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Alabama Small Business Loans

There are 390,000 small businesses in operation in Alabama, generating over 750,000 jobs. This makes Alabama a vibrant state for small businesses, new and old. In this article, you’ll read about what you need to do to set up or expand your business in Alabama.

At a glance Alabama small business owners occasionally need a little push to get them going or a boost to help them retain their momentum. That’s where an Alabama small business loan can come in handy. Whether you hope to open an additional location, hire some employees, or expand your product or services, you’ll need money. On this page, we will explore the top small business loans that can provide you with the funds you need to get your dream Alabama business off the ground.

Top 3 Alabama Small Business Loan Options

Here is our choice of the top 3 small business lenders in Alabama. 

1. OnDeck

OnDeck’s loans and credits are only relevant to businesses that have been in operation for more than one year, have 100,000 yearly revenue, and above 600 in a personal credit score. 

OnDeck provides term loans of up to $250,000, which must be repaid within 18 months. Interest rates will vary according to the strength of your business. OnDeck’s line of credit offers between $6,000 and $100,000, and must be repaid within a year.

While term loans offer a one-time cash sum, credit lines offer revolving credit reset after every withdrawal. Term loans are perfect for large purchases and business expansion. In contrast, the line of credit is better for payroll, inventory purchases, and other recurrent expenses.

2. Lendio 

Lendio is a platform that aggregates loans and credit opportunities. Lendio’s network of over 300 funders includes some of the biggest names, such as Blue Vine, Amex, and Kabbage. 

Lendio doesn’t provide loans directly, but it can help you find the loan that best suits your needs. It requires less paperwork credit score clearances than banks. You can also have access to more significant funds and longer-term repayment schedules. 

Lendio’s borrower requirements are more flexible than other lenders. You can become eligible for an SBA loan with as little as six months in business. Your credit score should be 550, which is lower than the average. Additionally, your business should have at least $10,000 of monthly revenue. Fees and APRs may vary according to the loan amount

3. Breakout Capital

Breakout Capital is a lender company providing financial solutions for small businesses. Short-term loans boast transparency and flexibility, with no unclear rules or high taxes. 

FactorAdvantage is a unique service that combines invoice factoring with a regular business loan. Breakout Capital also differs from others by assessing your needs thoroughly. If it doesn’t have a suitable service for your business, it recommends another lender. 

Your company must have been in operation for at least one year to access a Breakout Capital small business loan. You must also have a personal credit score of 600 or above. Finally, your company must have a monthly revenue of at least $10,000. Your business doesn’t need to be profitable to be eligible for a loan. 

Summary Table

Financial Institution

Amount of Loan

Interest Rate

Requirements

OnDeck

Between $6,000 and $250,000, depending on the type of loan

Can range between 10.99% and 35.2%

* be established for at least two years

* have at least $100,000 of yearly revenue

* personal credit score of at least 600

Lendio

Up to $1million

It varies, according to the funding partner

*Six months in business

*Credit score of 550

*At least $10,000 of monthly revenue

Breakout Capital

Up to $250,000

From 1.25%

*At least one year in business

*Credit score of 600 or above;

*At least $10,000 of monthly revenue

Top 3 Online Alabama Small Business Loan Options

An online loan is a straightforward and fast way to boost your business. This kind of loan is common to a diverse range of financial institutions, not only banks. Online lenders offer many credit solutions, like lines of credit, installment loans, and more. In this section, you’ll learn more about the most popular options out there. 

1. LoanBuilder

LoanBuilder, also known as PayPal Loan, is an online lending service offered by PayPal. It provides short-term loans with simple and straightforward rules, and it requests less documentation than most competitors. It also has lower credit score standards and no interest rates. Instead, you pay a fixed fee, spread throughout the repayments. 

Your business must be operating for at least nine months, and your credit score must be 620 or above. LoanBuilder’s yearly revenue requirement is $42,000, which is much lower than the average $100,000. It has a long list of ineligible industries, like environmental organizations, gambling businesses, civic and social organizations, human rights organizations, etc. 

The prequalification process has five steps. It takes about ten minutes to complete. First, you must provide contact information, business location, business details, and finally, verify your identity. After approval, you choose the terms of your loan and sign an electronic contract. You’ll then receive your funds.

2. Fundbox

Fundbox is one of the leading online loan providers. It requires fewer documents, and you only need a credit score above 500. Fundbox has some of the lowest small business loan requirements. Lower requirements can be a crucial advantage for B2B or B2C businesses, small businesses, and even freelancers. 

The company also offers revolving lines of credit to be repaid in 12 or 24 weeks. Fundbox offers loans up to $150,000, which might not be enough, depending on your needs. Also, fees and taxes can be higher when compared with other institutions. Still, if you don’t qualify for other loans, a loan from Fundbox may be a great solution.

Its invoice financing service can fund 100% of your invoice value, against the average of 80% or 90% of most financial institutions. Interest rates range between 4.66% and 8.9% for 12 weeks and 24 weeks repayments, respectively.

3. P2Binvestor

P2Binvestor is a peer-to-peer lending company with no credit score requirements. Instead, loans are asset-backed, meaning it considers your invoice and inventory values before deciding your loan amount. 

Your business’s yearly revenue is another important criterion: it must make at least $500,000 a year to qualify. However, some industries are ineligible for any P2Binvestor loan: construction, real estate, cannabis, and medical insurance billing. 

The amount of your loan will depend on the value of the assets you are backing it with. P2Binvestor usually offers between 70% and 80% of your receivables. For inventories, the amount ranges from 20% to 50%. The borrowing amount can go from $250 to $10million. Despite not having credit score requirements, some borrowers can have a hard time meeting the yearly revenue standards required to access a loan. 

Additional Alabama Small Business Financial Resources

If banks and financial institutions turn you down, you still have a couple of options in the state of Alabama. Companies must meet size standards to be eligible for Alabama small business loans. Size standards usually regard annual income, number of employees and can also vary by industry. An SBA doesn’t offer credit itself. Instead, they guarantee part of your loan with a bank to increase your chances of approval. Here are some of the main ones:

  • 7(a) Loan Program

It’s a multi-purpose business program that can help you get equipment, inventory, and working capital. SBA’s guarantees on this kind of loan can reach up to $5million, or 75% of your total loan amount. For loans under $150,000, guarantees can make up for 85% of the original loan amount. You can also choose between other specialized loan programs, such as the SBA Express Program, which offers faster processing for amounts under $350,000. 

  • Microloan Program

This program offers loans up to $50,000 for equipment, supplies, furniture, and more. Borrowers who wouldn’t usually be eligible for loans in a regular institution can find support here. However, it can’t be used to pay for debts or buy real estate. This program also requires borrowers to undertake business-skill training before being accepted. This loan must be repaid within six years. 

  • 8(a) Business Development Program

This program was designed to promote the inclusion of those in social or economic disadvantage based on ethnicity. Small businesses accepted into this program receive support for nine years. Participants can enroll for up to $4million for services and acquisition of inventory, equipment, etc. Businesses enrolled in this program can also access the 7(a) Prequalification and Loan programs. 

Other Resources for Alabama Small Businesses

The state and local governments of Alabama have a few more options for fledgling businesses. Further than money, they can offer guidance and support through four central departments: 

  • Alabama Department of Commerce: it’s responsible for promoting rural development.

  • Alabama Small Business Development Network: It connects organizations and programs.

  • Alabama Microenterprise Network: This group provides support and information to small businesses and startups. 

  • Alabama Department of Economic and Community Affairs (ADECA): State department responsible for most small business programs. 

How to Prepare for an Alabama Small Business Loan

If you want to know how to get a small business loan in Alabama, you should watch for the borrower requirements. They may vary from one financial institution to another. Still, there are vital factors to consider in preparing for a loan application. You should provide transparent information about your business goals. Not all lenders will ask for credit score reports, but it’s advisable to improve yours because it improves your loan options. Here’s a shortlist of what you must have:

  • A business plan

  • A loan checklist

  • Borrower Information Form – 1919

  • Personal Financial Statement Form

Bottom Line

Investments are flowing free in the Heart of Dixie. Financial options serve Alabama small business loans with gusto. There are options for all sizes, revenues, credit scores, and even without credit score requirements. Alabama’s business environment is inclusive, with programs for minorities. If you plan to set up your company, consider government-backed options, like Alabama small business grants or some of those mentioned above.