Small Business Loans Illinois: Where to Get the Best Financing Solution

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    Business-wise, Illinois is one of the most diverse states in the United States. On the North, along the coast of Michigan, lies Chicago, the most dynamic city in the state. With more than 9 million people calling it home, it’s no wonder why many entrepreneurs are looking to start and set their businesses up for success in the city. It doesn’t stop there. Vast lands of fertile farmlands and less populated cities predominate the southern part of Illinois. The small businesses in these regions run Illinois’ economy daily. 

    Small businesses are constantly on the lookout for the best financial resource to grow their company. The good news is business owners can choose from a wide variety of business loans offered by banks, credit unions, online lenders, and other financial institutions.

    Illinois Contractor Loans

    Construction projects never stop coming in for construction companies in Illinois. Chicago, specifically, is among the cities with the highest number of working tower cranes. The boom in the state’s construction industry is partly owed to the fact that big and small companies are relocating to Chicago, increasing the demand for residential and commercial construction projects. 

    Contractor business loans can help construction companies in Illinois get the capital they need to fund incoming projects without worrying about cash flow issues. With the cash flow boost, they can buy or rent equipment, reorder materials and supplies, and pay their employees on time.

    Biotechnology Loans in Illinois

    With a long history of breakthroughs in physics and chemistry, Illinois is a breeding ground for medical inventions and advancements. However, small biotechnology businesses in Illinois usually face high expenses. Small business loans can help them get the cash they need, so they can sustain their business operations and take advantage of any business opportunities that may come their way. 

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    What are the Top Business Loan Options in Illinois?

    When it comes to small business financing, Illinois business owners can have their pick on over thousands of options. From small loans to enormous ones, Illinois lenders have what you’re looking for.

    Here are some of the top picks:

    Business Lines of Credit

    Business lines of credit offer as-needed access to a specific amount of capital. That means small businesses can draw money from their credit lines whenever the need arises, pay it back, and access the funds again in the future. It works similarly to a business credit card, but the limits are typically much higher with lines of credit. 

    SBA Loans

    The Small Business Administration offers business financing to business owners that can’t qualify for credit elsewhere. It’s a government-backed loan, which means that although the federal government doesn’t extend the credit to the borrowers, it guarantees a portion of the loan – usually up to 85%. If the borrower defaults, the government will have to pay for the agreed-upon portion of the financing. SBA loans offer competitive rates, high loan amounts, and long repayment periods.

    The downside with that SBA loans typically has high eligibility standards. That said, startups or small businesses with bad credit may have to consider other types of loans more suitable for their current situation.

    Business Term Loans

    Business term loans are loans with set repayment amounts and terms. The business typically receives a lump sum of cash up front, which they can use towards any business initiative, including working capital, equipment, real estate, etc. They pay the loan amount back in fixed installments within a specific period or term. 

    Term loans can be short-term (less than one year), medium- or intermediate-term (two to five years), or long-term (five to more than 20 years). Long-term loans are typically the hardest to qualify for because they come with large loan amounts. 

    Equipment Financing

    Equipment financing, as the name implies, is loans designed for buying new or used equipment. Eligible businesses can get up to 100% of the equipment financed under the right conditions (strong credit score, revenue, etc.). Equipment loans are also self-securing, which means that the equipment itself will act as collateral for the loan. In the event of a default, the lenders can seize the equipment and use it as payment for the remaining loan balance. 

    Invoice Financing

    Invoice financing, or accounts receivable (A/R) financing, allows Illinois small businesses to borrow against their customers' unpaid accounts receivables. This financing resource requires you to hand over your accounts receivable ledgers to the lenders. In turn, the lenders will take care of the payment collection from your customers.

    After the collection, assuming each invoice has been paid, the lender will take the amount they advanced, plus interest, from the payments, then transfer the remaining balance back to your account.

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    How to Qualify for Illinois Small Business Loans

    Illinois small business loans can come from a lot of sources. In your search for a lender, you may come across two options: banks and alternative (or online) lenders. In some situations, you may better choose one over the others. 

    In general, apply for a loan from banks if:

    • You have a high credit score

    • You’ve been operating for at least two years

    • Your business’s cash flow is more than enough for your monthly financial obligations

    • You want to take advantage of high loan amounts, low rates, and extended repayment periods.

    • You don’t mind the long wait time and extensive documentation requirements

    On the other hand, alternative lenders might be a more suitable choice if:

    • You have a poor credit history

    • You’re a startup

    • You don’t have an established financial track record

    • You don’t mind paying high rates and fees for the financing

    • You’re looking to access cash immediately without the long documentation process

    Ultimately, the decision of which lender to choose ultimately boils down to your business's current credit and financial standing. 

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    FAQs About Small Business Loans

    FAQ
    Do I need collateral?

    The collateral requirement will depend on the loan type and the lender you’ll be working with. Some business loan types like SBA loans, business term loans, and some business lines of credit will require you to present collateral. If you’re working with banks, expect to pledge some assets for additional security.

    However, alternative lenders typically won’t require you to pledge collateral for some loans. For instance, equipment financing is self-securing. That said, the equipment financed will be enough to secure the loan, so you won’t have to pledge other assets. The same goes for invoice financing.

    The best way to know whether you need collateral or not is to ask the lender directly. Not only will they be able to provide more information about the loan products, but they will also be able to walk you through the entire application process.

    What documents do I need to prepare?

    Depending on the lender, you may have to submit several documents to prove your eligibility for the loan. As mentioned, banks typically require a long list of documents, while alternative lenders may require less. 

    Lenders will generally ask you for the following requirements:

    • A copy of your driver’s license

    • Balance sheets

    • Financial statements (personal and business)

    • Income tax returns (personal and business)

    • Income statement

    • Business registration and license

    • Credit report

    • Business plan

    Be sure to ask the lenders what other documents they might need so you can secure them beforehand. The faster you can get those documents to your lender, the faster the loan application process will be.  

    Ready to apply for a Business Loan?