Small business loans Wisconsin

While every lender and loan program will have specific requirements and application processes, you can expect to follow these key steps when applying for a small business loan in Wisconsin:

1. Assess your business’s needs: How much money does your business need? What will you use the funds for? Outlining this information will help you pick the right loan for your business.
2. Determine your qualifications: Most lenders will use your credit score to determine your creditworthiness, or how likely you are to repay a loan. They may also have requirements around how long your business has been running, your annual revenue or your business plan.
3. Choose your lender: Based on your needs and qualifications, choose the lender and loan program that best suits your needs. You may look at local or national lenders, as well as credit unions, banks or online programs. Swoop can help you narrow down your list to the best available lenders for your needs. 
4. Gather required documentation: Be prepared to present common documents such as tax returns, financial statements, business plans, identification, business licenses and proof of collateral. 
5. Apply for the loan: Follow the lender’s loan application process and make sure you submit the right documentation. Many lenders will assign you a loan officer to help guide you through the process. Always respond as quickly as possible to requests for more information. The more complete your application is, the less time the approval process will take. 
6. Review any loan offers: If your loan is approved, it’s important to review the paperwork to make sure you understand the repayment terms, interest rates, fees and any other stipulations on the loan. You may use a loan calculator to determine the full cost of the loan or ask a business accountant or consultant to review the offer.
7. Seek feedback for rejections: If your loan is not approved, you should ask the lender for guidance on how to prevent a rejection in the future. You may be able to work on your credit score or other qualifications and apply again. 

What alternative business financing options are there?

Small business loans aren’t the right choice for every business, but there are many other options available.

• Business credit cards: Use a credit card to pay for common business expenses. You may find a card that will give you points or rewards for purchases like gas, office supplies or travel. 
• Business lines of credit: This flexible option gives the business access to funding up to a pre-set credit limit. As with credit cards, you can usually access the funds again once you’ve paid off the balance, and you only pay interest on the amount you spend. 
• Invoice financing: This option allows businesses to use their unpaid invoices as collateral for a loan.
• Merchant cash advances: Businesses receive a lump sum in exchange for a percentage of their daily credit card sales. Repayments are made automatically as a percentage of daily credit card transactions.
• Crowdfunding: Platforms that allow businesses to raise funds from a group of individuals. This method can be effective for startups and innovative projects.
• Peer-to-peer lending: Peer-to-peer lending platforms connect businesses with individual investors willing to lend money. Borrowers receive funding from multiple investors.
• Angel investors and venture capital: For startups with high growth potential, angel investors or venture capitalists is a common option. In exchange for funding, these investors often take an equity stake in the business.
• Revenue-based financing: In revenue-based financing, a business receives funding in exchange for a percentage of its future revenues until a predetermined amount is repaid.

Always carefully consider the interest rates, fees and terms of any funding option to make sure you can afford it and that the funding will suit your business needs. 

What credit score do I need to qualify?

Your personal credit score is one of the most prominent ways that a lender will determine your eligibility for a loan, and each lender will have its own criteria. In general, you can expect to qualify for a traditional loan with a credit score of 680 or higher. A higher credit score (above 740) also usually opens the door to lower interest rates and longer repayment terms. 

For loans backed by the SBA, it’s recommended that the borrower have a credit score between 620-680 or higher. Most SBA loan programs also require a down payment, collateral and/or personal guarantee to secure the loan. 

Online or alternative lenders tend to have the most flexible credit requirements and may accept borrowers with credit scores as low as 580 or not require a credit check at all. However, these loans will often have higher interest rates – sometimes as high as 99%! – and much shorter repayment terms, which can make them very expensive for small businesses. 

Equipment loans tend to have less stringent credit requirements because the equipment is used as collateral. Most borrowers will be approved for an equipment loan with a credit score of 550 or higher.

If you have a lower credit score, the lender may consider other factors like your annual revenue, business cash flow or business plan, so don’t count yourself out. You can always work on your credit score and use alternative financing options until you’re ready to apply for a loan. 

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

Interest rates for business loans will vary depending on several factors, including:

• The lender’s processes
• The borrower’s qualifications
• The amount of the loan
• The type of loan
• Other economic or market conditions

On average, traditional business bank loans fall between 7-9% currently. Online loans have a much broader range, typically from 9-75%. The interest rate for SBA loans is tied to the U.S. Prime Rate and currently ranges between 13.5-16.5% for fixed-rate loans and 11.5-15% for variable-rate loans. 

Always compare rates between lenders and loan programs to make sure you get the best possible interest rate for your business loan. Remember to include other terms of the loan such as repayment dates, fees, down payments or collateral, as these can impact the overall cost of the loan. 

How long does it take to get funds?

The timeline to receive funds for a business loan varies depending on the type of the loan, the lender’s application and underwriting processes and how complete the loan application was. It’s a good idea to research funding times before you apply to make sure the timelines match your needs for business financing.

Traditional bank loans often have a longer processing time due to more thorough review and underwriting processes, and you can expect it take several weeks to a few months from application to funding.

SBA loans often have even longer processing times due to additional steps involved in government approval. It can take as much as six months for an SBA loan to distribute funds to your account. 

Alternative loans and online loans often boast quick application times and funding times, sometimes distributing funds in as little as a week or even a couple of business days after you apply. This can be a great solution for small businesses that need funding fast and can afford a higher interest rate or shorter repayment terms for the convenience.