March 21, 2022
How to Get a Small Business Loan in Delaware
If you need capital to start or grow your business in the First State, there are many working capital options available. In this blog post, we’ll dive deeper into small business loans in Delaware.
Uses for Delaware Business Loans
While owning a small business is exciting, it can also be very expensive. After all, there are plenty of costs you have to cover as a business owner. Fortunately, small business loans in Delaware can help you pay for a wide array of business expenses, such as:- Startup Fees
- Commercial Real Estate
- Equipment
- Inventory
- Payroll
- Marketing
- Insurance
- Expansion Costs
Types of Small Business Loans in Delaware
There are countless small business loans in Delaware. That’s why it’s important to familiarize yourself with all your options. While some loans are easy to qualify for, others require good credit and sufficient revenue.Term Loans
Term loans are offered by banks, credit unions, and online lenders. Upon approval, you’ll receive a certain amount of money at once. You’ll pay back your loan over time through fixed monthly payments, ranging from a few years to several years or even longer. If you have a solid credit history, you might lock in a low rate and favorable terms.
SBA Loans
Small Business Administration or SBA loans are partially guaranteed by the SBA. While the SBA doesn’t have hard and fast requirements, most borrowers hold a credit score of at least 620, have been in business for two years, and earn $100,000 or more in annual revenue. The extensive application process might be worth it as most SBA loans come with low rates and lengthy repayment terms.Microloans
If you need a small loan of up to $50,000, a microloan might be a good option, especially if you can’t qualify for traditional loans. In most cases, they’re offered by mission-based nonprofits or government organizations like the SBA or USDA. The SBA’s microloan program is specifically for small businesses and certain not-for-profit childcare centers.Business Credit Cards
Business credit cards are convenient and work like personal credit cards. You’ll be able to use them to fund everyday expenses, like gas, office supplies, and utilities. Most business credit cards offer rewards like cash back and travel points. Just make sure you pay your balances off in full and on time or they may steer you into the cycle of debt.Lines of Credit
Similar to a credit card, a business line of credit is a flexible form of business financing. Once you receive it, you’ll be able to access funds at any time up to a credit limit, which is based on your credit score. Compared to a business credit card, a line of credit comes with lower interest rates and larger loan amounts. It’s a solid choice if you want continuous access to cash.Invoice Factoring
Invoice factoring makes it easy to meet your immediate cash needs through your accounts receivables. Once a factoring company advances you up to 80% or 90% of your unpaid invoices, they’ll collect payments from your customers on your behalf. Then, they’ll distribute the remaining 20% or 10% minutes factoring fees, which are usually quite high.Merchant Cash Advance
A merchant cash advance (MCA) offers a lump sum of cash in exchange for a percentage of your future debit and credit card sales, typically from debit and credit cards. It offers fast cash and flexible repayment terms. The drawback of cash advances, however, is that can be expensive and won’t help you build your credit score.Useful Resources for Delaware Small Business Owners
If you own a small business in the state of Delaware, consider the following resources.- Delaware Small Business Development Center (SBDC): This organization offers one-on-one consulting services to entrepreneurs and startups. It also hosts a variety of in-person and virtual trainings.
- Small Business Alliance: The Small Business Alliance strives to promote small business growth in Delaware. As a member, you can receive access to networking events and referrals. You might also be able to deduct your membership fees on your taxes.
- Delaware Small Business Grants: Delaware Small Business Grants is a website that shares various grants for women, minorities, and veterans. It’s a good idea to explore it to find out if you’re eligible for any of them.
- Delaware Small Business Chamber: The Delaware Small Business Chamber supports local small businesses in Delaware. Its membership perks include member-only events, a special Facebook group, and invites to events like mixers, seminars, and networking.