Small Business Loans
Learn All About Small Business Loans in Missouri
More than 590,000 small businesses are located in Missouri, where they account for approximately 99.4% of all enterprises in the state. From the bioscience corridors of St. Louis to the agricultural heartland and the logistics hubs of Kansas City, these companies employ nearly 45% of the state’s workforce.
Whether you’re launching a startup in the Ozarks or expanding a manufacturing plant in Columbia, finding small business loans in Missouri is a key step toward helping your business grow and thrive. Here’s what you need to know about securing financing for your company.
- Key Points
- • The Missouri Linked Deposit Program (MOBUCK$) partners with lenders to lower interest rates for qualifying small businesses and agricultural operations.
- • IgniteMO uses federal State Small Business Credit Initiative (SSBCI) funds to provide loan participation and other programs, expanding access to capital for socially and economically disadvantaged entrepreneurs.
- • Nonprofit lender Justine PETERSEN is a national leader in microlending, providing critical gap financing to Missouri business owners who might otherwise struggle for funding.
- • The Action Fund Loan offers financing to for-profit companies in non-entitlement areas for starting up or expanding.
- • Agricultural producers can often use equipment financing and USDA-guaranteed loans to acquire and maintain the heavy machinery required for farming seasons.
Popular Types of Small Business Loans in Missouri
Entrepreneurs in the Show Me State can benefit from a diverse financial ecosystem that blends state-sponsored interest reduction programs with robust private lending. The following sections outline the most common funding options available to business owners across Missouri.
Missouri Small Business Loan Programs
The state actively encourages economic growth through the Missouri State Treasurer and the Department of Economic Development. The Missouri Linked Deposit Program (MOBUCK$) places state funds with local lenders at reduced rates, allowing them to pass on interest rate savings to borrowers. And the IgniteMO program participates in loans alongside private banks, reducing their risk and encouraging them to fund startups and underserved businesses that might otherwise be denied.
Additionally, the non-profit lender Justine PETERSEN provides microloans to Missouri business owners, and the Action Fund Loan offers financing to for-profit companies in non-entitlement areas.
Term Loans
A term loan can provide a small business with an upfront lump sum of money. The principal, along with interest (usually charged at a fixed rate), is then repaid in regular payments over a defined period of time. Having a fixed, predictable repayment structure can be helpful as you budget, and because the funds come all at once, such loans can make sense for funding large, one-time investments. For example, a manufacturing firm in Joplin might use a term loan to expand its production floor.
Business Lines of Credit
As opposed to a term loan, a business line of credit can give your business access to a revolving pool of funds that you can draw from whenever you need cash, up to a limit set by the lender. 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 you to withdraw again.
Lines of credit can be especially well-suited to businesses that have seasonal lulls or uneven cash flow. For instance, a tourism-dependent business in Branson could use a line of credit to manage inventory and payroll during the off season.
Equipment Financing
If your business is in need of a specific physical asset, like machinery, vehicles, or technology, you might want to apply for equipment financing. A soybean farmer in northern Missouri could use an equipment financing loan to finance a new combine, while a logistics company in Springfield might use one to acquire a new fleet of trucks.
Because the equipment acts as collateral and the risk for the lender is reduced, equipment financing loans can be easier to obtain than unsecured loans. Additionally, they may often come with more favorable terms.
Small Business Administration (SBA) Loans
The actual issuers of SBA loans are private lenders, but this financing is partially guaranteed by the U.S. Small Business Administration. That federal backing lowers the lender’s risk, so the loans may come with lower down payments and longer repayment terms. If you qualify, these Missouri business loans are available through numerous banks and credit unions.
Here are the SBA loans that may be the most useful for small businesses.
• The SBA 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 intended to address short-term needs and can help companies that need startup loans. You can borrow up to $50,000 and the maximum repayment term is seven years.
You can use an SBA loan calculator to 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 Missouri
Applying for a Missouri small business loan requires diligence, preparation, and attention to detail. You’ll need to give prospective lenders a clear picture of your company’s financial health and a well-developed plan for how their funds will be used.
Here’s a step-by-step rundown of how to apply for a small business loan in Missouri.
Define Your Loan Purpose and Amount
Before you begin reaching out to lenders for a Missouri business loan, you should have a precise understanding of your funding needs. You should be able to pinpoint exactly how much money your company needs and how it will be able to generate a return. A specific proposal, such as “$50,000 to upgrade our cold storage facilities, which we project will reduce product spoilage and energy costs” demonstrates targeted strategic thinking.
Know Your Credit Score
When they’re reviewing your Missouri business loan application, prospective lenders will generally pay special attention to your company’s credit profile. They’ll probably scrutinize your personal credit scores, too: Traditional banks typically prefer to see a credit score for a business loan in the range of 680 or higher. Other lenders, such as online banks, may be willing to look at somewhat lower scores.
Thanks to your scores’ importance, it’s smart to review your credit reports before applying for a loan so that you can spot any errors and have them fixed — and be sure that you fully understand your financial situation before you submit your application for a Mssouri 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
If you’re looking at Missouri small business loans, it’s important to shop around to find the financing that best suits your needs. That’s because different banks may offer very different options on equipment financing loans, for instance. It’s a good idea to compare offers from multiple kinds of sources, too, including small local banks, large national institutions, and online lenders.
As you consider different financing proposals, you can use a business loan calculator to estimate the monthly payments for different options. It’s also smart to look closely at the Annual Percentage Rate (APR) of each loan to understand its true cost.
Submit Your Application and Await Approval
Once you fill out the loan application form and gather your documents, you should be ready to submit the application package. After you’ve done that, you’ll have to wait for the lender’s response. This can take as little as two days in some cases, but may require several weeks in others.
Tips for Improving Your Loan Approval Chances
Lenders typically want to see evidence of your business’s stability as well as its ability to repay the loan. Taking steps to strengthen your business’s financial profile before you apply might help you increase your chances of securing a loan. Here are some strategies to think about trying:
• Ensure that you have a realistic business plan with detailed financial projections.
• Work to build your business and personal credit scores by paying down your current balances and making timely payments.
• If you have collateral available, consider offering it as security to potentially bolster your application’s chance for approval with certain Missouri lenders.
Other Funding Options for Missouri Small Businesses
If a traditional loan isn’t the right fit for your business’s situation, there are usually other ways you can fund your business. Missouri’s entrepreneurial ecosystem offers several alternative paths to capital, and one of these options may align better with your company’s specific stage of growth or industry.
Small business grants are highly sought-after options because they don’t require repayment. Grants in Missouri are available from a variety of organizations like Kansas City Generating Income for Tomorrow (G.I.F.T.) provide grants to Black-owned businesses in the Kansas City area. And in addition to its venture capital opportunities, the Missouri Technology Corporation (MTC) offers grants like the Physical Infrastructure Grant to help tech businesses get access to the resources they need.
Crowdfunding is another possible route, allowing you to raise smaller amounts of capital through an online platform from a broad base of supporters.
Additional Business Resources in Missouri
Succeeding in business often requires more than just capital: It also takes experienced guidance and a supportive community. Missouri has a network of resources designed to help small business owners navigate challenges. The Missouri Small Business Development Center (MO SBDC) is a useful resource, offering advising and training at centers statewide.
For mentorship, local SCORE chapters connect entrepreneurs with experienced business leaders who volunteer their time. Additionally, Justine PETERSEN offers extensive credit building and business formalization education services. Engaging with your local Chamber of Commerce can also provide valuable networking opportunities.
The Takeaway
Securing a Missouri small business loan can be what ultimately allows your company to expand and prosper. While the process may seem intimidating, a determined entrepreneur can generally find the funding that’s needed. By defining your goals and utilizing available resources, you should be able to find the right financing solution for your situation.
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 Missouri?
To apply for a Missouri business loan, begin by defining your funding needs and checking your credit scores. Then, gather essential documents like your business plan, tax returns, and bank statements so that you can assemble and submit your loan application. Finally, compare offers from various lenders to find the best terms available for your Missouri small business loan.
Can I get a startup business loan with no money?
It can be challenging to get a loan with no money, since most lenders require an owner’s investment. However, some SBA microloans for startups have lower capital requirements. An alternative is to look for business grants, which provide funding that doesn’t generally need to be repaid.
How hard is it to get a small business loan in Missouri?
How difficult this is depends on your business’s financial health, time in operation, and credit history. Traditional bank loans can be difficult to qualify for, but online lenders often offer more flexible requirements, making them potentially a more accessible option for many Missouri 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. That’s because the asset reduces the lender’s risk. Short-term loans and invoice financing from online lenders also tend to have less stringent requirements.
What credit score do I need for a small business loan?
Requirements vary considerably, but for traditional bank and SBA loans, a personal credit score of 680 or higher is often preferred. However, some online lenders may be willing to approve applicants with scores in the low 600s.
What can I use a Missouri small business loan for?
You can use a small business loan for almost any legitimate business purpose (but not for personal expenses). Common uses include purchasing inventory, buying equipment, funding marketing campaigns, or refinancing debt.
Are there any small business grants available in Missouri?
Yes, grants are available in Missouri. The Missouri Technology Corporation and local organizations like Kansas City G.I.F.T. offer small business grant opportunities. You can also search national databases like Grants.gov for federal programs relevant to your industry.
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