Small business loans Missouri

Applying for a small business loan in Missouri typically involves several steps. Although each lender and loan program will have its own process, here is a general guide to the application process:

1. Determine loan type: Identify the most suitable type of loan for your business based on your financial requirements, creditworthiness and how you plan to use the funds.
2. Gather documentation: Collect the necessary documentation, which will usually include financial statements, tax returns, business plans and other relevant financial records.
3. Check credit score: Review your personal and business credit scores, as lenders often consider these when evaluating loan applications. 
4. Research lenders: Explore various lenders in Missouri and nationally and compare interest rates, terms and fees associated with each option. Swoop can help you narrow down your search based on your specific needs and qualifications. 
5. Complete the application: Fill out the loan application form provided by the chosen lender, whether it’s online or in-person. Be thorough and accurate in providing the required information.
6. Submit documentation: Submit all required documentation along with your application.
7. Wait for approval: The lender will review your application and supporting documents. This process may take some time, and the timeline can vary depending on the type of loan and the lender’s procedures.
8. Loan approval and terms: If approved, carefully review the loan terms and make sure you understand all aspects of the agreement before accepting the loan.
9. Receive funds: Once you accept the loan terms, the funds will be disbursed to your business account. Make sure you spend them as specified in the loan agreement and repay the loan as agreed.

It’s important to note that each lender may have specific requirements and processes, so it’s always a good idea to communicate with the chosen lender and seek guidance throughout the application process.

What alternative business financing options are there?

If you don’t qualify for a loan or can’t afford large monthly payments, several alternative financing options exist for small businesses in Missouri. These alternatives serve different business needs and financial situations. 

Some common options include:

1. Peer-to-peer (P2P) lending: P2P lending platforms connect businesses directly with individual investors willing to lend money.
2. Invoice financing: This option allows businesses to receive funds upfront by selling their outstanding invoices to a financing company, which helps to improve cash flow.
3. Merchant cash advances: With a merchant cash advance, a business receives a lump sum in exchange for a percentage of its future daily credit card sales.
4. Crowdfunding: Crowdfunding platforms allow businesses to raise funds by receiving small amounts from a large number of people. 
5. Microloans: Often used for startup capital or to support micro-enterprises, these loans provide small sums to businesses, particularly those in underserved communities or with mission-based operations. 
6. Equipment financing: For businesses needing new equipment, this option allows them to secure financing for purchase or a lease while using the equipment as collateral.
7. Business lines of credit: Provides a flexible borrowing option where businesses can draw funds as needed, up to a predetermined limit. Interest is only paid on the amount borrowed.
8. Angel investors: Individuals who invest their personal funds in businesses in exchange for ownership equity.
9. Venture capital: Professional groups that invest large sums of money in exchange for equity, usually for high-growth startups. 

It’s important for businesses to carefully evaluate each option, considering factors such as interest rates, terms and eligibility requirements. Choosing the right alternative financing option depends on your unique needs and circumstances.

What credit score do I need?

The credit score required for a small business loan can vary depending on the lender and the type of loan. Ultimately, a higher credit score increases your chances of securing favorable loan terms, including lower interest rates. 

Traditional lenders, such as banks, generally prefer higher credit scores, often in the range of 680 and above. However, alternative lenders and online platforms may be more flexible and consider scores starting around 580. 

While credit score is a significant factor, lenders also look at other aspects of your business’s financial health, such as revenue, time in business and debt-to-income ratio. They may also take your business plan into account when determining whether or not to approve your loan.

It’s a good idea to check the specific requirements of the lender you’re considering and take steps to improve your credit score if needed before applying for a small business loan.

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

The interest rates on business loans in Missouri can vary based on several factors, such as the borrower’s creditworthiness, the amount of the loan requested and the general economy. 

Traditional lenders such as banks may offer lower rates, especially for businesses with strong credit profiles. Interest rates for bank loans might range from around %5.76 to 12% or more, depending on factors like creditworthiness, the purpose of the loan and the length of the repayment term.

Online lenders and alternative financing options may provide faster access to funds but may come with higher interest rates, often ranging from 10% to 30% or more. These rates can be influenced by the risk associated with the business and can go as high as 99% in some cases.

For SBA loans interest rates are tied to the U.S. Prime rate. SBA loan rates may vary but often fall within the range of 11.5-16.5%, depending on the specific SBA program, the loan amount and the repayment term.

How long does it take to get funds?

The time it takes to receive funds from a small business loan can vary based on several factors. If you need money quickly, you may consider alternative financing instead of traditional or SBA loans. 

Traditional lenders, such as banks, typically have a more extended application and approval process, which may take several weeks to a few months. Online lenders and alternative financing options often offer a quicker turnaround, with some providing funding in a matter of days or weeks.

SBA loans, while offering favorable terms, can have a more extended approval timeline due to additional government regulations and reviews. You can expect it to take up to six months to receive the funds from an SBA loan.

Business owners can speed up the process by making sure they submit a complete and accurate application, responding promptly to any requests for additional information and maintaining clear communication with the lender throughout the process.