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Best Virginia Small Business Loans

The state of Virginia earns top rankings in terms of business growth due to its well-educated workforce, world-class universities, and low level of business regulation. This article reviews the top options for Virginia small business loans and grants to consider for your small business.

At a glance In 2017 alone, approximately 143,000 loans below $100,000 were given out by Virginia’s lending institutions, adding up to $2.1 billion in total. Virginia was home to 1.5 million employees working in the field of small business, which made up 47.2% of the state’s total workforce. The state also contained 6,127 small business exporters.

Top 6 Options for a Small Business Loans in Virginia

In the state of Virginia, the majority of the best options for small business funding are offered directly by state entities. As such, below are the best ways for obtaining a small business loan in Virginia.

1. Virginia SSBCI Cash Collateral Program

Usually, banks expect one to put up collateral to cover most or all of the total loan amount that they provide. However, this is often not possible for some small businesses that are low on assets. Luckily, the State Small Business Credit Initiative (SSBCI) Cash Collateral Program can be useful if such a situation arises. 

The Cash Collateral Program is offered directly by VSBFA (Virginia Small Business Financing Authority), a government entity responsible for economic and business development. If you are applying for a loan from a participating bank that requires more collateral than you can possibly provide, the program will compensate you for the shortfall. As such, SSBCI will provide up to 40% of the initial loan amount no more than $500,000.

This collateral support is available for the initial three years for a line of credit and for the first five years for a term loan. To take advantage of the program, you will need to approach a participating bank, which will contact VSBFA on your behalf, should additional cash collateral be required.

2. Virginia Economic Development Loan Fund

Virginia Economic Development Loan Fund (EDLF), presents a state-funded loan program available to small business owners, with funding coming directly from the VSBFA. These loans serve to compensate for any financing still missing after a small business has already received a bank loan. As such, the small business owner will end up having two separate loans: one from his or her bank, and another one - from VSBFA. 

The loan amount offered by EDLF starts at $50,000, and the maximum repayment period available is 10 years. In addition, VSBFA requires personal guarantees from those, whose stake in the business is 20% or more, and places a UCC lien on its assets.

To get started, you need to contact VSBFA and find a participating bank lender. In order to be eligible for funding, you should meet the following requirements:

  • Conduct business in Virginia currently or be relocating to Virginia in the future
  • Create or retain jobs in the state of Virginia
  • Have fewer than 250 employees, no more than $10 million in annual revenues, and net worth less or equal to $2 million
  • Provide own contribution of no less than 10%
  • Be in good standing with the State Corporation Commission and other state licensing authorities

3. Atlantic Union Bank

Atlantic Union Bank presents another option for receiving a small business loan in Virginia. With headquarters located in Richmond, the bank provides Small Business Administration (SBA) guaranteed loans. These loans offer more extended repayment periods, lower interest rates, and other attractive characteristics for assisting small businesses. 

In addition to SBA loans, Atlantic Union Bank also offers installment loans, lines of credit, equipment financing, commercial real estate loans, and business credit cards.

If you are struggling to receive financing due to a lack of a good track record or credit card history, find an Atlantic Union Bank branch in your area and apply for a loan. If you qualify, you will receive some of the lowest interest rates available on the market today.

4. Virginia SWaM Business Microloan Fund

In Virginia, SWaM stands for “Small, Women-owned, and Minority-owned” business. The Virginia SWaM Business Microloan Fund is also run by VSBFA with the purpose to provide SB owners with smaller loans than a bank would typically entertain. As such, the Fund does not require the participation of a bank lender.

The maximum amount for SWaM microloans is $25,000, and the repayment term is up to four years. A business may use these loans for renovations, working capital, or financing of machinery and equipment. However, the loans can’t be used for construction, refinancing existing debt, or financing real estate that is not occupied by its owner.

To apply, fill out the SWaM Microloan application. To be eligible for a SWaM loan, you should: 

  • Conduct business in Virginia 
  • Have been operating for at least two years
  • Have fewer than 250 employees, no more than $10 million in annual revenues, and a net worth less or equal to $2 million
  • Be in good standing with the State Corporation Commission and other state licensing authorities

5. Virginia Credit Union

So far, we have looked at various options for Virginia small business loans, - yet, all of them will cost you quite a bit in interest repayments. If you are looking for lower interest rates, but have no luck with local banks, it may be time to consider using a credit union - a membership-based nonprofit or cooperative organization.

Generally, credit unions are willing to take on more risk than banks and are able to offer lower interest rates on loans. Virginia Credit Union is among the largest in the state and welcomes anyone who lives and works in Richmond or other cities in Virginia.

To apply for a small business loan with Virginia Credit Union, you will need to first determine whether you qualify for membership in the union. If you do, you will be able to apply for term loans, commercial mortgages, lines of credit, equipment loans, and business credit cards. Both variable and fixed interest rates are available.

6. Virginia Community Capital

Virginia Community Capital (VCC) is a non-profit Community Development Financial Institution (CDFI), providing free advisory services and financing to small business owners in the state of Virginia.

Among their numerous loan products ranging from $50,000 to $5 million, are equipment loans, business acquisition loans, lines of credit, commercial real estate loans, debt finance loans, and SBA loans. As a non-profit organization, VCC can take on more risk as compared to a regular bank, so they don’t have a specific requirement for a minimum credit score.

However, VCC does ask for various supporting documentation when assessing your application for financing. Some of the required documents include financial projections, a business plan, tax returns, and financial statements. To start an application, complete VCC’s online small business loan questionnaire.

A VCC staff member will then reach out to you and explain the requirements for supporting documentation. The complete process usually takes 45 days from submitting a full loan application until the loan pays out.

Top Online Virginia Small Business Loan Options

In addition to applying for a standard small business loan, you might also consider an online loan. These are available nationwide, along with other local financing alternatives. Below are some of the top online options for small business loans in Virginia.

1. Fundbox - Best for Lines Of Credit  

Fundbox presents an online fintech company offering business lines of credit for up to $100,000. To qualify for a line of credit from the provider, you need to have an average annual revenue of at least $25,000, have been in business for at least three months, and have a personal credit score of at least 500.

The funding turn-around time with Fundbox is also quick, with a line of credit approval taking only minutes. Having a business line of credit is always useful for short-term needs like stocking up or unexpected cash shortages. Upon approval, you can expect to have the required funds available in your bank account on the next business day. 

To sign up, you need to register for a free Fundbox account, share some details about your business, and link your business accounting software and bank account with them. In order to approve your SB for funding, Fundbox will take a look at the revenue history of your business.

2. Fora Financial - Best for Merchant Cash Advances

While it’s only been on the market since 2008, Fora Financial has quickly become a reputable fintech lender offering easy access to funding for thousands of small business owners. The online company offers short-term loans and merchant cash advances that can range between $5,000 and $500,000 and can be ideal for businesses operating in a range of industries, from construction to hospitality.

Fora Financial provides both a speedy and flexible loan application process. After you submit your one-page online application along with the supporting documentation, you can expect to hear back about the decision within 24 hours. Should you get approved, you will see the funds in your bank account in approximately three days. 

To apply, your company must have been operating for six months or more and earn at least $12,000 annually. In addition, it is important that you don’t have any currently open or unsettled bankruptcies.

Fora Financial

3. BlueVine - Best for Invoice Factoring

BlueVine is an online business lender that currently focuses on Payment Protection Program (PPP) loans and offers invoice factoring for up to $5 million and lines of credit up for to $250,000. While the qualifying criteria for BlueVine are somewhat stricter than those for Fundbox, the requirements are still much more straightforward as compared to banks or nonprofits.

To qualify for business financing with BlueVine, you need to have a credit score of at least 600, be in business for six months, and demonstrate at least $100,000 in annual business revenue. However, lower credit score is accepted if you are applying for a line of credit based on the value of outstanding invoices.

If you meet these minimal criteria, the application process with BlueVine will be fast and simple. Most of the time, you will know the outcome of your application on the same day you apply, and you can even expect to see the funds in your bank account within several hours.

Additional Virginia Small Business Financial Resources

Small business loans in Virginia are a great way of securing much-needed funds, but they come at a cost. Before considering getting a loan, make sure to take a look at several small business grants for which you might qualify. While these grants might be time-consuming and competitive, securing one will provide your business with some free money.

Below are the top small business grants available in Virginia:

1. Virginia Economic Development Incentive Grant

The Virginia Economic Development Incentive Grant program (VEDIG) was established to encourage and assist companies in locating important headquarters, service, or administrative sector operations in the state of Virginia.

By doing so, the program aims to create additional employment opportunities. However, it comes with serious competition between Virginia and another country or state for attracting the project. The size of the grant varies depending on the wage levels, the number of jobs created, and the state’s return-on-investment.

2. Virginia Small Business Jobs Grant

Businesses working in the fields of research and development, manufacturing, B2B information technology, distribution centers, and inbound call centers can apply for the Virginia Small Business Jobs Grant from VSBFA. To apply, you must have a maximum of 50 employees, have an average annual revenue below $3 million, and create five or more new full-time job positions in Virginia.

3. Virginia Investment Performance Grant

The Virginia Investment Performance (VIP) Grant was created to support research and development companies, as well as manufacturers. To qualify for the grant, you must have created new technology or leveraged the existing one in order to improve productivity or operations.

Eligibility also depends on capital investment in property, so it is optimal for medium-sized businesses. If you win the grant, the exact amount will be determined by the state Secretary of Commerce and Trade.

How to Prepare for a Virginia Small Business Loan

Before applying for a small business loan in Virginia, make sure to focus on the following preparation steps:

1. Improve Your Credit Score

Most lenders will consider your personal credit score when reviewing the financing application. To give your credit score a boost, make sure to catch up on any past-due accounts and not miss any payments in the future. Even if you are not behind on your bills, having high balances on your credit cards or lines of credit can hurt your credit score, so make sure to pay them down and maintain a low balance relative to your credit limit.

2. Register Your Business

No matter what type of business structure you follow, there are some common steps for registering a business in Virginia:

  • Come up with a business name
  • Select a registered agent, or an entity that accepts tax and other legal documents on behalf of your business
  • Get an Employer Identification Number (EIN) that is assigned by the Internal Revenue Service to identify your business for tax purposes
  • File formation documents

3. Prepare a Business Plan

A good business plan will help you through starting and managing your business, - and it will also be required for most loan applications. In your business plan, you can include information like your company description, overall market analysis, the organization and management of your company, your sales and marketing plan, and more.

4. Strengthen Business Revenues

Creating and following a thorough business plan will help you to grow business revenues over time. Generally, there are four ways to take your revenues to the next level:

  • Increase the number of customers
  • Increase the frequency of transactions per customer
  • Increase the average transaction size
  • Raise your prices

5. Open a Business Bank Account 

Finally, you will need to open a business bank account, where the lender can deposit their funds. In addition, a dedicated bank account will help you to track your business finances more efficiently and promote better bookkeeping practices.

Final Words

Without a doubt, Virginia presents one of the best states for starting and growing a business, with its numerous assistance and funding options aimed at supporting small business operations. In addition to various lenders offering small business loans in Virginia of all types, online applications are available 24/7, and qualification requirements are often simple and straightforward. So, if you are a small business owner in the state of Virginia, there should be nothing holding you back from applying for a loan or grant!