Michigan Small Business Loans Navigation

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There are many reasons small businesses thrive in Michigan, including a skilled workforce in cities such as Detroit, Lansing, and Grand Rapids, as well as in rural areas; a strategic location that provides access to US and international markets; and a relatively low cost of living. Whether you are an entrepreneur looking to start a business or a small business owner looking to grow, a small business loan can help your Michigan-based business grow.

How Do Small Business Loans Work in Michigan?

Most lenders who assess small business loan applications will assess the business to determine its ability and willingness to repay the financing. To do this, they will typically look at:

  • Time in business. How long has the company been operational or is it a start-up? Many lenders prefer to work with companies that have at least 1 to 2 years of established history.
  • Income. Many lenders will use business bank statements to assess business sales. They can also use this information to help analyze the cash flow of the business. Traditional lenders such as banks or credit unions may also require business tax returns.
  • Credit history. Most lenders will look at the owner’s personal credit scores, although it can be a soft credit check that doesn’t affect the credit scores. Some lenders will also look at business credit scores or business credit reports. (Learn to establish a business credit.)

Companies with strong qualifications are likely to benefit from the lowest rates and conditions. There are often options for businesses that excel on only a few of these criteria, but they can be more expensive.

Options for Small Business Loans in Michigan

If your business is located in the state of Michigan and you are looking for a small business loan, you may have several choices. These include:

Term loan

A fixed loan amount borrowed for a fixed term with a predictable repayment schedule.

Credit lines

A flexible loan that allows you to borrow an amount you choose up to your credit limit according to your needs. Pay it back and you can borrow again. Often used for short-term needs, including working capital.

SBA loans

These include loans guaranteed by the US Small Business Administration and made by approved lenders such as banks. There are a variety of SBA loan programs including 7 (a), 504 loans, and export loans. (Disaster loans and Covid-19 relief loans are made directly by the SBA.)

Credit card

Small business credit cards give you access to a line of credit when you need it. If you get a low interest rate card, you can minimize interest charges when you borrow.

Invoice financing

Businesses that invoice other businesses (B2B) may be able to improve their cash flow through factoring or invoice financing. This allows the business to be paid faster on unpaid invoices.

Equipment financing

If your Michigan business uses equipment, whether it’s manufacturing equipment or even computers, you may be able to use financing or equipment leasing to preserve cash flow and secure the equipment your business needs.

What Are the Typical Terms for a Business Loan in Michigan?

The conditions vary widely depending on the type of funding and the qualifications. Businesses with strong personal and / or business credit and a solid income will likely qualify for interest rates lower than one or two digits. Business owners with poor credit or fluctuating income will likely pay higher rates.

The repayment terms will also vary. Typically, online lenders offer short-term loans (6 months to 5 years), while bank and credit union loans (including SBA loans) can have repayment terms that are 5 to 5 years longer. 25 years.

Who Is Eligible For A Business Loan In Michigan?

From an industry perspective, there are small business loans for a wide variety of businesses ranging from real estate to restaurants, agriculture to financial services, or manufacturing to medical device technology.

Existing businesses with at least 1 to 2 years in business are better placed to qualify for financing, although there are start-up financing options for business owners with experience in their industry and a good credit.

Again, keep in mind that most businesses will need to demonstrate strong income and / or good credit to qualify. However, the eligibility criteria vary depending on the lender.

How to Apply for a Business Loan in Michigan

You can apply for small business loans from online lenders or traditional financial institutions such as banks. You can also work with a business loan broker or an online marketplace. The latter will help you get in touch with lenders based on your qualifications.

When preparing for funding, it’s a good idea to:

  • Check your personal and professional credit
  • Gather your latest corporate bank statements from the past six months
  • Make sure two years of tax returns are available upon request
  • Have your articles of incorporation and business license handy

Some lenders may ask for additional information (a business plan, for example), but these are the main things most commercial lenders will ask for.

Michigan Small Business Assistance Loans

Businesses affected by the coronavirus pandemic can still seek Covid-19 relief loans. The main programs include:

Economic disaster loans (EIDL): Low-interest loans available to qualified businesses and non-profit organizations affected by the pandemic. Apply through the SBA.

Paycheque Protection Program (P3) Loans: Repayable loans based on payroll (or income for self-employed workers). This loan program is currently closed to new requests.

Restaurant Revitalization Fund: This program provides restaurants with funding equal to their lost revenue from the pandemic of up to $ 10 million per business and no more than $ 5 million per physical location. Recipients are not required to repay funding as long as funds are used for eligible purposes by March 11, 2023. SBA.gov.

There are other programs that can help businesses recover from the pandemic crisis, such as grants, unemployment benefits for the self-employed, and local funding. The organizations below can help businesses locate these resources.

Resources for Michigan Small Businesses

In addition to small business loans, there are a variety of programs that can help Michigan small businesses grow:

This article was originally written on June 14, 2021 and updated on July 13, 2021.

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