Mississippi Small Business Loan Options

According to a report by the Mississippi Secretary of State.

With so many Mississippi businesses struggling to get the financial resources they need, it’s important to make sure they have access to as many tools as possible to succeed. Small business loans are one such important tool for starting and growing a business.

How a Small Business Loan Can Help Your Mississippi Small Business

You probably already have an idea of ​​how financing could help your small business. Maybe you want:

  • Hire more staff
  • Obtain new equipment
  • Order more inventory
  • Create an online store
  • Rent an office space
  • Start exporting

And even if you don’t have a plan for your small business loan yet, it can be a good idea to have capital available for opportunities (or challenges) that arise. Fortunately, there are many different financing options to meet your small business needs.

Types of small business loans to choose from

Before looking at all the different loan options, it may be useful to have an overview of the most popular options:

Business credit cards

These offer small business owners access to a line of credit and, as a bonus, most will help you establish business credit if you pay on time. If you have a good personal credit score and enough income, you can probably qualify for a business credit card quickly, even if your business is new.

Crowdfunding

You’ve probably heard of Kickstarter, but crowdfunding is much more than just this platform. Generally, crowdfunding works in three different ways: you can either grant equity from your business in exchange for an investment, take out a loan from multiple people on the platform, or offer rewards in exchange for investments . Crowdfunding is good for startups.

Lines of credit

Access financing when you need it with a line of credit. Once you are approved, you can borrow up to the credit limit. When you repay the financing, you have access to those funds again. Interest is charged on the amount borrowed. Popular for working capital and short-term financing needs.

Term loans

Ideal for specific projects, term loans allow you to borrow a lump sum of money and pay it back with predictable payments, usually over 2-5 years or more.

Commercial real estate loans

When you want to buy real estate for a bricks and mortar business, a commercial real estate loan can provide you with the financing you need.

Equipment financing or leasing

Financing or leasing equipment can help preserve cash flow while allowing your business to get the equipment it needs to grow. Certain types of leases offer tax advantages.

Invoice factoring or financing

For businesses that invoice other businesses, using invoices to obtain financing can help the business get paid faster. Invoice factoring is often available to business owners with low credit scores.

Merchant Cash Advance

One of the quickest types of funding is merchant cash advances. Here, businesses are approved for an advance on future earnings, based on past earnings. Good credit is generally not required.

Microcredits

If you need a lower loan amount, consider a microloan. With a loan amount under $50,000 (and often a few thousand) and the lenders who issue these loans are often non-profit organizations and they are often available to borrowers who have traditionally had difficulty qualifying for a loan. traditional to small businesses. They also come with technical assistance to help businesses succeed.

SBA Loans

Loans guaranteed by the US Small Business Administration are designed for qualified small businesses that have difficulty accessing capital on reasonable terms. More than a dozen SBA loan programs are available, including 7(a) loans, SBA Express, microloans, export loans, disaster relief and loans, and more.

Vendor financing

Your suppliers or vendors may be willing to let you “buy now, pay later”. This type of financing is often flexible and can help with cash flow. It can also be a business loan. Ask your suppliers or use this list of net-30 suppliers to get started.

Small Business Loan Options for Mississippi

If you are looking for a business loan for your business in Mississippi, you can of course start with local community banks and credit unions. Here are the options to consider:

Business credit cards

Lines of credit

Term loans

Commercial real estate loans

Equipment financing or leasing

Invoice factoring or financing

SBA Loans

What it takes to get approved for a small business loan

Just as personal loans have certain requirements, several factors will affect eligibility for small business loans. The four main factors that affect your ability to get a small business loan are:

  • Business income / finance
  • Credit (professional and/or personal credit)
  • Time spent in business
  • Industry

finance

When you apply for a personal loan, the lender wants to know your income. And when you apply for a business loan, the lender wants to know your business income.

Lenders will often require company bank statements to verify if you meet their minimum income requirements. Some lenders, especially traditional lenders such as banks or credit unions, will also require tax returns and/or business financial statements.

Credit

Although good personal and business credit helps increase your loan options, there are still financing options for those with lower credit scores. If you don’t have good credit. you may want to explore crowdfunding, invoice factoring, merchant cash advances, and microloans instead of more traditional lenders.

Industry

You may be surprised to learn that when it comes to getting a loan for your small business, lenders will consider the industry you are in. Some industries are more favored by certain lenders, and some of them won’t lend. These are often referred to as “restricted industries”.

Time spent in business

The longer your business has been around, the more comfortable lenders will be with giving you a loan. If your small business has been around for five years, for example, it is much less risky than one that opened its doors six months ago.

Which Loan is Best for Your Mississippi Small Business

The loan that is best for your small business depends on several factors. You should consider:

  1. How you will use the funds
  2. How fast do you need – and can get – financing
  3. The cost of the loan (interest rate and fees)
  4. What loan repayments you can afford
  5. The types of financing options you may qualify for

Try researching financing options before you need a loan. You will have more time to evaluate your options and make an informed decision.

Small Business Grants for Mississippi

Small business grants are coveted by many small businesses because they provide money that does not have to be repaid. Naturally, grants are competitive, so they may not be the best option for someone who needs a guaranteed amount of funding by a certain date. But every year, millions of dollars in small business grants are awarded by foundations, government agencies and private companies.

Plan to spend time researching and applying for grants, using resources such as Grants.gov, opengrants.io and state-specific resources listed below.

Additional Resources for Mississippi Small Businesses

Want more help for your small business? A good place to start is the Mississippi State Small Business website: You all business. You will find many business resources there, including a detailed list of associations and organizations that work with entrepreneurs.

It also publishes resources for businesses impacted by the Covid-19 pandemic, including CARES Act programs such as PPPs and Economic Disaster Loans. Although these programs are now closed to new applications, you can find information about new initiatives available to business owners in the state.

the Mississippi Small Business Development Center (SBDC) provides free one-on-one counseling, training events, business services, and financing assistance to small businesses in the state. They will also help you with free cybersecurity training. And SCORE sponsors offer free business mentoring.

If you’re a female or minority business owner in Mississippi looking for loans, grant programs, or business certifications, you’ll want to check out Mighty Mississippi, published by the Mississippi Development Authority. Here you’ll find information about certifications, technical support, and training programs.

This article was originally written on February 10, 2022.

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