Small business loans Kansas

How you apply for a loan may differ depending on what type of loan you want and which lender you select. However, there are a few steps you can be sure you’ll need to take:

1. Determine what you need. Assess your business’s financials and your business plan to determine how much money you need and how much you can afford to repay. 
2. Be honest about what you qualify for. Check your credit score, annual revenue and time in business to help you determine what your chances are of successfully getting a loan. You should also see what kind of collateral you can offer. 
3. Compare lenders and loan types. Shop around at local banks and credit unions, national financial institutions and online lender to see if they offer what you need with the rates and terms you can afford. Swoop can help you find loan offers that suit your business’s specific needs and requirements. 
4. Prepare your documentation. While every lender will have their own documentation requirements, you can almost always expect to need to provide financial and bank statements, tax statements, identification documents and a business plan. 
5. Apply accurately. Make sure you have filled out all the necessary information and have the required documentation before you submit your loan application. It’s a good idea to have a professional like a business accountant or consultant review your application before you submit it to save you time. 
6. Review any loan offers before signing. Double-check that you understand the interest rate, repayment periods and stipulations on how you can use the funds to avoid defaulting on the loan. Make sure that you know when you need to start making repayments, as well. 

The more prepared you are to apply to the loan, the better your chances of success will be. Also, you don’t want to waste time applying for loans you aren’t qualified for or that you won’t be able to use for your purposes.

What credit score do I need?

While every lender will have their own criteria for approving a loan, a credit score of 700 or higher gives you a better chance of approval with traditional lenders, as well as more opportunities for better interest rates and terms. Some SBA loans will approve a loan for a credit score of 620-640, although they are more likely to have higher interest rates. Alternative lenders may approve a loan for a credit score as low as 550, but the interest rates will be very high (sometimes up to 99%) and you may have to repay the loan quickly.

If you have a lower credit score, you may consider finding alternative funding (more on that below). You can also work on your credit score and apply for a loan at a later date.

What are typical interest rates on a business loan in Kansas?

Interest rates in Kansas and across the U.S. fluctuate based on economic conditions, and different types of loans and lenders will offer different rates. In 2023, the Federal Reserve Bank of Kansas City reported that the average business loan interest rate was 7% for fixed-rate loans and 7.9% for variable-rate loans. Your interest rate may be higher or lower based on your credit score and other factors, but you can probably get a traditional loan for between 6 – 9% interest.

The interest rates on SBA loans are tied to the daily prime rate, but lenders must keep the interest rates between a certain range. Depending on the type of SBA loan you apply for, you can expect an interest rate between 8.5% to 15%. 

Alternative lenders have a much wider range of interest rates – anywhere from 3.5% to 60.9%, although some may go as high as 99%. Be sure to read the conditions carefully to understand any additional fees, as well. 

What alternative financing options are there?

If you aren’t ready to apply for a business loan for whatever reason, there are many other financing options available for small businesses in Kansas.

• Merchant cash advances, where you receive immediate funds in exchange for a portion of future credit card sales. This option can be a good idea for businesses that do a high volume of credit card transactions and need money quickly for cash flow. However, beware of high interest rates and fees. 
• Crowdfunding platforms allow you to raise funds from a broad online community, usually in exchange for special gifts or advanced sales. If you have a unique product idea or service, this can be a good option to get startup funds. 
• Peer-to-peer lending connects you directly with individual investors willing to fund your business. They will often provide you with money in exchange for equity in your business.
• Equipment financing lets you secure a loan specifically for equipment purchases, with the equipment itself serving as collateral. Many equipment financing companies deal only in the industry they serve, such as trucking or farming, and you can often lease the equipment rather than buying it outright. 
• Invoice financing, where you receive a cash advance based on outstanding invoices. This can be a good option for businesses that have long repayment terms with vendors and need money sooner. 
• Business line of credit lets you borrow money up to a predetermined credit limit, much like a credit card. You can usually use these funds like cash or to pay for business expenses you might not be able to cover with a credit card, such as payroll or commercial rent. Unlike a loan, you only pay interest on the amount you spend, rather than a lump sum. You may also be able to access the funding again after you’ve repaid it. 

Different financial institutions will offer different types of funding and will set their own fees, interest rates and repayment terms. Be sure to read the fine print before you sign on to any type of funding and make sure it’s right for your business.

How long does it take to get funds?

Once you’ve applied for a loan, the lender’s review processes will determine how long it takes for you to get funding. A traditional loan may take up to six weeks, while an SBA loan can take as long as six months. An online or alternative loan may fund in as few as two business days.

It’s essential to make sure you have your application completed and accurately filled out to reduce the amount of time it takes to get the money you’ve applied for. Underwriting and review processes can be lengthy, especially for SBA loans or traditional loans, and if they have to ask you for clarification or follow-up information, it can cause significant delays.