Small business loans Pennsylvania

Every small business loan will have its own criteria and application processes, but following these general guidelines will help you prepare:

1. Assess your business: Determine how much money you need and why you need it to meet your business goals. It’s also important to know your qualifications, such as your credit score, annual revenue and time in business.
2. Research appropriate funding sources: Take a look at traditional loans, SBA loans and alternative loans as well as other types of funding to figure out which program suits your needs. Swoop can help you narrow down your options by matching you with programs that you’re most likely to qualify for. 
3. Write your business plan: Create a comprehensive plan that outlines your business model, revenue projections and how you intend to use loan funds. Many lenders require this document to evaluate your business.
4. Gather necessary documentation: You’ll be required to submit documents such as financial statements, tax returns, business licenses and other paperwork, and having these ready in advance can save you time. 
5. Apply for your chosen loan: Fill out the loan application and submit the necessary documentation. Be sure to stay in contact with the lender to respond to any questions they may have. 
6. Review any loan offers: If you’re approved, the lender will send you a letter with details of the loan, including terms and conditions. Make sure you understand what you’re signing up for.

Remember that each lender will have their own application process, so it’s important to communicate directly with them and seek clarification on any questions you may have during the application process. 

What credit score do I need to qualify?

The credit score you need to qualify for a business loan will vary depending on the lender, the type of loan and the amount you’re seeking. Many lenders will consider other factors like your business’s revenue, cash flow and overall financial health, as well as your business plan. 

Traditional lenders, including banks and credit unions, usually prefer higher credit scores in the range of 680 or above. Higher credit scores are seen as an indicator of lower risk.

For loans backed by the SBA, the minimum credit score can vary but is often around 640 or higher. They may require collateral or a down payment as well. 

Alternative lenders or online lending platforms may be more flexible and consider lower credit scores, sometimes even accepting scores below 600. However, these loans also tend to come with higher interest rates and shorter repayment terms so the lender can make up for their perceived risk.

Always make sure you understand the rates and terms of any loan before you accept a loan offer. You can also work on your credit score to increase your chances of getting better interest rates and repayment terms. 

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

The typical interest rates on a business loan in Pennsylvania can vary based on many factors, including:

• The lender
• The loan type
• The loan amount
• Your qualifications and credit score
• The repayment terms
• Economic market conditions

Most traditional business loans in Pennsylvania will see an interest rate between 7-9%. The interest rates for SBA loans are tied to the U.S. Prime Rate and are currently between 11.5-16.5%, depending on the loan type and amount. Alternative lenders have a much wider range of interest rates, from as low as 3.5% to as high as 60% or more. 

It’s important for business owners to compare offers and carefully review the terms and conditions to find the most favorable rate based on your business’s circumstances. It’s helpful to use a loan calculator to calculate the overall cost of the loan, including any fees and hidden charges, to evaluate your loan choices. 

How long does it take to get funds?

It can take anywhere from a few days to several months for loan funds to hit your account, depending on the type of loan, the lender and how thorough your application is. Traditional lenders and SBA loans tend to have longer review and underwriting times, and you can expect it to take at least a month to up to six months for you to receive funds after you’ve applied.

Alternative lenders tend to have shorter application processes and approval times. Some lenders boast that you can have the funds in as little as two business days. 

To shorten application processing times, be proactive in providing all the necessary information and documents when you apply. 

What alternative business financing options are there?

Small business loans aren’t for everyone, but there are many alternative options available for business owners in Pennsylvania.

• Peer-to-peer lending platforms connect borrowers directly with individual lenders, offering potential advantages like competitive interest rates and flexible terms.
• Invoice financing allows businesses with outstanding invoices to sell them to a lender at a discount, providing immediate cash flow.
• Merchant cash advances offer a lump sum payment in exchange for a percentage of future credit card sales, with repayment linked to daily credit card transactions.
• Crowdfunding platforms enable businesses to raise funds from a large number of people, using reward-based crowdfunding, equity crowdfunding or debt crowdfunding.
• Angel investors are individuals who invest their own money into businesses in exchange for equity, often providing mentorship and guidance along with capital. 
• Venture capital involves investors providing funds to startups and small businesses in exchange for equity, typically in ventures with high growth potential.
• Microloan programs, often offered by community development financial institutions, provide small loans to businesses, particularly those in underserved communities. 
• Equipment financing allows businesses to purchase or lease equipment while spreading the cost over time.
• Business lines of credit offer businesses access to money up to a pre-set spending limit. You only pay interest on the amount you use and you can often access it again after paying the balance.

Each option comes with its own advantages and considerations, and the most suitable choice depends on the specific needs and circumstances of your business.