Small Business Loans
Learn All About Small Business Loans in Colorado
Colorado is home to more than 730,000 small businesses, which account for 99.5% of all enterprises in the state. From the booming tech hubs along the Front Range to the outdoor recreation industries in the high country, these companies employ nearly half of the state’s workforce.
Whether you’re launching a startup in Denver or expanding a family-owned business in Grand Junction, finding small business loans in Colorado is a key step. Here’s what you need to know about securing financing for your company.
Key Points
• The Colorado Startup Loan Fund provides capital to mission-based lenders to support entrepreneurs who may not qualify for traditional bank financing.
• The Cash Collateral Support (CCS) program offers support for businesses with collateral shortfalls.
• Business lines of credit may be useful for outdoor recreation and seasonal tourism businesses that need to bridge cash flow gaps during shoulder seasons.
• Advanced Industry Accelerator Grants are a potential funding source for Colorado companies innovating in areas such as aerospace, bioscience, and technology.
• Having a strong credit score and a thoughtful, realistic business plan may help you get your funding application approved.
Popular Types of Small Business Loans in Colorado
Entrepreneurs in the Centennial State have access to a diverse array of financing types tailored to Colorado’s unique mix of urban innovation and rural resilience. The following sections outline the most common funding options available to business owners across Colorado.
Colorado Small Business Loan Programs
Colorado’s Office of Economic Development and International Trade (OEDIT) works with other agencies to actively support economic growth through a wide variety of specialized lending initiatives. A few of the most notable include:
• The Colorado Startup Loan Fund provides capital to nonprofit lenders, allowing them to offer smaller startup loans with flexible terms to newer businesses.
• The Cash Collateral Support (CCS) program, managed by the Colorado Housing and Finance Authority (CHFA), helps small businesses secure loans by providing cash deposits to lenders when the borrower lacks sufficient collateral.
• The Colorado Credit Reserve similarly assists businesses that might have difficulty accessing conventional loans by establishing loan loss reserve accounts with lenders to provide them with additional security.
• The Venture Capital Authority helps startups, especially those in expanding industries and/or underserved communities, get venture capital funding.Though it’s an investment, not a loan, this capital can be invaluable for young companies.
Term Loans
A term loan provides a lump sum of capital that is repaid over a specific period in regular, often fixed payments. This structure makes these small business loans an excellent choice for financing large, one-time investments where costs are predictable.
For example, a craft brewery in Fort Collins might use a term loan to purchase new fermentation tanks and expand its taproom.
Business Lines of Credit
Unlike a term loan, a business line of credit gives you access to a revolving pool of funds that you can draw from as you need. Typically, you pay interest only on the money you actually use, and as you repay the balance, your credit becomes available again.
A ski shop in Vail might use a line of credit to stock up if it finds it needs winter gear before the busy tourist season begins.
Equipment Financing
Equipment financing refers to a loan designed specifically to help you purchase physical assets, such as machinery, vehicles, or technology. Because the equipment itself serves as collateral, these loans often come with more accommodating approval standards.
A tech company in Boulder could use an equipment loan to finance specialized servers, while a construction firm in Colorado Springs might use one to acquire a new loader.
Small Business Administration (SBA) Loans
SBA loans are issued by private lenders but are partially guaranteed by the U.S. Small Business Administration. This federal backing can help reduce your lender’s risk, which can lead to lower down payment requirements and longer repayment terms. These Colorado business loans are widely available through approved banks and credit unions.
The most common types of SBA loans are the SBA 7(a) and 504 loans. The 7(a) program is highly versatile, suitable for financing your company’s working capital, refinancing debt, or purchasing supplies. The 504 loan is used for major fixed assets, such as purchasing commercial real estate or heavy equipment that promotes business growth and job creation. As a smaller loan, microloans (which are available up to $50,000) may be especially useful for new business owners who don’t yet need large amounts of capital.
Using an SBA loan calculator can help you estimate what your monthly payments would be for an SBA loan, as well as what you’d pay in interest over the lifespan of the loan.
Recommended: Small Business Financing Guide
How to Apply for a Small Business Loan in Colorado
When you apply for Colorado small business loans, potential lenders will want a clear picture of your company’s financial health and a well-thought-out plan for how those funds will be used. By organizing your documents in advance, you can present a professional application that stands out during the underwriting process. Read on to find out more about how to apply for a small business loan, step by step.
Define Your Loan Purpose and Amount
Before contacting lenders, you’ll want to have a precise understanding of your funding needs. You should be able to articulate exactly how much money you need and how it will generate a return. A specific proposal — such as “$50,000 to upgrade our roasting equipment” — demonstrates strategic thinking and financial discipline to your potential lenders.
Know Your Credit Score
Your credit profile is one of the first things a lender will typically review. Traditional banks often want to see a personal credit score for a business loan of 680 or higher, though online lenders may be willing to look at lower scores. It’s smart to check your reports before submitting a loan application to identify any errors and understand where you stand.
Gather Your Key Documents
Providing your lender with a complete application package can speed up the review process and signal reliability. This typically includes not only the application, but also supporting documents. While requirements vary by lender, you should generally be prepared to show the following:
• Credit report
• Income statement
• Bank statements
• Budget
• Income tax returns (both business and personal)
• Business plan
• Collateral valuation and supporting documents (which may include titles, deeds, or invoices)
Compare Lenders and Loan Offers
Different lenders will likely make different offers, so shopping around can go a long way toward helping you find the financing that best fits your needs. It can be a good idea to compare offers from multiple sources, including local community banks, large national institutions, and online lenders.
As you’re evaluating proposals, a business loan calculator can help you estimate what your payments will be. You can also look closely at the Annual Percentage Rate (APR) to better understand the true cost of the loan.
Submit Your Application and Await Approval
Once you’ve filled out your application and gathered any necessary documents, you’re ready to submit your application. Timeframes for your answer can vary by lender, but you’ll usually hear fairly quickly from many lenders, but you may have to wait a little longer to hear about an SBA loan.
Tips for Improving Your Loan Approval Chances
Lenders are generally looking for evidence of your company’s stability and ability to repay. Presenting a strong, low-risk profile may help to win their confidence. Here are a few steps you can take:
• Ensure that your business plan is realistic and includes detailed financial projections.
• Work on improving your personal and business credit scores by paying down existing balances and making all payments on time.
• If you have it available, offering collateral can also strengthen your application for certain Colorado business loans.
Other Funding Options for Colorado Small Businesses
If a traditional loan isn’t the right fit, there are other ways you may be able to fund your business. Colorado’s entrepreneurial ecosystem offers several alternative paths for acquiring capital. Depending on your situation, one of these options may align better with your specific stage of growth or industry.
Small business grants are a highly sought-after option because they don’t require repayment. The Advanced Industries Accelerator Grant program awards funding to companies in sectors like aerospace, energy, and bioscience to foster innovation.
Crowdfunding is another viable route, allowing you to raise smaller amounts of capital from a broad base of supporters online.
Additional Business Resources in Colorado
Success in business often requires guidance and community as well as capital. Fortunately, Colorado has a robust network of resources designed to help small business owners navigate challenges.
The Colorado Small Business Development Center (SBDC) can be a useful resource for business owners, offering no-cost confidential advising at 14 locations across the state.
For mentorship, local SCORE (Service Corps of Retired Executives) chapters connect entrepreneurs with experienced business leaders who volunteer their time. Additionally, the Minority Business Office of Colorado provides specialized assistance to minority, women, and veteran-owned enterprises. Engaging with your local Chamber of Commerce can also provide valuable networking opportunities.
The Takeaway
Securing a Colorado small business loan can be the decisive factor that allows your company to expand. While the process involves careful planning, it is generally an achievable step for most focused entrepreneurs. By defining your goals, preparing your application carefully, and utilizing state resources, you should be able to find the right financing solution for your company.
If you’re seeking financing for your business, SoFi is here to support you. On SoFi’s marketplace, you can shop and compare financing options for your business in minutes.
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FAQ
How do I get a small business loan in Colorado?
Start by defining your funding needs and checking your credit scores. Gather essential documents like your business plan, tax returns, and bank statements. Finally, compare offers from various lenders to find the best terms among your potential Colorado small business loans.
Can I get a startup business loan with no money?
This may be challenging, as most lenders require an owner’s investment. However, some SBA microloans are designed for startups with lower capital requirements. Another option is to research business grants, which provide funding that does not need to be repaid. Applying for your financing through a small business loan marketplace may help by narrowing down your search to lenders willing to work with startups.
How hard is it to get a small business loan in Colorado?
The difficulty depends on factors such as your business’s financial health, time in operation, and credit history. Traditional bank loans can be competitive and have strict requirements. Online lenders often have more flexible requirements, making them more accessible options for many Colorado businesses.
What is the easiest type of business loan to get approved for?
Loans secured by collateral, such as equipment financing, are generally easier to obtain because having the asset as security lowers the lender’s risk. Short-term loans and invoice financing from online lenders also typically have less stringent requirements.
What credit score do I need for a small business loan?
Requirements vary, but for traditional bank and SBA loans, a personal credit score of 680 or higher is often preferred. Some online lenders may approve applicants with scores in the low 600s. Higher scores generally lead to better approval odds and lower interest rates.
What can I use a Colorado small business loan for?
You can use a small business loan for almost any legitimate business purpose. Common uses include purchasing inventory, buying equipment, funding marketing campaigns, or refinancing debt.
Are there any small business grants available in Colorado?
Yes, grants are available from federal, state, and private sources. The Colorado Office of Economic Development and International Trade (OEDIT) can be an excellent resource for finding state-level opportunities like the Advanced Industries Accelerator Grant. You can also search national databases like Grants.gov for federal programs relevant to your industry.
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