Whether you’re just getting started as an entrepreneur or expanding your established small business, a small business loan can be pivotal to launching a new product, hiring more workers or expanding services. Fortunately, in Colorado, small businesses have access to a variety of funding options through state and local government agencies, nonprofit institutions and private lenders, including credit unions and banks. Organizations like the Colorado Small Business Development Center Network also provide free consulting and low-cost training.

Here’s what you should know to find and secure funding for your business.

Understanding Which Small Business Loan Is Right For You

Choosing the right type of loan for your small business is the first step in taking your organization to the next level. It’s important to look for options that meet your needs and align with your business’ stage of growth. There are several popular funding options to consider, which include:

• Business Line of Credit: A business line of credit functions similarly to a credit card, offering flexible access to funds up to a certain limit, which is ideal for managing cash flow or covering unexpected expenses. A line of credit can be used to secure funds for recurring costs or to establish an emergency fund.
• Commercial Real Estate Loans: This type of loan is intended for purchasing or refinancing commercial properties, such as office spaces or retail locations. The repayment terms are typically longer and geared toward businesses looking to secure a physical location.
• Microloans for Startups and Entrepreneurs: Microloans are specifically designed for startups and entrepreneurs, offering smaller amounts of capital to help launch or expand business operations. These loans are sometimes accompanied by business development resources to support growth.
• Working Capital Loans: These loans provide support to cover day-to-day expenses, manage cash flow and address operational needs in the short term. Working capital loans are flexible financing options, which are essential for maintaining and growing business operations.

Applying For a Small Business Loan

To secure a small business loan, applicants must meet specific eligibility criteria. Lender evaluations may include a review of credit history, financial health, collateral available to help secure the loan, and loan terms. Here are eligibility requirements to keep in mind:

• Credit Score: Lenders often evaluate both the credit score of the business and its owner(s). A higher credit score increases the likelihood of loan approval.
• Business Plan: A strong business plan outlining your target market, competitive advantages and financial projections for the next few years is important to have in place.
• Business Revenue: Lenders will review your gross annual revenue to ensure it supports the proposed loan repayment schedule. Lenders will also typically request detailed financial statements.
• Collateral and Documentation: Lenders may require collateral, such as business assets or equipment, to mitigate risk. Be sure to have comprehensive documentation if needed to support your application.
• Interest Rates & Repayment Terms: Understand how interest rates and repayment terms will impact your monthly payments and the overall cost of the loan. Terms vary based on the loan’s risk assessment and the borrower’s financial strength.

Repaying Your Small Business Loan & Growing Your Business

Planning carefully to manage your small business loan effectively is crucial for ensuring repayment and supporting strategic growth for your business. Here are some tips:

• Debt Refinancing: Consider refinancing your debt to lower interest rates and monthly payments. However, maintaining or improving your credit score before refinancing is important to secure better terms.
• Budgeting & Monitoring Cash Flow: Regularly monitor your cash flow to avoid overextending financial commitments while repaying your loan. Sticking to your budget will keep your business finances on track and help prioritize loan repayments.

If you’re looking to expand your small business, a loan or line of credit could be the next step. To explore business loans or lines of credit through Bellco Credit Union, click here to learn more.