Small business loans North Carolina

Being prepared for your business loan application can save you a lot of time (and help you get your money faster). While every loan program will have its own application process, you can generally expect to follow these steps to apply for a business loan in North Carolina:

1. Make a business plan – Write down specifically what you plan to do with the money you’re looking for, including how much you need, what you’ll spend it on and how it will help you build your business. This helps you get a better idea of what types of loans to apply for and helps you make your case to the lender when you apply. 
2. Check your qualifications – Knowing your credit score, annual revenue and years in business can help you figure out which business loans you qualify for, which can save you time in applying.
3. Research available loans – Figure out which loan options meet your business needs and qualifications. If you have an existing relationship with a bank, check out what loan options they have for businesses. Online research can go a long way, so look into national and local options from banks and credit unions, as well as SBA loan programs and online loans. 
4. Gather documentation – Most lenders will ask for a minimum of bank statements, financial statements and tax returns, as well as personal identification and business licenses. You should also have your business plan ready to go, as many lenders will consider this when determining whether to lend to you. Having this ready in advance can save you a lot of time during the application process.
5. Apply for the loan – Most lenders have online applications, but some may require hard copies of documents or for you to meet with a loan officer in person. Double-check the application before you submit it to make sure you’ve included all the necessary documentation and answered the required questions.
6. Stay in communication – Your chosen lender may ask you for more information, and responding quickly can get your application through the approval process faster. 
7. Review loan offers thoroughly – If you’re approved for a loan, review the offer thoroughly before you sign it. Consider getting help from a business accountant or consultant who can explain the terms to you. Use a loan calculator to help you determine the cost of the loan, including fees and interest, as well as what your monthly payment will be. You may be able to negotiate on the interest rate or terms as well.
8. Follow the loan terms – Once you’ve received the funding, make sure you follow the requirements of the loan, such as spending it on the agreed business expenses and making monthly payments on time. Defaulting on a loan can have serious consequences for your business and personal credit.

Remember that every lender will have their own loan application and approval processes, as well as terms, conditions and qualifications. Preparation and communication are key to getting the funding you need as quickly as possible.  

What credit score do I need?

Your credit score is one of the most important factors a lender will look at when considering whether to give you a loan. There’s not a single credit score that can ensure you are approved for a loan, but higher credit scores (700 or above) tend to help show lenders that you’re creditworthy (able to pay back a loan). A higher credit score also gives you leverage when negotiating interest rates and terms. 

Some SBA loan programs may accept credit scores between 650-680, although you may have to provide a downpayment, collateral or a personal guarantee. Online or alternative lenders are often willing to lend to borrowers with lower credit scores (550-650), but they will usually have higher interest rates and shorter repayment terms to make up for the risk. 

Remember that lenders will also consider other factors, such as your business plan, annual revenue or collateral, when considering whether or not to lend to you. You can also work on building your credit score before applying for a loan to help ensure you get the best possible rates and terms. 

What are the typical interest rates on a business loan?

Interest rates vary due to the lender, the borrower’s qualifications, the type of loan and general economic conditions. The average traditional business loan in the U.S. had an interest rate between 5.75% and 12% in 2023, while online loans fell between 7% and 60% (with some alternative loans offering even higher rates). SBA Loans are tied to the U.S. Prime rate and averaged 11.5% to 16.5% in 2023, depending on the loan program and amount of the loan. Some loans also come with fixed interest rates while others have variable interest rates. Always check with your lender and review your loan approval documentation to make sure you understand what your interest rate is and how it could change. 

How long does it take to get funds?

The amount of time it takes for loan funds to reach your account depends on the type of loan, amount of the loan and the lender’s application and approval processes. For traditional bank loans, you can expect to wait a few weeks after applying to see the funds, but you may have to wait longer if you have to respond to requests for more information. SBA loans tend to have longer approval and review processes, and can take anywhere from six weeks to six months to fund. Online and alternative loans often boast short application processes and quick approval times – sometimes as quickly as two business days. Always consider how long you can wait to receive your funds before you apply for a business loan or other funding.

What alternative business financing options are there?

If you’re not ready to apply for a business loan, need funds faster or aren’t sure you qualify, there are a number of other funding options available for small businesses in North Carolina.

• Business credit cards allow businesses to pay for everyday expenses and only pay interest on the amount spent. Some business credit cards that report to the credit bureaus can help you build your credit score, and many will offer point systems or rewards that can help you with basic expenses. 
• Business lines of credit are similar to a credit card and allow the business to spend money on business expenses up to a pre-set credit limit. You only pay interest on the money you use and the financial institution will often allow you to re-spend the money once you’ve paid it off.
• Invoice financing allows you to use your business’s outstanding invoices for immediate cash. A third-party financial institution basically buys invoices from you and uses the customer’s future payment as your repayment, deducting any interest and fees. 
• Merchant cash advances provide the business with a lump sum of cash in exchange for repayment through future credit card sales plus fees and interest. While this option provides your business with quick money, it can get expensive quickly. 
• Crowdfunding allows you to raise money from a wide number of individuals for your business idea, usually in exchange for advanced products or services. 
• Peer-to-peer lending allows businesses direct access to individuals who will invest in the business with their personal funds. This can include friends and family members. Rates and terms are determined on an individual basis. 
• Angel inventors are individuals who invest their personal funds in businesses in exchange for equity, often providing mentorship and expertise in business ventures. 
• Venture capital is provided by independent firms that typically invest in high-growth startups in exchange for equity. 

You may choose to use one or several of these funding methods to help your business grow, but make sure you understand interest rates and fees before you sign anything.