Small Business Loans
Learn All About Virginia Small Business Loans
Virginia regularly ranks as one of the top states for business in the U.S., thanks to strong workforce development programs, education, and infrastructure. Its corporate income tax is just 6%, compared to the national median of 6.5%, and there are more than 795,000 small businesses employing 1.6 million Virginians.
Looking for small business loans in Virginia to grow your own company? Here’s everything you need to know.
Key Points
- • Small business loans in Virginia include term loans, lines of credit, equipment financing, and SBA loans, catering to diverse financial needs.
- • Application process involves defining loan purpose, checking credit score, gathering documents, comparing lenders, and submitting application.
- • Essential documents for loan application: credit report, income statements, business budget, tax returns, business plan, and collateral details.
- • Enhance loan approval chances by improving credit scores, preparing a strategic business plan, showing steady cash flow, and applying with local institutions.
- • Virginia offers additional resources like VSBDC for tax-exempt bond financing, business training, and grant listings, plus VSBFA for direct and bank loan programs.
Popular Types of Small Business Loans in Virginia
Explore state-specific business loans in Virginia as well as options available nationwide.
Florida Small Business Loan Programs
The Virginia Small Business Financing Authority (VSBFA) is a state agency that helps businesses with development and financing.
There are four direct loan programs available:
• Economic Development Loan Fund
• Microloan Program
• Fee Based Microloan Program
• Child Care Financing Program
The agency also supports two bank loan programs:
• Cash Collateral Program
• Loan Guaranty Program
Term Loans
A term business loan in Virginia provides your company with a one-time infusion of cash, which can be used for things like working capital, debt consolidation, and more. The balance is repaid over time, usually with fixed payments that make it easy to budget.
Use a business loan calculator to explore how monthly payments are impacted by the loan amount and other financing terms. While you may need to be in business for a minimum amount of time in order to qualify for a larger loan, there are also options for startup business loans.
Business Lines of Credit
A business line of credit gives you access to ongoing financing up to a certain limit. You can draw on your credit line to cover operating expenses or unexpected emergencies. As you repay your balance (with interest), your available credit replenishes. Like a credit card, you’ll have a minimum payment required each month.
You may need to secure your credit line in order to get approved or qualify for better terms. Eligible collateral includes things like real estate, cash, and inventory.
Equipment Financing
Equipment financing helps you cover the cost of buying business-related equipment and machinery, plus other assets like vehicles, office furniture, and software. In many cases, the loan is secured by the asset you’re purchasing, which can help keep terms affordable.
You may be able to finance up to 100% of the cost of equipment so you don’t have to worry about a down payment. Once your business pays off the entire loan amount, you’ll own the equipment in full.
SBA Loans
Small Business Administration loans are provided by lenders, but are federally guaranteed, making them an accessible option as a Virginia business loan. Depending on the loan type and eligibility, you can borrow between $500 and $5.5 million.
7(a) loans are designed for working capital, real estate, debt refinancing, and more. 504 loans from the SBA can be used for major fixed assets that will help with business growth and job creation. Finally, microloans offer smaller loan amounts of up to $50,000 (though the average loan is $13,000).
How to Apply for a Small Business Loan in Virginia
Preparing to apply for a small business loan in advance can streamline the process.
Define Your Loan Purpose and Amount
Before you apply for a Virginia small business loan, have a clear understanding of how you plan to use the money and what amount you need. Overborrowing can cause you to spend on non-priorities while paying more than you need to in principal and interest.
Know Your Credit Score
Your credit score is an important part of the business loan application. Lenders will review your personal and business credit scores, so both should be in good standing to qualify for the best loan terms.
Personal credit scores range from 300 to 850 and many lenders use 680 as the minimum requirements. Business scores start at 1 and go up to 100, with 70 considered a good score. You can still apply even if your scores are lower. Some lenders specialize in bad credit loans, but will likely charge more in interest and limit your borrowing amount.
Gather Your Key Documents
You’ll need to submit supporting documentation in addition to your business loan application. Lenders may request the following information about your business and personal finances:
• Credit report
• Income and bank statements
• Business budget
• Personal and business income tax returns
• Collateral details (including valuation and supporting documents)
Recommended: Small Business Financing Guide
Compare Lenders and Loan Offers
Instead of applying with just one lender, consider getting business loan quotes from multiple lenders operating in Virginia. That way you can compare financing structures, interest rates, and payment terms to find the best option.
Don’t assume you’ll receive the same loan offer from every financial institution out there. Give yourself choices so you don’t pay more than necessary.
Submit Your Application and Await Approval
After you fill out paperwork and submit your financial documents (whether online or in person), it’s time to wait for a financing decision. The type of loan you apply for impacts the timeline.
SBA loans, for instance, can take between 30 and 90 days for approval. Banks can take several weeks, while online lenders may approve an application within days.
Tips for Improving Your Loan Approval Chances
The U.S. Chamber of Commerce recommends the following strategies to improve your chances of getting approved for a business loan.
• Work to improve your personal and business credit scores
• Make a strategic business plan
• Get your financial documents in order
• Show steady cash flow
• Ask for a lower funding amount
• Apply with local financial institutions
Other Funding Options for Virginia Small Business
Virginia’s Small Business Development Council offers several resources on other financing options to consider. Community Business Partnership (CBP) is active in some Virginia counties and offers SBA microloans and a CBP Enterprise Loan program for operating expenses.
The SBDC also rounds up several organizations that small business grant resources, including:
• Grants.gov
• SAM.gov
• OpenGrants
• GrantWatch
Additional Business Resources in Virginia
There are many resources available for businesses to grow and expand in Virginia.
Eligible manufacturing businesses and 501(c)(3) non-profits can apply for tax-exempt bond financing through the VSBDC as well as local economic development authorities.
In addition to financing programs, the Virginia SBDC offers business training programs in the following areas:
• Cybersecurity Awareness Program
• International Business Development Program
• Innovation Commercialization Assistance Program (ICAP)
• Craft Beverage Assistance Program (CBA)
• Veterans Assistance
The Takeaway
Ready to take your Virginia small business to the next level? Compare different lenders and loan types by submitting just one form at the SoFi marketplace.
Look for business loans in Virginia now.
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 Virginia?
Preparation is key to getting a small business loan in Virginia. You’ll need a clear plan and budget for how to use the funds, plus a variety of financial documentation for both your business and personal situation.
Can I get a startup business loan in Virginia with no money?
It depends on the lender. Some lenders require a minimum time in business, while others specialize in startup loans.
How hard is it to get a small business loan in Virginia?
It depends on your business and personal finances. Lenders look at credit scores, revenue, and other factors that demonstrate how likely you’re able to repay the loan. Using collateral as security can help improve your odds of getting approved for a small business loan in Virginia.
What is the easiest type of business loan to get approved for?
Any type of financing secured by an asset is usually easier to get approved for compared to unsecured loans. Eligible assets often include things like inventory, invoices, cash, and equipment.
What credit score do I need for a small business loan?
Minimum credit score requirements for small business loans vary by lender. You may need a 680 or higher for your personal credit score and a 70 for your business credit score.
What can I use a small business loan for?
A small business loan can be used for many purposes, including working capital, expansions, real estate, inventory, and debt consolidation. But some loan types, like equipment financing, are designed for certain purchases with restrictions.
Are there any small business grants available in Virginia?
Yes, as stated above, the Virginia Small Business Development Council provides a number of resources where you can search for small business grants available in the state and nationwide.
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