Small business loans New Hampshire

Every lender will have their own application requirements and qualifications, so it’s important to follow their instructions when you apply. However, the process is usually very similar across lenders and preparing in advance can save you a lot of time. 

To apply for a small business loan in New Hampshire, you can follow these 10 steps:

1. Determine your financial needs: Assess your business’s financial requirements, considering the purpose of the loan, the amount you need and your ability to repay. 
2. Research lenders: Identify potential lenders in New Hampshire, including traditional banks, credit unions, online lenders and government-backed programs such as SBA. You may look at local lenders, especially if you have a standing relationship with a bank or credit union, but remember that national financial institutions may also have better rates and terms to meet your needs.
3. Gather documentation: Collect the necessary documentation for your loan application. This may include financial statements, tax returns, identification, business plans and any other information required by the lender.
4. Complete the application: Fill out the loan application provided by your chosen lender, whether that’s online or in-person. Ensure that all information is accurate and comprehensive. 
5. Review and submit: Review your application before submission to make sure all required documents are attached, and the information provided is accurate. You may enlist the help of a business consultant, accountant or the loan officer to make sure you’ve filled the application out correctly. 
6. Wait for approval: After submitting your application, be prepared to wait for the lender’s response. Approval and underwriting can take the longest out of the application process, and submitting a complete application can help lower this waiting time. 
7. Review loan terms: If your application is approved, carefully review the terms and conditions of the loan offer. Pay attention to interest rates, repayment terms and fees. Use a loan calculator to help you determine the total cost of the loan with interest and fees, as well as your monthly payment.
8. Negotiate if necessary: If there are aspects of the loan terms that you find unfavorable, consider negotiating with the lender. You may have more leverage if you have a higher credit score. 
9. Finalize the agreement: Once you and the lender agree on the terms, finalize the loan agreement. Be aware of any closing costs or additional requirements.
10. Stay in touch: Throughout the process, maintain clear communication with the lender and be responsive to any requests for additional information.

By following these steps and staying organized throughout the application process, you can increase the likelihood of a successful small business loan application in New Hampshire.

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 you’re seeking. Your credit score helps the lender determine how likely you are to be able to repay the loan, also known as your creditworthiness.

Traditional banks often prefer higher credit scores, typically above 700, for more favorable terms on loans. However, alternative lenders, online lenders or government-backed programs may be more flexible, considering credit scores in the mid-600s or even lower.

While a higher credit score improves your chances of securing a loan with better terms, other factors such as your business’s financial health, cash flow and the purpose of the loan also play a role. Some lenders may be willing to consider additional factors beyond credit score, especially for established businesses with a strong track record of revenue and profitability. Your business plan can also help sway their decision in your favor, so make sure you have a clear plan for how you intend to use the loan to grow. 

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

Interest rates on business loans vary based on factors such as the overall economy, the applicant’s creditworthiness and qualifications, the lender, the type of loan and the amount of the loan. Traditional banks may offer lower interest rates, often ranging from 4% to 10%, especially for businesses with strong credit profiles. The average traditional small business loan in 2023 ranged from 7% to 9% interest. 

Alternative lenders, including online lenders, may provide quicker access to capital but could have higher interest rates, ranging from 7% and going higher, depending on the lender’s assessment of risk. Some online loans can assess an interest rate as high as 99%, which is why it’s so important to understand terms and conditions before you accept a loan.

SBA loan interest rates are tied to the U.S. Prime rate, which is currently at 8.5%. Lenders then add interest rate points depending on the borrower’s qualifications and loan type, up to a certain limit. Most SBA loans averaged between 11.5% to 16.5% in 2023, although this varied widely based on the loan type. 

The specific interest rate you qualify for depends on factors such as your creditworthiness, the type of loan, the lender’s policies, and market conditions. Before selecting a loan, it’s important to carefully review and compare the terms, including interest rates, fees, and repayment structures, from different lenders to find the most suitable option for your business in New Hampshire. 

How long does it take to get funds?

The time it takes to receive funds also depends on factors such as the completeness of the application, the complexity of the loan, and the responsiveness of the borrower in providing necessary documentation. Additionally, the type of loan, whether it’s a term loan, line of credit, or another form of financing, can influence the processing time.

Your lender’s underwriting and approval processes have the greatest impact on how long it takes for you to get funds. Traditional bank loans tend to have longer processing times, which means you may not see the funds for several weeks or even months. SBA loans are known for taking longer – sometimes as long as six months from the time you submit your application until funds are in your account.

On the other hand, online lenders and alternative financing options may offer quicker approval and funding timelines. Some online lenders can provide a decision within a few days, and if approved, funds may be disbursed shortly thereafter—sometimes within one to two business days.

To speed up the process, you should have your financial documents in order and be responsive to any requests for additional information from the lender when you apply. Clear communication with the lender throughout the application process is the key to an efficient funding experience.

What alternative business financing options are there?

Businesses have various alternative financing options beyond business loans. These alternatives serve different needs and financial situations. 

• Online lenders provide quick access to capital with a streamlined application process, offering options such as term loans, lines of credit, and invoice financing.
• Merchant cash advances allow businesses to receive a lump sum upfront in exchange for a percentage of future credit card sales.
• Business lines of credit offer a revolving credit line for managing cash flow and short-term expenses. 
• Peer-to-peer lending connects businesses with individual investors willing to lend money, often through online platforms.
• Crowdfunding allows businesses to raise funds from a large number of individuals, usually through online platforms, based on a compelling pitch or business idea. 
• Microloans, often provided by community development financial institutions or nonprofit lenders, are smaller loans designed for startups and small businesses with smaller financing needs.
• Venture capital and angel investors provide funding in exchange for equity ownership, mainly suitable for high-growth potential businesses. 

If you don’t qualify for a business loan or can’t afford it, you can use these other methods to supplement your financing and wait to apply until you do. You may also find that a loan is more appropriate for your business when it’s more established and you need more financing for bigger projects, such as buying commercial property.