Entrepreneurs who want to start a small business in Ohio are in luck! The U.S. Small Business Administration (SBA) backs Ohio small business startup loans. SBA loans are competitive and have firm requirements, so it’s important to target the right loan for your new company. Follow these steps to successfully secure a startup loan in Ohio for your budding enterprise.
Steps to Get a Startup Loan in Ohio
- Determine Startup Expenses
If you’re like most startups, you’re strapped on cash. After all, you haven’t turned a consistent profit and it costs money to start, operate, and grow a small business.
The SBA understands the financial needs of entrepreneurs like you. That’s why they offer a variety of loan programs designed specifically for startups.
Before you begin the SBA loan application process, you’ll need to figure out your startup costs. Identify all of your expected expenses—rent, inventory, payroll, etc.—and calculate how much they will cost on a monthly and a one-time basis. Then, choose the SBA loan program option that meets your startup’s financing needs.
- Target the Right SBA Loan for Your Ohio Startup
The SBA offers two startup-friendly loans that cater to new companies in Ohio—microloans and Community Advantage loans.
A microloan provides up to $50,000 in financial assistance to startups that meet certain eligibility requirements. Microloan funds can be used for working capital, inventory, supplies, equipment, and more. The Ohio Department of Development also offers microloans to certain Ohio-based businesses at 0% interest as long as they achieve set milestones.
- Community Advantage Loans
The purpose of the Community Advantage Loan Program is to increase the access to credit for startups in underserved communities. The maximum loan size in the Community Advantage program is $350,000. The interest rate for a Community Advantage loan is, at most, Prime plus 6%. Community Advantage funds can be used to augment working capital and for the purchase of inventory and new, existing commercial buildings.
- Build a Solid Business Plan for Your Startup
A strong business plan signals to lenders that your startup is serious and will be a success. Write a thorough plan that outlines your company’s description, target market, financial projections, and funding requirements. Be sure to also include your projected expense sheet and anticipated income.
- Pick a Lender for Your Small Business Startup Loan
Now that you’ve picked the right SBA loan for your startup and written your business plan, it’s time to choose a participating lender. SBA microloans and Community Advantage loans are administered through intermediary lenders, which are nonprofit, community-based organizations. Use the SBA’s Lender Match tool to find a lender that offers SBA-backed funding. Ask potential lenders about interest rates, minimum credit scores, and other eligibility requirements.
- Start Your Loan Application
Once you match with a lender, begin preparing your paperwork and loan application. Each loan and lender has different SBA startup loan application requirements. Generally, lenders want your startup’s business plan and loan application along with other documents, including your personal tax returns, projected cash flow, a list of collateral, and any contracts or quotes.
Ask for Startup Loan Assistance from Growth Capital
If all of this is too overwhelming, or if you have any questions about Ohio small business startup loans, contact the friendly professionals at Growth Capital today! We’ll help you navigate the Ohio small business loan application process so you can launch your startup in no time!