July 2, 2022

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Small Business Loan Options in Nevada

Small Business Loan Options in Nevada

The state of Nevada is a popular place for entrepreneurs to launch small businesses. Not only does the state have a rapidly growing economy, but it is also considered very business-friendly in terms of the ability to set up corporations for asset protection. 

However, as many small business owners learn, it can take money to get started and then to grow. Luckily, there are many small business loan options you may consider for your Nevada-based business. 

How a Small Business Loan Can Help Your Nevada Small Business

Small business loans can help businesses grow in myriad ways. You may use financing to invest in a bigger workforce, create new products, set up an online store, hire a marketing firm or streamline your production process through new equipment. 

Really, there are likely any number of investments that could drive your company forward. How you plan to use a small business loan matters, but just as important is the type of loan you get. That choice can affect your cash flow, credit scores, and ultimately the financial health of your business.

Types of Small Business Loans to Choose From

As an entrepreneur, it is important to know what types of small business loans are out there, and when you may want to consider them. While this isn’t a completely comprehensive list, these are the most popular types of small business financing: 

Term loans

Term loans tend to be a better option for projects for projects that require a predetermined amount of funding. They typically come with monthly payments for 2— 5 years, though some can go as long as 20— 25 years. 

Lines of credit

If you find yourself needing capital every so often, a line of credit may be a good financing option for you. This type of loan gives access to funding when you need it, up to your credit limit. Two major benefits are that you only pay interest on the amount you use, and once you pay what you have used (plus interest), you have access to that financing again. Lines of credit are great for short-term financing and working capital needs.

Business credit cards

Business credit cards can be a good financing option for entrepreneurs if they need capital in a short time frame, have a record of adequate income, and have a good personal and/or business credit scores. Certain business credit cards will also help build business credit.

Vendor Terms

Your suppliers or vendors may offer to extend payment terms. Net-30 terms, for example, gives your business thirty days to pay for the goods you purchased. This can be an easy way to improve cash flow: get what you need to create your product or service, then pay for it out of cash flow. Vendor financing may also help you build business credit, which in turn can help your business qualify for additional financing. 

Crowdfunding 

The great thing about crowdfunding for small businesses is that it provides multiple paths to funding. Through crowdfunding, your business can offer products/rewards in exchange for financial support, equity in exchange for an investment, or you can get a loan from multiple individual lenders. This flexible funding may be available to startups as well as established businesses.

Commercial real estate loans

The use case for a commercial real estate loan is much more specific than some of the others on this list. However, if your project involves commercial real estate, the terms of this type of loan could be very favorable.

Equipment financing or leasing

Another type of financing is equipment financing or leasing. It is exactly what it sounds like; if your business needs to acquire equipment you may be able to use this type of financing to pay for it over time, or you may be able to lease the equipment. Leasing can offer certain tax benefits which is a popular draw for certain businesses. 

Invoice factoring or financing

In order to use invoice factoring or financing you need to be a company that invoices other businesses. Why? Because you will be selling those invoices to another company at a discounted rate so you can get financing quickly. The credit of your customer who owes your business money is much more important than you credit. 

Merchant cash advance

A merchant cash advance is often one of the fastest types of financing your business can get, and good credit typically isn’t required. Here, your past sales (usually through credit and debit cards, or online sales) will be analyzed and, if your business qualifies, you’ll get an advance against future sales. Daily or weekly withdrawals from those future sales will be required to repay the advance. Costs aren’t usually described as an interest rate, though, and can be considerably higher than other loans.

Microloans 

Microloans are smaller loans that may be an attractive option for businesses having trouble getting approved. Typically made by nonprofits who may be more forgiving of credit blemishes, this financing often comes with attractive rates as well as mentoring. The drawback to these loans is that they can be hard to find as many are available in specific geographic areas, and loan amounts aren’t large (typically up to $50000, though some offer less than that). Some microlenders work with new businesses, including startups. 

SBA Loans

The U.S. Small Business Administration offers a variety of programs to help small businesses, and there are more than ten SBA loan programs. They range from 7(a) loans that go up to $5 million, to microloans that cap out at $50,000 but average about $14,000. Most SBA loans are made by participating lenders, and are guaranteed by the SBA. It also makes disaster assistance loans to small businesses in federally declared disaster areas. 

Small Business Loan Options for Nevada

If you want some business loan options for your Nevada small business check out these options:

Lines of credit

Term Loans

Business credit cards 

Commercial real estate loans

Equipment financing and leasing

Invoice financing or factoring

Business cash advance

SBA Loans

What it Takes to Get Approved for a Small Business Loan

If you think you are ready for a small business loan, keep in mind most lenders will evaluate borrowers on these main criteria:

  • Business financials/revenues
  • Credit scores
  • Time in business 
  • Industry

Financials

Have your financial information together and ready to go when you are ready to talk to a lender about getting a small business loan. Lenders want to make sure you meet their minimum income requirements and that your business can afford to pay back the loan. They’ll often require business banking statements to verify revenues, and some will require business tax returns and/or updated financial statements. 

Credit 

A good credit score is an asset when you are looking for small business financing, as it will give you access to more types of financing. Make sure you check your personal and business credit before you start shopping for financing. But even with a lower credit score, you may have options. Instead of a bank loan, you may need to consider microloans, invoice factoring, merchant cash advances, and crowdfunding, all of which are more flexible when it comes to credit scores requirements. 

Time in business

If you have a business over two years old, congratulations. Not only have you made it this far, but you are in a better position to get financing. Obviously, there are many other different factors that can affect that statement, but for most part, a business that has been around longer will have a better chance of getting funding compared to a younger company (under 2 years in business).

Industry

You may have great qualifications but find your business unable to qualify because of your industry. Lenders may have their preferences when it comes to the types of businesses they will lend to. Industry is usually indicated with an SIC or NAICS code, and that information may appear on your business credit reports. 

How to Choose the Right Loan for Your Nevada Small Business

Even if you know what type of loan you want for your small business it can be hard to know which financial institution, non-profit, or company has the best loan for your business. When you are looking at your loan options, you will want want to consider:

  1. The amount you need to borrow,
  2. How quickly you’ll be able to pay it back (i.e., short-term versus long-term),
  3. When you need the money,
  4. How you’ll use the funds (loan purposes),
  5. What the financing will cost, and how that will affect your profits.

There’s no single option that will work for each business, and the sooner you start looking into financing, the more time you’ll have to compare offers. Trying to get financing when you need it asap may end up costing more in the long run.

Small Business Grants for Nevada

Aa an entrepreneur, you have probably heard about small business grants and are really excited about them. After all, if you get a grant you don’t have to pay those funds back, and that means no payments to make.  

But small business grants shouldn’t be your only focus when looking for financing, and here are several reasons why:

  1. Grants tend to be highly competitive, so there is no guarantee you will get the money. 
  2. The process for applying and interviewing for some small business grants can be lengthy; if you need a loan next month, there’s a good chance you won’t land most grants that quickly. 
  3. They offer a specific amount of funding that you may still need to supplement with additional financing.

That being said, if you come across a small business grant that looks like a great fit and you have the time to apply, do so! Extra cash to speed up a project or get more equipment for your small business is always a good thing. 

The State of Nevada lists several grant resources on their website at Business.nv.gov. Don’t limit your search just to grants available to Nevada businesses, but that can be a good place to start. 

Additional Resources for Nevada Small Businesses

The State of Nevada offers several different business resources on their website under the Department of Business & Industry. You can check out their FAQ section, video library, startup guide, resource directory, and more. You’ll also find pandemic relief resources for small businesses.

The Nevada Small Business Development Center is an SBA resource partner that provides free and low-cost help to small businesses across the state. It has full-service locations in several Nevada cities, including Las Vegas, Ely and Reno, offering free mentoring and low-cost training, plus you can use the resources on their website to get advice and help. 

The Nevada SBA is a government organization designed to help small businesses. They have a number of resource partners including SCORE, Women’s Business Centers, and Boots to Business for veteran business owners and their spouses. They provide local help along with information on funding and securing government contracts. If you want help with your business, the website of the U.S. Small Business Administration is a great place to start.

This article was originally written on February 22, 2022.

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