Small Business Loans in Columbus
Columbus, Ohio is one of the largest and fastest-growing cities in the Midwest region of the US. It encompasses a metro area that is home to over 2 million residents.
Often associated with the large and impressive Ohio State University that is also within the city limits, Columbus offers many bigger-city amenities and attractions, with a decidedly more familiar, intimate, and suburban feel.
For many residents, this is the best of both worlds – not too rural or remote, but not too densely packed like a large city, either.
With plenty of museums, art galleries, landmarks, performing arts venues, and sports teams (Go Buckeyes!), Columbus is undoubtedly one of the most attractive places to live in the entire Midwest. It was voted as such in 2016 by Money magazine.
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Like much of the industrial Midwest, Columbus has transitioned from a heavily industrial economy earlier in the 20th century into a much more diversified economic base in the 21st century and last several decades of the 20th.
As a result, Columbus has been well-positioned for growth for several decades, and has not suffered from the after-effects of the industrial exodus, housing market crash, and similar economic events as other comparably-sized cities.
Today, many business sectors are integral components of the Columbus economy, including education, government, healthcare, finance and insurance, aviation and defense, logistics, food, apparel, light and heavy industry, energy, and technology, among many others.
Five Fortune 500 companies call the Columbus area home: American Electric Power, Cardinal Health, L Brands, Nationwide, and Big Lots, along with thousands of other smaller brands and businesses.
Most people know that publicly-traded companies, large multi-national corporations, and more well-established businesses have multiple ways of generating working capital or investment cash for specific projects, and are not limited simply to traditional loans and credit products.
The options for smaller or newer business are far more restricted, and many small businesses struggle to secure the kind of small business funding they need to be successful.
Small business loans in Columbus, along with several other small business financing options, are usually the best way for Ohio-based small and medium-sized businesses to access precious capital.
Options can include business lines of credit, short-term business loans, merchant cash advances, and more.
Many small business owners looking for business loans in Ohio (or other kinds of small business funding, for that matter) may be confused by the different types of funding options available, or unsure of the different considerations, advantages, and disadvantages inherent in each of these kinds of small business funding.
Most small business owners do not come from a primarily financial background, so not being an expert in small business financing is perfectly natural and understandable.
In an attempt to make it easier for small business owners in Columbus, Ohio, and elsewhere in the US to understand their options, and how they can best deploy small business financing to their benefit, we’ve created this guide.
Below, we’ll talk about several important topics relating to small business loans in Columbus, including – first and foremost – the different options that exist to fund your small business.
Next, we’ll talk about the differences between the two main sources for small business funding, namely banks and private lenders.
Finally, we’ll highlight the eligibility requirements for and benefits of choosing one particular private lender, BizFly Funding, who is a leader in small business loans in Columbus, Ohio, and throughout the US.
The Small Business Funding Portfolio
Let’s start by taking a look at the different kinds of small business funding products that are available today.
Understanding the differences between loans and credit products that are designed specifically for small businesses is essential if you intend to optimize your chances of getting approved, choosing the right product, and paying the least in interest expense or debt service.
Most people have a good understanding of how straightforward or typical loans work: you receive a lump sum of cash at the time you take out the loan, then pay it back, with interest, over the term of the loan.
In most cases, these payments are in equal amounts, and evenly spaced out through the loan term – typically on a monthly basis. But those details can vary significantly with some of the other kinds of small business funding options that are out there.
Likewise, businesses shouldn’t limit themselves to only considering small business loans in Ohio or any other state, as there may be additional or alternative funding options that are a better fit for your needs within the lender’s portfolio.
Each of the different small business financing options that are available in a modern lender’s portfolio, including the traditional or basic small business loans for Columbus businesses, will offer a business owner different pros and cons or tradeoffs that must be considered.
In general terms, it’s best for small business owners to choose the funding option that most closely aligns with the type of expense, project, or reason why the funding is needed.
Specifically, that usually means matching up the loan or credit product’s term with the time you believe it will take to utilize the funding, and realize a return on that utilization or investment.
There are other considerations as well, of course, but this underpinning is one of the best ways to ensure you’re on the right path to minimizing the negatives and maximizing the positives in your choice of small business funding.
How this translates to your specific business will of course vary. Every business is unique, and their needs unique. What might make the most sense for one business, even in your same market sector and/or geographic region, may be the worst option for another business.
Every lender offering small business loans in Columbus or elsewhere, along with all the other types of funding in their portfolio, will also differ from one another.
Different eligibility requirements, ease of access or approval for small business funding, different interest rates, product offerings, loan terms, and so on are quite common.
The bottom line is it is incumbent on small business owners to do some research and compare what is available from different lenders and sources, and to ensure that your business meets the requirements at your chosen lender.
With all of that said, let’s take a closer look at the details of seven of the most common small business funding options available in the market today:
- Small business loans
- Lump sum of cash provided up front from lender to borrower
- Repaid over a set period of time, both principal and interest, based on the interest rate set by the lender
- Loan term typically lasts for a few to several years
- Repayment is usually evenly divided across the term, most commonly monthly
- Small business lines of credit
- No cash provided up front, but rather approval for an upper credit limit
- Work like a credit card account, as a revolving credit facility, allowing borrowing in any amount provided the outstanding amount is less than the upper credit limit
- Interest is only charged on the outstanding balance, not the whole credit line
- Minimum payments in each cycle are common, like a credit card, though you can repay more in any given period
- You can re-borrow against the line on an ongoing basis.
- Repayment is typically on a monthly schedule, though weekly or daily is not unheard of either
- Short-term business loans
- Like a small business loan, but is meant to be repaid over a shorter term
- Usually, the loan term is a few months to a year or two at most
- Interest rates are often higher on an APR (annual) basis, especially when the loans last for less than a year, but this does not mean they cost businesses more
- Repayment is much faster, typically with weekly or daily payments required
- Merchant cash advances
- Different than many other kinds of small business funding
- Provide lump sum of cash up front
- Not technically a loan, but rather a pre-sale of your future debit or credit card sales at a discount
- The discount is effectively the interest rate, called a factor rate
- The term is open-ended and not fixed to a calendar date
- Rather, repayment is based solely on the rate of your sales, so higher revenue periods mean more repayment, and vice versa
- Repayment occurs automatically once a merchant cash advance is setup
- One of the easiest to obtain, with low credit score, revenue, and time-in-business thresholds
- Not suitable if a small business doesn’t do a significant amount of their sales through credit or debit cards
- Debt consolidation loans
- A type of small business loan designed to be used to pay down existing debt, thus consolidating it into a single debt instrument (the loan)
- Provides a lump sum of cash that is to be used to pay off existing debts
- Often provides a lower interest rate than some or all of existing debts you may hold
- Consolidating debt saves money on interest expense as well as on servicer fees, streamlining the repayment process and schedule
- Small business loans for women-owned businesses
- Work in the same way as ordinary small business loans
- Increased access and reduced eligibility requirements in order to ensure fairer, more level playing field/greater access for this demographic, which has historically been discriminated against
- Bad credit business loans
- Small business loans for businesses with bad credit or a limited credit history
- Work in the same way as ordinary small business loans
- Have relaxed credit score and other eligibility requirements, de-emphasizing credit score as the ultimate arbiter of approval or rejection
- Allow 40 to 50% of the credit score spectrum to qualify for a small business loan
Two Types of Lenders for Business Loans in Ohio
Now that you understand the different options for small business loans in Columbus and across America, the next step is to understand the different sources or types of lenders that you can choose from to secure your funding.
This really boils down to a choice between either a bank on one hand, or a private, non-bank lender on the other.
This decision is not as straightforward as it may seem, and will determine a great deal more about the availability of certain kinds of small business funding, what kinds of funding you can qualify for the eligibility and other requirements you may have to meet, the speed with which you can get funded, and much more.
In fact, it’s probably one of the most important decisions you’ll make in the process of obtaining small business financing for your business.
Most often, small business owners who have tried borrowing from both banks and private lenders in the past overwhelmingly state that private lenders are their preferred source of funds.
There are core, fundamental reasons why this is the case, which can loosely be categorized as matters of risk, accessibility, speed, and service.
To start, let’s take a look at banks and traditional financial institutions. Certainly, most small business owners are familiar with banks, and likely have multiple accounts at one or more banks for their business as well as personal finances.
It only seems natural, then, to seek out small business loans in Columbus from whatever bank or banks you may already utilize. However, it’s often not that simple.
Banks, in general, are extremely risk averse – perhaps not in their investment divisions, but among lending and regular depositor or commercial banking, they most definitely avoid risk wherever possible.
There are regulatory and capital-related covenants that they must meet, which means they cannot lend to too many risky customers (that is, after all, part of what caused the financial collapse of the late 2000s).
Small business lending is generally seen as high risk, given the failure rates (half of all new small businesses fail within the first five years).
In practical terms, this means that banks may not offer many small business funding options. The ones they do offer typically have extremely challenging eligibility requirements, that pre-select only the “cream of the crop,” lowest-risk applicants.
That usually translates into only the most well-established, revenue-rich companies with outstanding credit, leaving many small and medium-sized businesses seeking business loans in Ohio out in the cold.
Even if you do manage to qualify for a small business loan in Columbus via a bank, there’s another drawback you’ll need to contend with: collateral. Again, as a means to reduce risk, most banks only offer secured loans and credit products – those that are backed by pledged collateral.
Secured loans ensure that the lender is repaid or made whole if the borrower defaults on the loan.
If your business goes belly-up, they retain ownership of the collateral before other, unsecured debt holders are paid out in the bankruptcy process, thus ensuring the best chance at recouping their money.
Because of the way in which collateral is valued, in practical terms, many businesses seeking a secured business loan need to put up several times the value of the loan they are seeking in collateral assets. This is an enormous risk for many small businesses, with very little upside.
It is true that secured loans and credit products generally have a somewhat lower interest rate, since they are less risk for the lender. But that’s about the only positive – the rest is a massive increase in risk for the borrower – you.
Additionally, because of the need to assess the value of collateral for a secured loan or credit product, the application and approval process typically spans a period of weeks.
That’s valuable time that businesses have to wait to receive an approval decision or obtain their desired small business financing, so that assets can be reviewed against fair market value, often requiring an on-site inspection by an assessor.
This all adds up to mean it’s harder to get a small business loan in Columbus via a bank, requires you to take on greater risk, aren’t necessarily the top priority for the bank (who already sees small business lending as risky), and may have to wait as long as a month from the time you apply to when you get your funds.
By contrast, pretty much every disadvantage or drawback associated with banks is an advantage when you choose a private, non-bank lender. Private lenders most often offer unsecured loans and credit products, meaning no collateral is required.
This is a larger risk for the lender, and interest rates tend to be a bit higher than their secured counterparts. That, however, is generally the sole drawback to choosing a private lender for your business loan in Columbus, Ohio.
Because no collateral is required, small businesses can obtain their small business funding much faster through a private lender than with a bank.
Where banks take weeks or up to a month to complete a loan and deliver funds, private lender typically take days, with funding itself taking as little as 1 business day following loan approval in many cases.
Everyone knows that time is money, and by choosing a private lender, you’ll ensure you get the most funding you can, as quickly as possible, so that you can take advantage of emerging opportunities to grow your business, catch that extra order, add labor and equipment faster, buy extra inventory, and so on.
That’s really just scratching the surface of the advantages to choosing a private lender as your source for credit and small business loans in Columbus. There are several others, which include:
- Most small businesses find it far easier to qualify for small business loans and credit products via a private lender, because of the more easily-met eligibility requirements for lending.
As discussed above, banks maintain fairly high standards and requirements, including very high credit score requirements, lengthy time-in-business requirements, and substantial monthly revenue requirements.
Private lenders are much more comfortable with risk, and have much lower requirements in each of these three areas, increasing the accessibility to funding for small businesses.
- As per the above, this means that the approval odds for many small businesses are far better at private lenders.
This is especially important for business loans with bad credit, for businesses that have bad credit or a limited credit history.
Many small businesses struggle to create a robust credit report and good credit score – which really requires accessing credit and loans in the first place – and that’s much easier to do when taking out credit or business loans in Ohio via a private lender.
- Businesses taking out unsecured small business loans from private lenders take on less risk than with secured loans from banks or traditional lenders.
This is important because no business owner knows what the future holds or wants to take on unnecessary risk without an equivalent upside.
- Private lenders offer a greater focus on serving and meeting the specific needs of their niche or market sector.
Many private lenders who offer small business loans and credit products focus only on small business lending, and as such, have a much greater expertise in small business funding than more generalized lenders such as banks.
This can help businesses to better choose the kind of small business financing options that are best for their business.
These are just some of the reasons why many small business owners prefer private lenders as their source for small business funding, whether that would be small business loans in Columbus, business lines of credit, merchant cash advances, or any other of the types of funding we’ve discussed.
Accessing credit and loans is simply easier and faster when sourced from private, non-bank lenders as compared to banks.
BizFly Funding – Your Best Choice for Small Business Loans in Ohio
The final step on your journey to securing small business loans in Columbus, or any other kind of small business financing, is to choose your lender and start the application process. As we’ve outlined, most small businesses prefer private lenders for their small business funding.
One of the best options among the private lenders who specialize in small business funding is BizFly Funding. BizFly Funding is one of the US’s leading private, non-bank lenders, that exclusively serves the needs of the small business community.
They offer a full portfolio of small business funding options, including all of the different options we’ve discussed in this guide. Upon approval, small businesses can access up to $1 million from several of the funding products available from BizFly Funding.
As with other private lenders, BizFly Funding offers a range of benefits and advantages for small businesses.
A fast, online application process, commitment to outstanding customer service, easy-to-meet eligibility requirements, high approval odds, and fast funding are at the core of BizFly Funding’s service.
Most customers can receive their loan or credit product funds in as little as 1 business day following final signing of the loan agreement – allowing you to get the funding you need and get back to running your business!
While every business and loan application is different, and additional requirements may exist for larger loans, the following are the general or basic eligibility requirements for some of the top small business funding products available from BizFly Funding:
- Loan term of 2 to 36 months
- Minimum 6 months in business
- Credit score of at least 500
- $10,000 minimum monthly revenue
- Loan amounts of $5,000 to $1 million
- Interest rates of 9 to 45%
- Loan term of 6 to 24 months
- Minimum 12 months in business
- Credit score of at least 600
- $10,000 minimum monthly revenue
- Loan amounts of $15,000 to $1 million
- Interest rates of 9 to 45%
- Loan term is variable (repayment is based on sales and not tied to the calendar)
- Minimum 2 months in business
- Credit score of at least 500
- $8,000 minimum monthly revenue
- Loan amounts of $8,000 to $250,000
- Factor rates of 24 to 49%
- Credit line term is variable
- Minimum 6 months in business
- Credit score of at least 650
- $10,000 minimum monthly revenue
- Credit line amounts of $5,000 to $250,000
- Interest rates of 5 to 10%
If you are in need of small business loans in Columbus, Ohio, or anywhere else in the US, then it’s worth spending a little time filling out the online application and getting pre-approved. There’s absolutely no obligation, no costs, and it won’t affect your credit score or appear in your credit report.
You could get pre-approved for up to $1 million in small business funding, which can make a serious impact on your ability to respond to market trends, catch sales opportunities, and gain a competitive advantage to grow, expand, and succeed.
To learn more or to start the application process, visit BizFly Funding online at https://bizflyfunding.com.
