virginia

Virginia Small Business Loans Options

The state of Virginia was home to more than 740,000 SBS—according to a 2019 small business profile. This state gets top ratings for business growth thanks to its world-class universities, well-educated workforce, and low business regulation level. In this article, we explore the top small business loan options in Virgina.

At a glance In 2017, around 143,000 loans of under $100,000 (valued at $2.1billion) were made available by lending institutions in Virginia, reporting under the Community Reinvestment Act (Source: FFIEC). Virginia also had 1.5 million employees in small business, which amounted to 47.2% of its total workforce, and it boasted 6,127 small business exporters. It would be safe to say that we consider Virginia to be the best state to get a small business loan.

Top 6 Virginia Small Business Loan Options

Most of the top local small business funding options come from state entities. The following are your best six options for how to obtain a small business loan in Virginia:

1. Virginia Economic Development Loan Fund

The Virginia Economic Development Loan Fund (EDLF) funding comes from the Virginia Small Business Financing Authority (VSBFA), the government's arm for business and economic development.

EDLF is a state-funded loan program for SB owners. Their loans serve as a 'backstop' to fill any financing gap left after an SB owner has received a bank loan. The SB owner will then have two loans, one from his/her bank and another from VSBFA.

EDLF loans start at $50,000 with a maximum repayment period of 10 years. VSBFA will require personal guarantees from those who have 20% or more stake in the business and place a UCC lien on its assets.

To start the process, contact VSBFA and also find a participating bank lender. Eligible applicants should meet the following criteria:

  • Not have more than $10 million in annual revenues, have fewer than 250 employees, and a net worth not exceeding $2 million
  • Currently, conduct business in Virginia or be relocating to Virginia
  • Create or retain jobs in Virginia
  • Be in good standing with the State Corporation Commission and other state licensing authorities
  • Provide own contribution of at least 10%

2. Virginia SWaM Business Microloan Fund

In Virginia, SWaM stands for; Small, Women-owned, and Minority-Owned Business (SWaM). 

Also run by the VSBFA, the Virginia SWaM Business Microloan Fund does not require a bank lender's participation. The purpose of this loan fund is to provide SB owners with lesser loan amounts than what a bank would entertain.

SWaM microloans go to a maximum of $25,000, with a repayment term of up to four years. A business can use them for working capital, renovations, or financing of equipment and machinery. They cannot be used to refinance existing debt, construction, or financing real estate not occupied by its owner.

To apply, refer to the SWaM Microloan application. Eligibility requirements for SWaM loans are that you should:

  • Not have more than $10 million in annual revenues, have fewer than 250 employees, and a net worth not exceeding $2 million
  • Currently, conduct business in Virginia 
  • Be in good standing with the State Corporation Commission and other state licensing authorities
  • Have been operating for two years or more

3. Virginia SSBCI Cash Collateral Program

Banks typically expect one to put up collateral to cover most, if not all, of the total amount of loans that they provide. Something that is not possible for some SBS that are low on assets. The State Small Business Credit Initiative (SSBCI) Cash Collateral Program, also run by VSBFA, assists in these instances.

Should you be negotiating for a loan with a participating bank that requires more collateral than you can provide, this program will help you make up the shortfall. SSBCI will provide up to a maximum of 40% of an initial loan amount up to $500,000.

This cash support is available for the first five years of a term loan and the first three of a line of credit. To take part in this initiative, you will need to approach a participating bank which, in turn, will contact VSBFA should cash collateral support be required.

4. Atlantic Union Bank

Atlantic Union Bank is another option for getting small business loans in Virginia. Headquartered in Richmond, Atlantic Union Bank specializes in Small Business Administration (SBA) guaranteed loans.

These loans have lower interest rates, more extended repayment periods, and other aspects of assisting small businesses. In addition to SBA loans, Atlantic Union Bank also provides lines of credit, installment loans, commercial real estate loans, equipment financing, and business credit cards.

Should you struggle to obtain financing due to a lack of credit history or track record build-up, find an Atlantic Union Bank branch near you to apply for a loan. Should you qualify, you will find that interest rates are some of the lowest available.

5. Virginia Credit Union

So far, we have looked at loan options that will cost you quite a few dollars extra in interest repayments. Should you be seeking low interest rates but have had no luck with local banks, it may be worth trying a credit union. A union is a membership-based cooperative or nonprofit organization.

Credit unions offer lower interest rates on loans and are prepared to take on more risk than banks. Virginia Credit Union is one of the largest in the state and is open to anyone who lives and works in Richmond or other Virginia cities. 

To follow this option, you will need to determine if you qualify for membership in the credit union. Virginia Credit Union offers term loans, lines of credit, commercial mortgages, equipment loans, and business credit cards. Fixed and variable interest rates are available. 

6. Virginia Community Capital

Virginia Community Capital (VCC) is a community development financial institution (CDFI) that is nonprofit. It provides financing and free advisory services to small business owners throughout the state.

Among their many loan products—from $50,000 to $5 million—are business acquisition loans, equipment loans, commercial real estate loans, lines of credit, SBA loans, and debt refinance loans. As a nonprofit, they can take on more risk than a regular bank, and they don't have a minimum credit score requirement.

VCC will require various documentation, including tax returns, financial projections, a business plan, and financial statements to assess your application for financing. To begin an application, complete their online small business loan questionnaire.

A VCC staff member will then contact you and explain the documentation requirements. The entire process usually takes 45 days from receipt of a complete loan application until the loan pays out.

The table that follows summarizes the above.

Provider

Features

Virginia Economic Development Loan Fund

  • Repayment up to 10 years

Virginia SWaM Business Microloan Fund

  • No bank lender involved

Virginia SSBCI Cash Collateral Program

  • Collateral shortfall covered

Atlantic Union Bank

  • Lower interest rates
  • Longer repayment period
  • More finance products

Virginia Credit Union

  • Lower interest rates
  • Take on more risk

Virginia Community Capital

  • More finance products
  • Take on more risk
  • No minimum credit score required

Top Online Virginia Small Business Loan Options

You might also consider online business loans. These are nationally available alongside the other local small business loan possibilities. Let's take a look at some of the best online business loans for Virginia small businesses:

1. Fundbox

Providing business lines of credit of up to $100,000, Fundbox is an online financial technology company. To qualify for a Fundbox line of credit, you need to have been in business for at least three months, have a minimum annual revenue average of $25,000, and a personal credit score of 500.

Their funding turn-around time is also quick, with approval for a line of credit taking minutes and the funds being made available in your bank account on the following business day. To join up, you need only create a free Fundbox account, provide some information about your business, and link your business bank account and accounting software with them.

A business line of credit is always suitable for those unexpected cash flow shortages and other short-term needs, such as stocking up. Fundbox will use your business's revenue history as a tool for approving your SB for funding. 

2. BlueVine

Currently focusing on PPP (Payment Protection Program) loans, BlueVine is an online business lender who also does lines of credit up to $250,000 and invoice factoring up to $5 million. Qualifying criteria for BlueVine are slightly more stringent than Fundbox but still much more straightforward than banks or nonprofits.

To consider financing for your business, BlueVine requires you to be six months in business, show at least $100,000 in annual business revenue, and have a credit score of 600. That said, lower credit is okay if you're applying for a credit line based on the value of outstanding invoices. 

Having met these requirements, the application process with BlueVine is quick and easy. You will generally know the outcome of your application on the day you apply, and you can have the funds available in your bank account within a few hours. 

3. Funding Circle

Funding Circle originated to revolutionize an outdated lending system and build a better deal for small businesses—in their words. With one six-minute application, they undertake to help you find the most suitable financing options for your needs, from lines of credit to term loans, merchant cash advances, and even Small Business Administration (SBA) loans.

Funding Circle provides loans of up to $500,000. With them, you receive a combination of speed and flexibility. Once an online application—plus documentation to support your loan request—has been submitted, it takes about three days for the funds to reach your bank account. 

Compared to Fundbox and BlueVine, Funding Circle is somewhat more selective. Your business must have been operating for at least two years, and the owner/s must have a minimum personal credit score of 620. 

Since they are more selective with their borrower profile, their interest rates are lower, nearer to what you'd get with a bank or a nonprofit lender.

Additional Virginia Small Business Financial Resources

Small business loans are an excellent way of securing finance capital, but they come at a cost. You should also take a look at small business grants for which you might qualify. These grants are competitive and time-consuming, but if you're able to secure one, it will amount to your business's free money.

There are many small business grants available in Virginia. To see if you qualify, please click here. The following are the top ones:

1. Virginia Economic Development Incentive Grant

The Virginia Economic Development Incentive Grant program (VEDIG) encourages and assists companies in locating significant headquarters, administrative, or service sector operations in Virginia.

Doing the above will create new employment opportunities, but there must be vigorous and realistic competition between Virginia and another state or country for attracting the project.

The grant's size varies based on the number of jobs created, wage levels, and the return-on-investment for the state.

2. Virginia Small Business Jobs Grant

Businesses in manufacturing, research and development, distribution centers, B2B information technology, and inbound call centers can qualify for a grant from VSBFA.

To be eligible, you must average less than $3 million in annual revenue, have 50 or fewer employees, and create at least five new full-time jobs in Virginia.

3. Virginia Investment Performance Grant

The Virginia Investment Performance Grant (VIP) is in place for manufacturers and research and development companies. They must have created advanced technology or leveraged technology to improve operations or productivity. 

The state Secretary of Commerce and Trade will select the amount of the grant. Eligibility depends on significant capital investment in property, so it is best for medium-sized businesses.

Other Resources for Virginia Small Businesses

Here are some helpful sites to visit if you are looking for other SB resources available in Virginia:

How to Prepare for a Virginia Small Business Loan

You will need to attend to the following before proceeding with your Virginia Small Business Loan application:

  • Improve Your Credit Score
  • Register Your Business
  • Prepare a Business Plan
  • Strengthen Business Revenues
  • Open a Business Bank Account 

The Bottom Line

When it comes down to small business operations and funding, there is no shortage of assistance and options in the great state of Virginia. Besides the many choices available to you, the online loan option can be applied for 24/7.