it. It’s also a good idea to have all of your documentation in order before you apply to reduce the need for follow-up from the lender during the application review process.

What alternative business financing options are there?

If you don’t think you’ll qualify for a loan or you aren’t sure you’re ready to sign on to large monthly payments, there are other funding options available for small businesses in Indiana. 

1. Business lines of credit: A financial institution provides a business with access to a predetermined amount of credit and the business only pays interest on the money they spend. Many lines of credit also allow you to re-use the funds once you’ve paid them off. 
2. Equipment financing: Enables businesses to purchase necessary equipment with a loan structured around the equipment’s value.
3. Invoice financing: Allows businesses to borrow against outstanding invoices, improving cash flow.
4. Merchant cash advances: Provide upfront capital in exchange for a percentage of future credit card sales.
5. Crowdfunding: Platforms allow businesses to raise funds from a large pool of individuals.
6. Peer-to-peer lending: Involves borrowing from individuals or groups through online platforms, bypassing traditional financial institutions.
7. Venture capital: Investors provide funding in exchange for equity, typically for startups with high growth potential.
8. Angel investors: Individuals who invest their own funds in exchange for equity or ownership in early-stage businesses.
9. Revenue-based financing: Repayments are based on a percentage of monthly revenue, providing flexibility for businesses with unsteady income.

Each of these options has its own advantages and disadvantages, and they may not suit your business’s needs. Make sure you understand any fees, interest rates and repayment terms before you sign on for any financing.