How to Qualify for Small Business Financing in North Carolina

According to a 2020 report, North Carolina is home to over 900,000 small businesses, and most of them need help acquiring financing. Small business loans are invaluable to both established enterprises and brand new startups. Working capital provides a wealth of opportunities for your business to expand, no matter how long you’ve been around. Rest assured, there are financing solutions for every small business in North Carolina.

Here’s a brief guide to the most common funding options available to small business owners:

Bank Loans

When you’re beginning to research small business financing, long-term loans from banks and credit unions are a great place to start. Just one example – if you qualify, the Carolina Small Business Development Fund offers loans of up to $250,000.

SBA Loans

The Small Business Administration (SBA) is a federal agency which was created to provide resources to small businesses looking for funding. It offers a variety of low-interest long-term small business financing loans for working capital, real estate, equipment, and other business expenses. These include the SBA 7(a), the SBA 504 which are designed specifically to foster economic and community development. Make sure to read any fine print to see if you qualify.

Line of Credit

Unlike loans, which provide a lump sum of money up front, lines of credit approve you to borrow against a credit line, so you spend what you need as you go along.

Business Credit Card

Making everyday purchases for your North Carolina business is a definite challenge if you’re cash-poor. Having a business credit card allows you to charge those expenses and pay them off as the cash comes in. Choose a rewards card so your purchases will earn you perks, such as travel vouchers.

Short-Term Loan

Don’t assume you’ll automatically be declined if your credit record isn’t flawless. A short-term loan is one option that can get you the cash you need, although there are drawbacks. You may have a shorter repayment period and interest rates will probably be higher than other financing options.

Invoice Financing

Invoicing clients means you’ll sometimes have to wait weeks or months to get paid. One solution is to leverage those invoices with invoice financing, which allows you to borrow funds based on the value of any outstanding invoices.

COVID-19 Small Business Assistance

The COVID-19 pandemic has had a negative impact on the majority of small businesses, many of which were forced to close. Fortunately, state and federal resources were in place to help some of them get back to normal operation. Two federal programs offer low-interest loans, the Paycheck Protection Program and Economic Injury Disaster Loans, In some cases a portion of these funds might not have to be repaid.

Small diverse businesses should check out the Small Diverse Business Emergency Relief Fund, which provides grants to minority-owned and women-owned businesses.

How to Qualify

Your eligibility for each of the above financing options depends on the lender. Banks may have more stringent requirements when it comes to your credit scores, while online lenders may look at other qualifiers besides your credit.

Lenders definitely take into consideration how long you’ve been in business, as well as profitability, a clean financial history, creditworthiness, and collateral. A strong business plan is definitely an advantage. If you haven’t yet learned how to establish business credit, make sure you do to ensure you qualify for better rates.

If you don’t have a business plan, small business centers like the SBTDC and Women’s Business Center are there to assist you in putting one together.

While some factors determining whether an applicant is a good candidate for a small business loan are subjective, others are non-negotiable. These include:

• Location – your business headquarters must be located n the U.S., with your primary business being domestic.
• Business size – to qualify for a small business loan, your business must actually be small (Here’s the SBA’s definition)
• Industry – while some industries aren’t eligible for certain SBA loan programs, only select industries are eligible for others.

Take the time to find the best loan terms you can, and you could save hundreds, if not thousands of dollars in interest. If you decide to go with an SBA 504 loan, seek out the best Certified Development Company (CDC) you can find. These are nonprofit organizations set up to help administer the 504 loan program.

504 Capital Corporation is an SBA preferred lender that’s been promoting financial and industrial growth throughout Virginia, Maryland, and North Carolina since 1983. We offer business owners financing at market rate, with a minimum down payment and work under the Accredited Lenders Program (ALP) to facilitate the purchase of the fixed assets your business needs to succeed.

Our expert team of loan experts can help you through every step of the process. Contact us today so you can get started fulfilling your small business financing goals.