How to Get a Small Business Loan in Kansas

Launching a business in Kansas can be a thrilling and rewarding journey, but it can also be daunting. One of the most significant obstacles that small business owners in Kansas encounter is obtaining the necessary funds to launch or expand their business. Thankfully, there are several lenders in Kansas that provide small business loans.

Prior to submitting an application for a small business loan in Kansas, it’s essential to comprehend how lenders assess loan requests. Lenders’ profits are influenced by whether borrowers repay loans or not, and as a result, they examine a variety of factors while evaluating loan applications.

There are six main steps to getting a business loan in Kansas:

1. Learn what lenders look for.

2. Decide what type of financing you need.

3. Find out how to get approved.

4. Gather documentation.

5. Find a lender.

6. Fill out the application.

This article explores what it takes to get a business loan in Kansas and how Nav can help.

Learn What Lenders Look for in Kansas Small Businesses

Securing a business loan is a critical step for many small businesses in Kansas. However, before you apply for a loan, it’s essential to understand what lenders are looking for in a borrower. By understanding the lender’s evaluation criteria, you can increase your chances of getting approved for a loan.

Lenders consider several factors when evaluating small business loan applications, such as cash flow, personal and business credit scores, collateral, time in business, and industry. However, the specific evaluation criteria may vary depending on the lender.

Time in Business

As a rule of thumb, lenders prefer to work with small businesses that have been in operation for at least two years. However, some online lenders may require only one year in business. If you’re a startup without revenues, it can be challenging to qualify for a term loan or line of credit, but you could consider a business credit card or crowdfunding.

Don’t overlook trade credit from your suppliers, which is one of the most underused types of business credit available to businesses.

Personal and Business Credit Scores

Both your personal and business credit scores will play a significant role in determining your creditworthiness. Before you apply for a business loan, it’s vital to understand your credit profile. A strong credit score can improve your chances of securing favorable loan terms.

Cash Flow

Lenders need to verify that you have the financial capability to repay your loan, and your cash flow is a key indicator of your ability to make timely payments. Most lenders will review at least three months of your business bank statements to determine your cash flow situation.

Collateral

Traditional lenders, such as banks, credit unions, and SBA lenders, will require collateral for most small business loans. While SBA loans cannot be declined solely based on the absence of collateral, offering tangible items such as real estate or equipment can increase your chances of securing favorable loan terms.

Unsecured loans that don’t require collateral are rare and typically reserved for lenders’ most eligible customers. Even if a loan doesn’t require collateral, the lender may place a UCC lien or require a personal guarantee.

Industry

Some industries are easier to finance than others, and different lenders may have preferences that influence their financing decisions. It’s crucial to understand the lender’s industry restrictions before applying for a loan. Some lenders publish their industry restrictions on their websites, which you can review before submitting your application.

Understanding what lenders look for when evaluating small business loans can help you prepare a robust application and increase your chances of approval. By considering your cash flow, time in business, credit scores, collateral, and industry, you can improve your chances of securing a small business loan in Kansas.

Decide What Type of Loan or Financing You Need

When it comes to small business financing in Kansas, there are a variety of options to choose from. It’s important to choose the right type of loan or financing that suits your business needs. Here are some common types of financing options available to small business owners in Kansas:

Small Business Administration (SBA) Loans:

The SBA provides a range of loan programs to assist small businesses in Kansas. These loans can be used to purchase equipment, inventory, or real estate or to fund working capital. SBA loans are known for their favorable terms and low-interest rates, but the application process can be time-consuming.

Traditional Bank Loans:

Traditional bank loans are another popular option for small business owners in Kansas. These loans usually offer competitive interest rates and longer repayment terms, but the application process can be strict and may require extensive documentation.

Microloans:

Microloans are smaller loans designed to help small businesses with limited funding needs. In Kansas, there are several microlenders available such as Justine PETERSEN, a nonprofit that provides microloans to entrepreneurs.

Online Loans:

Online lenders have become increasingly popular in recent years, offering quick and easy access to funding. These lenders usually have less strict requirements and offer faster processing times, but often have higher interest rates and fees.

Line of Credit:

A line of credit allows businesses to borrow money as needed up to a certain credit limit. This type of financing can be useful for managing cash flow or funding unexpected expenses. In Kansas, banks like Capitol Federal, Emprise Bank and Arvest Bank offer lines of credit to small business owners.

Business Cash Advances:

Business cash advances are an option for businesses that need fast funding. This type of financing is based on the business’s future credit card sales and may have higher interest rates and fees.

Cash Flow Loans:

Cash flow loans are a type of financing that are based on a business’s cash flow. These loans can be used to cover working capital, payroll, or other expenses. Some options in Kansas include Main Street Launch, a community development financial institution that provides cash flow loans to small businesses.

Business Credit Cards:

Business credit cards can be a useful tool for managing expenses and building credit. These cards usually offer rewards programs and can be easier to qualify for than traditional loans. Banks such as Commerce Bank, Meritrust Credit Union, and Fidelity Bank in Kansas offer business credit cards.

Vendor Financing:

Vendor financing allows businesses to purchase goods or services on credit from their vendors. This type of financing can be useful for managing cash flow and may offer more favorable terms than traditional loans. A local example is Home Lumber & Supply, which offers financing options to businesses in the construction industry.

Choosing the right type of financing for your small business in Kansas can be overwhelming. Consider the amount of funding you need, the repayment terms, interest rates, fees, and other factors to determine which type of financing is right for you.

Find Out How to Get Approved

Once you’ve identified the type of loan or financing that best suits your business needs, it’s time to focus on getting approved. Here are some tips for increasing your chances of approval:

Review your credit reports and scores

Your credit profile is a crucial factor in securing financing for your small business. Before you apply for any loan or financing, you should review your credit reports from the major credit bureaus, such as Experian, Equifax, and TransUnion. This will give you a clear understanding of your creditworthiness and allow you to identify any errors or inaccuracies that may impact your ability to secure financing.

Prepare a solid business plan

Lenders want to know that you have a well-thought-out plan for using the financing you receive to grow your business. Be sure to include a detailed description of your business and its operations, as well as your plans for marketing, sales, and growth. Your business plan should also include financial projections, such as cash flow statements and profit and loss statements, that demonstrate your ability to repay the loan or financing.

Gather all necessary documentation

Different types of financing require different types of documentation, but generally speaking, you should be prepared to provide the following:

• Business tax returns
• Personal tax returns
• Financial statements (such as balance sheets and income statements)
• Business licenses and permits
• Proof of insurance
• Bank statements
• Business plan
• Articles of incorporation
• Build relationships with lenders

One of the best ways to increase your chances of approval is to build relationships with lenders. Attend local business events and network with lenders in your community. This can help you learn more about the lending process and what lenders are looking for in a borrower.

Be persistent

Getting approved for small business financing can be a lengthy and challenging process, but don’t give up. Be persistent in your efforts to secure financing and be open to different types of financing options. If you’re turned down for one type of financing, explore other options and keep trying.

In Kansas, you can also explore resources such as the Kansas Small Business Development Center (KSBDC) and the Kansas Department of Commerce. These organizations offer business planning and financing assistance, as well as access to funding programs specifically for Kansas small businesses. Additionally, the Kansas City Federal Reserve Bank provides useful information on small business financing and access to credit.

Gather Documents

Gathering the necessary documents is a critical step in the small business loan application process. The following documents are commonly requested by lenders and can help speed up the application process:

Business Plan: 

A detailed business plan that outlines your company’s goals, strategies, and financial projections.

Financial Statements:

You’ll need to provide your lender with income statements, balance sheets, and cash flow statements for the past two years. These documents help lenders assess your company’s financial health and repayment ability.

Personal and Business Tax Returns:

Lenders may require copies of your personal and business tax returns for the past two years to verify your income and ensure that you are in good standing with the IRS.

Legal Documents:

You may be required to provide copies of your business’s legal documents, including your business license, articles of incorporation, and any contracts or agreements you have with other parties.

Bank Statements:

Lenders may ask for copies of your business’s bank statements for the past few months to verify your cash flow and check for any red flags.

Credit Reports:

Your lender will likely request copies of your personal and business credit reports to assess your creditworthiness and determine the terms of your loan.

It’s essential to ensure that all of your documentation is complete and up-to-date before submitting your loan application. This can help increase your chances of approval and reduce the time it takes to receive your funds.

In Kansas, there are several resources available to help small business owners gather and organize their documentation. For example, the Kansas Small Business Development Center offers free business counseling services and can help you develop a strong loan application package. The Center can also provide guidance on how to improve your financial statements and business plan to increase your chances of approval.

Choose a Lender

Once you have a clear understanding of what type of loan you need and have gathered all the necessary documents, it’s time to start shopping for a lender. As a small business owner in Kansas, you have several options when it comes to choosing a lender. Here are some of the most common types of lenders:

Direct Lenders

Direct lenders are financial institutions that lend money directly to borrowers without any intermediaries involved. These lenders can be banks, credit unions, or online lenders. Direct lenders typically have a straightforward application process and can provide funding relatively quickly. They also tend to have stricter requirements for loan approval, such as a higher credit score and a longer time in business.

Lending Marketplaces

Lending marketplaces are platforms that connect borrowers with multiple lenders. These marketplaces allow borrowers to fill out one application and receive loan offers from multiple lenders, making it easier to compare rates and terms. Lending marketplaces can be especially useful for borrowers with less-than-perfect credit or those who don’t meet the strict requirements of direct lenders. Some popular lending marketplaces include LendingTree, Fundera, and NerdWallet.

Peer-to-Peer (P2P) Lending

Peer-to-peer lending, also known as P2P lending, is a form of lending that connects borrowers with individual investors, bypassing traditional financial institutions. P2P lending platforms like Prosper and LendingClub allow borrowers to create a loan listing and investors to bid on the loan. Once the loan is fully funded, the borrower receives the funds and begins making payments to the investors. P2P lending can be a good option for borrowers who have been turned down by traditional lenders or who need to borrow a smaller amount of money. However, P2P lending can come with higher interest rates and fees than other types of loans.

When choosing a lender, it’s important to consider the lender’s reputation, interest rates and fees, repayment terms, and customer service. You may also want to check if the lender has experience working with businesses in your industry or geographic region. Take the time to compare multiple lenders and read reviews from other borrowers to find the best fit for your small business in Kansas.

Fill Out the Application

Once you’ve gathered the necessary documents and chosen a lender, it’s time to fill out the application. The application process may vary depending on the lender and the type of loan you are applying for. Here are some general tips on how to fill out a small business loan application:

How to Get a Business Loan from a Bank

If you are applying for a traditional bank loan, you will need to fill out a detailed loan application that includes information about your business, your personal finances, and your collateral. Banks typically require a lot of documentation, such as financial statements, tax returns, business plans, and bank statements.

To increase your chances of getting approved for a bank loan, it’s important to have a solid business plan, a good credit score, and collateral. You should also be prepared to provide a personal guarantee, which means you are personally responsible for paying back the loan if your business can’t.

How to Get a Loan to Buy a Business

If you are looking to buy an existing business, you may be able to get a loan specifically designed for this purpose. These loans are often called acquisition loans or business purchase loans.

To get approved for an acquisition loan, you will need to provide detailed information about the business you want to buy, including financial statements, tax returns, and a business plan. You will also need to provide information about your own personal finances and credit history.

How to Get a Business Loan with No Money

Getting a business loan with no money can be challenging, but it’s not impossible. If you don’t have any collateral or cash to put towards the loan, you may need to look into alternative financing options, such as microloans, crowdfunding, or grants.

To get approved for these types of loans, you will need to have a solid business plan and a good credit score. You may also need to provide proof of your business’s revenue and financial stability.

How to Get a Business Loan Without Collateral

If you don’t have collateral to put up for a loan, you may still be able to get approved by providing a personal guarantee or finding a lender that offers unsecured loans.

To get approved for an unsecured loan, you will need to have a good credit score and a solid business plan. You may also need to provide proof of your business’s revenue and financial stability.

How to Get a Business Loan with Bad Credit

Getting a business loan with bad credit can be difficult, but there are lenders that specialize in working with borrowers with less-than-perfect credit.

To get approved for a loan with bad credit, you will need to provide detailed information about your business, including financial statements and a business plan. You may also need to provide collateral or a personal guarantee.

It’s important to shop around and compare lenders to find the best loan options for your business. Don’t be afraid to ask questions and negotiate terms to ensure that you are getting a loan that works for you.

Assisting Small Business Owners Get the Funds Needed with Nav

If you’re a Kansas-based small business owner seeking to acquire a loan, the process can be overwhelming and complicated. Fortunately, Nav is here to help. Nav is a financial health platform that offers a range of resources and tools designed to help small business owners obtain funding.

With Nav, small business owners can find the right lenders and loan products that meet their specific requirements. By providing your business details, you’ll have access to loan options that you’re eligible for before you start the application process, saving you time and effort during your search for lenders.

For small business owners in Kansas, Nav is an indispensable resource for securing the funding needed to grow your business. Nav offers credit monitoring, educational resources, loan options, and business credit reporting to help you navigate the loan application process and improve your chances of obtaining the financing you need to propel your business forward.