Small Business Loans
Learn All About Small Business Loans in Kansas
Kansas is home to more than 273,000 small businesses, which account for approximately 99.1% of all enterprises in the state. From the aviation manufacturing plants in Wichita to the vast agricultural operations on the western plains, these companies employ nearly half of the state’s workforce.
Whether you’re launching a new ag-tech venture or expanding a logistics company in Kansas City, finding small business loans in Kansas can be a key step in your business’s development. Here’s what you need to know about securing financing for your company.
- Key Points
- • The GrowKS Loan Fund uses federal funds to provide matching loans to startups and underserved businesses in both urban and rural areas.
- • Aviation and aerospace manufacturers in Kansas may rely on equipment financing to acquire precision machinery.
- • Agricultural producers can utilize lines of credit to manage operational costs during seasonal planting and harvesting cycles.
- • Kansas’s Job Creation Fund program grants funding to companies that create jobs or engage in other forms of business development.
- • The Small Business Administration (SBA) backs a wide variety of lending products designed to meet the needs of companies of different sizes and at different moments in their development.
Popular Types of Small Business Loans in Kansas
Entrepreneurs in the Sunflower State can benefit from a supportive network of public and private lending options designed to fuel growth. The following sections outline the most common funding options available to business owners across Kansas.
Kansas Small Business Loan Programs
The state actively fosters economic development through NetWork Kansas, a statewide collective of nonprofit organizations and lenders. It administers the GrowKS Loan Fund, which matches private capital to help companies secure funding to launch or expand, with an emphasis on underserved communities.
Term Loans
With a term loan, a lender provides a small business with an upfront lump sum of capital. Over a specified period (the term), the borrower then makes regular payments to repay the principal and interest, which is usually charged at a fixed rate. This structure can make a term loan an appealing option for financing large, one-time investments with predictable costs. For example, a logistics firm in Overland Park might use a term loan to expand its distribution center.
Business Lines of Credit
In contrast with a term loan, a business line of credit can provide you with access to a revolving pool of funds that you can draw from as you need, up to a predetermined limit. Generally, you pay interest only on the money you actually withdraw, and as you repay the balance, you replenish the pool of funds and the money becomes available for withdrawal again.
Lines of credit can be helpful for businesses that have seasonal lulls or uneven cash flow. For example, a wheat farmer in Salina could use a line of credit to cover fuel and labor costs before the harvest checks arrive.
Equipment Financing
If your business needs a specific physical asset, like machinery, vehicles, or technology, you might want to apply for equipment financing. An aerospace supplier in Wichita could use equipment financing to finance a new CNC machine, while a construction company in Topeka might use it to acquire a new loader.
Since the equipment itself serves as collateral for the lender, equipment financing loans may be easier to obtain than unsecured loans. What’s more, they often come with more favorable terms, too.
SBA Loans
SBA loans are provided by private lenders, but they’re partially guaranteed by the U.S. Small Business Administration. This federal backing lowers risk for the lender, and as a result, the loan conditions may permit lower down payments and longer repayment terms than other types of loan. If you qualify, these Kansas business loans are available through many approved banks and credit unions.
Here are some types of SBA loans commonly used by small businesses.
• The SBA 7(a) loan. The 7(a) loan is very flexible: Amounts can range from $500 to $5 million. It’s suitable for covering working capital, refinancing debt, or purchasing supplies.
• The SBA 504 loan is specifically meant for companies to use on major fixed assets, such as commercial real estate or heavy equipment. The maximum amount is between $5 million and $5.5 million.
• The SBA Microloan is meant to help with short-term needs and can be useful to companies that need startup loans. You can borrow up to $50,000 and the maximum repayment term is seven years.
An SBA loan calculator can help you estimate what your loan costs might be for different kinds of SBA funding.
Recommended: Small Business Financing Guide
How to Apply for a Small Business Loan in Kansas
When your company is applying for Kansas small business loans, prospective lenders generally want you to provide them with an in-depth, easy-to-understand rundown of your company’s financials and a defined plan for how you’d spend the funds you receive.
Here’s a step-by-step breakdown of how to apply for a small business loan in Kansas.
Define Your Loan Purpose and Amount
Before you start contacting lenders, it may be beneficial to have a precise understanding of your funding needs. You should be able to articulate exactly how much money your business needs, what it will be used for, and how it will generate a return. A specific proposal, such as “$50,000 to upgrade our grain storage facilities, which we anticipate will reduce spoilage by 5%,” demonstrates to lenders that you’re thinking strategically and being financially prudent.
Know Your Credit Score
When reviewing your Kansas business loan application, prospective lenders will generally pay particular attention to your company’s credit profile. They’ll probably analyze your personal credit scores, too: Traditional banks often require a credit score for a business loan in the range of 680 or higher. Other lenders, like online banks, may be willing to look at slightly lower scores.
Because of your scores’ importance, it may be beneficial to review your credit reports before you apply so that you can find any errors and have them fixed — and be sure you fully understand your financial situation before you submit your application for a Kansas small business loan.
Gather Your Key Documents
Handing in an application package that’s organized and complete can speed up the review process and signal to a potential lender that you’re a motivated, reliable borrower. While requirements will vary among lenders, you’re likely to be asked for some or all of 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
When you’re looking at Kansas small business loans, shopping around can help you find the financing that best suits your needs, since different banks can offer very different options on term loans, for instance. It may also be a good idea to compare offers from multiple kinds of sources, including small local banks, large national institutions, and online lenders.
As you evaluate financing proposals, it may be helpful to use a business loan calculator to estimate the monthly payments for different options. It may also be a good idea to look closely at the Annual Percentage Rate (APR) of each loan to understand its true cost.
Submit Your Application and Await Approval
After you’ve filled out the application form and gathered your supporting documentation, you’ll probably be ready to submit the application package. Once that’s done, you’ll need to wait for the lender’s response. This can take as little as two days in some cases, but may take several weeks or even months in others.
Tips for Improving Your Loan Approval Chances
You might be able to boost your odds of securing a loan by taking steps to strengthen your company’s financial profile before you apply for it. Lenders usually want to see evidence of your business’s stability as well as its ability to repay the loan. Presenting a financially strong, low-risk profile could help you win a lender’s confidence.
Here are a few steps to consider:
• Ensure that your business plan is realistic and includes detailed financial projections.
• Pay down credit balances and make all your payments on time to work toward strengthening your business and personal credit scores.
• If you have available collateral, consider offering it as security to potentially bolster your application’s chance for approval with certain Kansas business loans.
Other Funding Options for Kansas Small Businesses
If a traditional loan isn’t the right fit for your needs, there may be other ways to fund your business. Kansas’s entrepreneurial ecosystem offers several alternative paths for acquiring capital. One of these options may align better with your company’s stage of growth or industry.
Small business grants are a highly sought-after option because they don’t require repayment. The Kansas Department of Commerce offers a number of grants, including the Job Creation Fund, which awards funds to companies that create jobs or engage in other forms of business development. It can also be helpful to search national databases like Grants.gov to find federal programs relevant to your industry.
Crowdfunding can be another viable route, potentially allowing you to raise smaller amounts of capital online from a broad base of supporters.
Additional Business Resources in Kansas
Succeeding in business often takes more than just funding; it requires expert guidance and a supportive community. Kansas has a broad network of resources designed to help small business owners navigate challenges. The Kansas Small Business Development Center (Kansas SBDC) is a notable resource, offering no-cost advising at regional centers across the state.
For mentorship, local SCORE chapters connect entrepreneurs with experienced business leaders who volunteer their time. Additionally, NetWork Kansas creates eCommunities that can provide local loan funds and specialized training.
Engaging with your local Chamber of Commerce may also help you find valuable networking opportunities.
The Takeaway
Securing a Kansas small business loan can be the decisive factor that allows your company to expand and thrive. While the process involves careful planning, it can be an important step in the entrepreneurial journey. By defining your goals and utilizing state resources, you may ultimately be able to find the right financing solution for your business.
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 Kansas?
To apply for Kansas business loans, start by defining your funding needs and checking your credit scores. Next, gather essential documents like your business plan, tax returns, and bank statements to have ready as you fill out and submit your application. Finally, compare offers from various lenders to find the best terms for your business needs.
Can I get a startup business loan with no money?
This can be challenging, since most lenders require an owner’s investment. However, some SBA microloans that are designed for startups often have lower capital requirements. Another option can be to research business grants, which provide funding that doesn’t have to be repaid.
How hard is it to get a small business loan in Kansas?
The degree of difficulty will depend on your business’s financial health, time in operation, and credit history. Traditional bank loans can be hard to qualify for. Online lenders often offer more flexible requirements, making them a more accessible option for many Kansas businesses.
What is the easiest type of business loan to get approved for?
Loans secured by collateral, such as equipment financing loans, are generally easier to obtain because the asset reduces the lender’s risk. Short-term loans and invoice financing from online lenders may also 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. However, some online lenders may approve applicants with scores in the low 600s. Bear in mind that higher scores can also often result in better approval odds and lower interest rates.
What can I use a Kansas small business loan for?
You can use Kansas business loans for almost any legitimate business purpose. Common uses include purchasing inventory, buying equipment, funding marketing campaigns, or refinancing debt. However, you can’t use these loans for personal expenses.
Are there any small business grants available in Kansas?
Yes, grants are available from a variety of sources. The Kansas Department of Commerce is a useful resource for finding state-level opportunities like the Job Creation Fund. You can also search national databases like Grants.gov for federal programs relevant to your industry.
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