Virginia Small Business Loans

Small businesses are an important part of any community, and the state of Virginia is no exception.

More than 46% of the state’s workforce is employed by small businesses with approximately 1.6 million Virginia residents employed by a small business.

In addition, the total amount of reported new lending to businesses in loan amounts of $1 million or less reached approximately $5.7 billion in 2019. Aside from a few small dips, the rate of lending via small business loans in the state has held fairly steady since 2010 and is slowly increasing.

We’ve compiled a quick guide for business owners to learn more about small business loans, financing options, grants, and other types of assistance available to help your business grow and succeed in the state of Virginia.

How a loan can help your small business in Virginia

A loan can help your small business in many ways, no matter what state you live in. When you need access to more working capital for your business, a loan is often the best way to obtain the funds you need. Small business loans can be used to cover many different types of expenses from payroll to new equipment. Common uses of loan proceeds include start-up costs, day-to-day operating expenses, emergencies, real estate purchases, and expansion costs.

Types of small business financing options in Virginia

Small business owners in the state of Virginia have several options to consider for their financing needs:

• Term Loans – A term loan is an installment loan that has a fixed repayment period (or loan term) and a fixed monthly payment. They may also have a fixed interest rate, meaning that rates won’t rise or fall. These factors make them a very attractive financing option for Virginia business owners.
• SBA Loans – One of the best sources of business financing are loans backed by the SBA. SBA-backed loans are guaranteed by the Small Business Administration and can be obtained through a network of partner lenders. The SBA offers a variety of convenient loan programs including microloans, equipment loans, and real estate loans. Although the application and underwriting process can take longer than other types of business loans, the wait is often well worth it. SBA loans have competitive interest rates and are easier to qualify for than other types of loans. So if you are having a hard time qualifying for a business loan, consider trying an SBA loan next.
• Online Business Loans – Another popular source of business loans are online lenders. These financial institutions operate with fewer overhead costs and so are able to offer low interest rates and flexible loan terms to consumers. The underwriting and loan approval process is relatively quick and easy through online lenders, and you may even be able to receive your funds in just a few business days. For these reasons, online loans are becoming increasingly popular in the business community.
• Commercial Business Loans – Commercial business loans are used to fund various purchases, projects, and opportunities. Commercial vehicle loans, commercial real estate loans, commercial construction loans, and commercial equipment loans are all different types of commercial business loans. This type of loan can be obtained through your local bank or credit union, or even from some online lenders.
• Business Credit Cards & Lines of Credit – Some businesses may choose to use credit instead of financing. Using a business credit card or line of credit offers several advantages when compared to traditional financing. As a popular alternative to taking out a loan, credit cards offer quick and easy approval perfect for emergencies or large purchases, as well as access to a revolving line of credit to pay for ongoing expenses. In addition, oftentimes you can find a card with a promotional rate of 0% APR, meaning you don’t pay interest for several months.

Small business financing resources in Virginia

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 Virginia can take advantage of the following small business resources:

• The Virginia Small Business Development Center provides a variety of training programs and resources to new and existing businesses in the state of Virginia. A team of advisors is available to help business owners review the resources and funding opportunities available to them. The Virginia SBDC also publishes resources for starting a new business and a very helpful Funding Resources page.
• The Shenandoah Community Capital Fund exists to help bridge the gap of access to lending for Shenandoah Valley businesses unable to obtain capital through traditional means. SCCF microloans are available in amounts ranging from $1,000 to $50,000 and can be used to fund everything from equipment to inventory. Other services include entrepreneurial networking events, workshops, summits, training courses, and business coaching.
• 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 Virginia include: Appalachian Community Capital (ACC), Community Business Partnership (CBP), Community Investment Collaborative (CIC), and Foodshed Capital. You can also find a CDFI near you using this online locator.
• The Virginia 30 Day Fund is a unique funding opportunity offered by the private business sector to support the Virginia small business community. This non-profit organization provides forgivable loans of up to $3,000 to small businesses in need.
  

Small business grants available in Virginia

Grants are gifts of financial assistance available to businesses, individuals, and students. Small business grants do not have to be paid back, making them an attractive funding option if you can find one.

Small business grants are most often offered through government agencies, corporations, and non-profit/community organizations.

Many grant programs today are designed to help specialized segments of the local economy such as rural development or minority-owned businesses.

Business owners in the state of Virginia can begin their search for small business grants with the following:

• The State Trade Expansion Program (STEP) Grant provides grants in amounts up to $15,000 to small businesses seeking expansion through international business development activities (such as attending trade shows or updating marketing materials for an international audience).
• Virginia-based agribusinesses of all sizes can receive funds through The Governor’s Agriculture and Forestry Industries Development (AFID) Fund. An AFID Facility Grant helps support the success of a new or expanding facility.
• Business owners can also check the portal at Virginia Grant Watch for grant opportunities.

In addition to the resources above, some federal agencies offer small business grants such as the SBA and USDA. Business owners can also check state agencies such as the Virginia Department of Education and Virginia Department of Transportation. Lastly, grants may be available at the municipal or county level, so be sure to check the local area in which you live.

Tips for applying for a small business loan in Virginia

Business owners residing in the state of Virginia should consider the following key factors when applying for a small business loan:

• Consider your credit – In order to get access to the best deals on business loans (or any other type of financing) it is important to ensure your credit score is as high as possible. Business owners will also begin to build a business credit score in addition to their personal credit score. The higher your credit score is, the lower your interest rate will be. Applicants with scores of 660 and above have the best chances of securing a loan from nearly any lender. If your score is lower than this, you can take steps to improve it before applying, search for a lender with a lower minimum credit score requirement or consider using a cosigner on your loan application.
• Have a business plan – A good business plan should include an executive summary, a marketing plan, a financial plan, an operations plan, and other key elements. Business plans help your company get organized and are often required by the lender when applying for financing.
• Gather your paperwork - In addition to a business plan, you may be asked to submit the following documents: profit and loss statements, financial projections, earnings reports, tax returns, and bank statements. Be sure to gather this information before you submit your application and be prepared to prove how long you have been in business and what your current annual revenue is, as some lenders have minimum requirements for these items.
• Consider alternative lenders – Credit unions and online lenders offer some of the best deals on business loans. Online lenders have less overhead and can lend to consumers in all 50 states. Both online lenders and credit unions are known for having flexible loan terms and a lenient underwriting process. Credit union membership is typically based on your employer, university, or place of residency – so be sure to check a few near you for their requirements. The most popular credit unions in the state of Virginia include Blue Eagle Credit Union, Agriculture Federal Credit Union, State Farm Federal Credit Union, Navy Federal Credit Union, Anheuser-Busch Employees' Credit Union, Hanscom Federal Credit Union, Dominion Energy Credit Union, KEMBA Roanoke Federal Credit Union, Norfolk Federal Credit Union, and Belvoir Federal Credit Union.

Wrapping up

Understanding the current state of economic growth in your area, the financing options available to you as a business owner, and the small business resources available in your state, is critical to the success of your business. Once you have determined which type of financing is best for you, it is time to start the loan application process. It is always recommended to get prequalified for any type of loan, especially a business loan. Finding the best deal can save you hundreds (if not thousands) of dollars in interest that could be better spent invested back into your business.

Compare rates and get funded

To find the best deal on your Virginia 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!