Small business loans Wyoming

It can seem overwhelming to apply for a small business loan, but following these general steps will help you prepare. Remember: the more complete your application is when you submit it, the faster the approval process will go.

1. Outline why you need the loan: Determine how much funding you need and what you’re going to use it for. Different loans are tailored for different purposes, like equipment purchases, commercial real estate or improving cash flow. Write down your reasons in your business plan and explain how the loan will improve your business.
2. Determine your qualifications: It’s a good idea to check your credit score, as many lenders use this as the basis for approving your loan. Higher credit scores also tend to get you better interest rates. You should also note how long your business has been operating, what your annual revenue is and other financial information about your business. 
3. Research lenders: Once you know what you need from a loan, you can find lenders that will meet that need. Many local banks or economic development agencies will have loan programs specifically for Wyoming small business owners, but you may find better rates at national or online lenders. Keep in mind that customer service is important, too; if you need help during the loan application process, smaller lenders may be able to provide you with more customized service.
4. Gather documentation: Most loan applications will require you to submit basic documentation, including three years of tax returns, financial statements, business licenses and your business plan. They may require other documentation as well, so make sure you have your documents ready before you apply.
5. Apply for the loan: Many loan programs have online applications, but some may require hard copies of paperwork or for you to come into the bank in person. Some lenders will assign you a loan officer who can guide you through the process. Make sure the application is correct and as complete as possible to help speed up the process.
6. Respond to requests for more information: Depending on how thorough a lender’s approval and underwriting processes are, you may need to provide additional details on your application. Responding quickly and accurately will help the process run smoothly.
7. Carefully review loan offers: If you’re approved for a loan, make sure you review the documents carefully before you sign. You need to understand the terms and conditions, including interest rates, repayment terms and any fees. You may ask a business accountant or advisor to help you review the offer.

Once you’ve signed the loan agreement, you should receive your funds. Make sure you spend them for your business as agreed and set up repayment on time to avoid defaulting on the loan. 

What credit score do I need?

Most lenders will use your personal credit score to determine how likely you are to be able to repay the loan – also called your creditworthiness. Higher credit scores mean you’re more creditworthy and are generally used to indicate the lender will take on less risk to lend you money.

For SBA loans, you should aim to have a credit score between 620-680 at least, although if you have a higher credit score, you may be able to get better interest rates. Traditional loans will often want a higher credit score – anything above 720 is considered “good” and will help you qualify. 

If you have a lower credit score, you may still qualify for alternative or online loans, which may accept scores as low as 550. However, because they will be taking on more risk by lending to you, they will often include higher interest rates – sometimes as high as 99% – so it’s important to make sure you can afford the loan.

Even if you don’t have a high credit score, lenders may look at other aspects of your business, like your business plan or annual revenue, to determine if you’re a good fit for a loan. You can also work on improving your credit score over time and apply at a later date. 

How fast will I get funds?

The amount of time it takes for funds from a small business loan to be available depends on a number of things:

• How complete your application was when you submitted it
• The lender’s approval processes
• The lender’s underwriting processes
• The type of loan you applied for
• The amount of the money you requested

Traditional banks tend to have longer approval and processing times. Once you’ve submitted your application, you can expect it to take at least a few weeks for the loan to process, although you may have to wait a few months. Larger loan amounts may take longer, especially if you are required to make a down payment or provide collateral. 

SBA loans usually take even longer to process because they are backed by the federal government and require more investigation for approval. Schedule at least six months to wait for funding if you apply for an SBA CDC/504 loan or an SBA 7(a) loan, although you may receive the funds faster.

Alternative and online lenders often have the fastest application processes. Many of them boast funding times as short as two business days, depending on the loan type and the application. 

What are the typical interest rates on business loans in Wyoming?

Interest rates on small business loans in Wyoming vary depending on the type of loan, the lender, the applicant’s qualifications, the amount of the loan and outside economic conditions. 

SBA loans have limits on their interest rates and are tied to the U.S. Prime Rate. On average, most fixed rate SBA loans will fall between 13.5-16.5% while variable rate loans will fall between 11.5-15%. Traditional banks can set their interest rates however they like, but tend to offer very competitive rates. On average a traditional small business loan will have interest rates between 6.25-9%.

Online loans have the greatest variability in their interest rates, with typical loans falling between 3-60.9%. Again, they often have higher interest rates because they are more willing to lend to borrowers who are considered more risky. 

Always check with your lender on their interest rates before you sign a loan document. Use a loan calculator to determine the full cost of your loan and what your repayment amount will be. 

Alternative types of financing to loans in Wyoming

If you don’t qualify for a small business loan or want to find a different source of financing for your Wyoming small business, there are many option available:

• Peer-to-peer (P2P) lending: P2P lending connects businesses with individual investors willing to lend money. This model can offer competitive interest rates and flexible terms.
• Crowdfunding: Platforms which allow businesses to raise funds from a large number of individuals. In return, they may receive products, services, or equity in the business.
• Invoice financing: Businesses can use outstanding invoices as collateral to secure financing. This allows them to receive a percentage of the invoice amount upfront, with the rest paid when the customer settles the invoice.
• Merchant cash advances: This option involves receiving a lump sum in exchange for a percentage of daily credit card sales. Repayments are made through a percentage of daily sales.
• Business credit cards: Business owners can use credit cards for short-term financing. This option is convenient for smaller expenses and can help build a business’s credit history.
• Angel investors: Angel investors are individuals who provide capital in exchange for equity or convertible debt.
• Venture capital: Venture capital is a form of financing where investors provide funding in exchange for equity in high-potential startups. 
• Revenue-based financing: In this model, businesses repay a percentage of their monthly revenue until the borrowed amount is repaid.
• Business grants: These lump sums of money are often offered to businesses in specific industries by community organizations, economic development agencies, government agencies or incubators. They don’t have to be repaid and they often include other business perks like mentoring or marketing assistance.