PrimeRates Guide to Small Business Loans in Ohio
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Small businesses are an important part of every community. Business owners help drive innovation, provide jobs to their neighbors, and contribute to the overall growth and development of their area.
In the state of Ohio, nearly 45% of the state’s workforce (2 million Ohioans) works for a small business operation. In addition, reported new lending via business loans of $1 million or less totaled $7.7 billion in 2019, with the rate of lending holding fairly steady since 2010.
We’ve compiled a quick guide for small business owners in the state of Ohio to learn more about business loans and other forms of financial assistance available to help your business succeed.
How a loan can help your small business in Ohio
There are many ways that a loan can help your small business in Ohio.
When you don’t have the funds you need upfront, a small business loan can help. Small business owners can take advantage of business financing to cover everything from emergencies and large purchases to start-up costs or expansion costs. Many businesses use loans to cover gaps in funding, acquire more working capital to achieve their business goals, or help keep up with day-to-day operating expenses.
Types of small business financing options in Ohio
Ohio business owners have several options to consider for their small business financing:
- Term Loans – Term loans are a form of installment loan that allows borrowers to benefit from a set repayment period and monthly payment. Business term loans usually have a fixed interest rate, making them a very attractive and common financing option for Ohio business owners.
- SBA Loans – One of the most common sources of term loans and other loan programs is the SBA. While the Small Business Administration does not facilitate the loans itself, it guarantees loans offered through a network of partner lenders in order to help business owners score some of the best deals on loans including low interest rates. SBA loans are typically easier to qualify for than other types of business loans. Therefore, if you have been turned down for a business loan from other lenders, consider applying for an SBA loan.
- Online Business Loans – Another popular source of business loans is through an online financial institution. These lenders have fewer overhead costs and pass the savings on to loan applicants. Therefore, online business loans typically have the lowest interest rates and the shortest wait to receive your funds. The underwriting process with online lenders is relatively quick and easy, and loan requirements are usually more lenient than those of traditional banks. For these reasons, online business loans are becoming an increasingly popular choice of business owners.
- Commercial Business Loans – Commercial business loans are used to finance a variety of large commercial purchases including real estate, vehicles, and construction costs. Business owners may be able to obtain a commercial business loan from a bank, credit union, or online lender.
- Business Credit Cards & Lines of Credit – One final option for business owners is to open up a business credit card or line of credit. Opening up a credit card can have several advantages over taking out a business loan, especially if you can find a deal on a card with an introductory 0% APR promotional period. Many entrepreneurs actually prefer using credit for their financing needs due to the ability to pay for ongoing expenses with a revolving line of credit and the ability to get approved for financing quickly.
Small business financing resources in Ohio
The U.S. Small Business Administration (SBA) is a good starting point for businesses in any state to access resources and information about financing options including loans, investment capital, disaster assistance, surety bonds, and grants. SBA-backed loans are a popular option for many entrepreneurs.
In addition, business owners in Ohio can take advantage of the following small business resources:
- The Ohio Small Business Development Center provides a variety of resources and assistance to business owners in the state of Ohio. The SBDC provides business counseling through Certified Business Advisors® to help local small businesses in the state succeed. The Ohio SBDC also publishes a comprehensive guide called “Starting Your Business in Ohio.”
- The Ohio Department of Development maintains a searchable database of grants, loans and tax credits offered by the department. More information is available at their State Incentives page.
- Another option for small businesses is to find a Community Development Financial Institution (CDFI). These non-profit lenders offer favorable terms and low interest rates as well as mentoring and workshops. CDFIs focus on lending to small businesses, entrepreneurs, nonprofit organizations, and more. Some non-profit lenders in Ohio include: Appalachian Growth Capital, LLC (AGC), Growth Opps, and Cincinnati Development Fund (CDF). You can also find a CDFI near you using this online locator.
Small business grants available in Ohio
Grants are gifts of financial assistance that do not need to be paid back. Small business grants are made available to business owners for the benefit of both the company and the economy.
When a small business succeeds, so does the entire community. This is why many grant programs today aim to help certain sectors of the population such as rural development or minority-owned businesses.
Small business grants can be obtained through various government agencies, corporations, and non-profit / community organizations.
Ohio business owners have several options to begin looking for small business grants:
Government agencies: In addition to taking advantage of the resources above, small business owners can check state government agencies such as the Ohio Department of Education and Ohio Department of Transportation. Federal agencies offering small business grants include the SBA and USDA. Grants may also be available at the municipal or county level in the local area in which you live.
Tips for applying for a small business loan in Ohio
Business owners in the state of Ohio should take the following tips into consideration when applying for a small business loan:
- Consider your credit – It is extremely important to verify the accuracy of your personal and/or business credit report before applying for a business loan. Knowing your credit score will help you determine your loan options, since a Prime credit score (generally considered to be 660 and above) is usually required to get access to the best loan offers and the lowest interest rates. However, even if your credit is sub-standard, you can take steps to fix it before applying for a loan or consider using a cosigner.
- Have a business plan – A key to small business success is to have a well-written business plan. This document will not only assist you when applying for your Ohio small business loan but will also help your business see finance success. Most lenders will want to see a business plan with key items such as an executive summary, a marketing plan, a financial plan, and an operations plan among other key elements.
- Gather your paperwork – While a business plan is helpful, it is not the only thing you will need when you apply for a business loan. Besides a detailed business plan, you will most likely need to submit proof of your company’s finances and profitability. Be sure to gather this information before you start your application and be prepared to show how long you have been in business and what your current annual revenue is, as some lenders have minimum requirements for these things. Some of the documents you may be asked for includes: profit and loss statements, financial projections, earnings reports, tax returns, and bank statements.
- Consider alternative lenders – When you are applying for a loan, there are more options to choose from than just your local bank. Credit unions and online lenders offer some of the best deals on business loans. Due to fewer overhead costs, online lenders are able to offer low interest rates and flexible loan terms with fast access to cash. Similarly, credit unions often have a very flexible underwriting process with competitive interest rates, and membership is relatively simple. Check with a credit union near you to find out how you can join (membership is typically based on your location or employer). The most popular credit unions in the state of Ohio include USX Federal Credit Union, Anheuser-Busch Employees’ Credit Union, State Farm Federal Credit Union, Navy Federal Credit Union, Century Federal Credit Union, Financial Resources Federal Credit Union, Credit Union of Ohio, Towpath Credit Union, First Miami Student Credit Union, and Classic Federal Credit Union.
Wrapping up
Once you have determined which form of small business financing is best for your business, the next step would be to compare your available loan options and begin the application process. One of the smartest things you can do is to get prequalified for your loan before applying. This will help you find the best deal on your financing, saving you money over time in interest.
Compare rates and get funded
To find the best deal on your Ohio small business loan, consider getting prequalified with PrimeRates’ quick and easy pre-application online process.
In just a few minutes, you will receive your business loan offers, and get ready to apply for your funds.
Getting prequalified does not result in a hard inquiry to your credit report and can be completed online in a matter of minutes. Find out how much you can qualify for today!
Ready to find the funding you need?
Small Business Loans By State
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