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Commerce in the state of Maryland is made up of 99.5% small businesses. Half of all employees in the state, from Baltimore to Annapolis, work for small businesses. So it’s important that those business owners have access to working capital that helps them keep those companies going strong.

Small Business Loans for Maryland Business Owners

Entrepreneurs don’t always have the cash flow to purchase what they need to keep running. In your business, would you be able to replace a piece of equipment like a computer or company vehicle with cash? If not, you’re far from alone.

Small business financing solutions like the ones we’ll discuss below can give you the peace of mind of knowing that you can cover any expense that arises no matter what’s in your bank account.

Options for Small Business Loans in Maryland

Each of the following business financing solutions is ideal for specific situations. Decide which is right for you.

Coronavirus Pandemic Loans

In addition to federal COVID-19 emergency relief loan funds designed to help businesses nationwide recover from financial loss caused by the coronavirus pandemic, including the Paycheck Protection Program (PPP) and the Economic Injury Disaster Loans (EIDL), there were also Maryland small business COVID programs offered by the Maryland Department of Commerce and other entities.

Note that these programs may no longer be available. 

Bank Loans

Banks, credit unions, and online lenders offer small business loans with competitive rates and longer terms to businesses with excellent credit.

SBA Loans

The U.S. Small Business Administration (SBA) offers low-interest loans that can be used for a variety of purposes. For more information on the various loan programs, visit SBA.gov.

Lines of Credit

When you need working capital, you sometimes don’t need it all at once. That’s where a line of credit can be useful: you are approved for a certain amount, which you can borrow from and pay back, then borrow from again.

Equipment Financing

If you use expensive equipment in your Maryland business, an equipment loan is worth exploring. Even if you don’t have great credit, you may still qualify for lower interest rates because the equipment you’re buying acts as your collateral for the loan.

Short-Term Loan

Even if you have bad credit, there are financing options. Short-term loans typically have to be paid back within a few months or a year and may have higher interest rates.

Credit Cards

Using business credit cards to make purchases for your company, especially a card that lets you rack up points to redeem for rewards, may be a smart move for your business. Some do have high interest rates, so be mindful of paying your balance off before those fees kick in.

How to Qualify for a Maryland Small Business Loan

There are several factors that lenders look at to determine eligibility for financial assistance. If you run a startup, you may not qualify for some options, like a bank or SBA loan, because those usually want borrowers to have been in business for at least two years.

Your credit will also be considered: the higher your personal and/or business credit scores, the better the offers you’ll get. Learn how to establish business credit so that you expand your options.

Lenders may also look at your annual revenues and whether you already have loans taken out. Essentially, they will determine how much of a risk you present to them in terms of your ability to repay a loan.

How to Apply for a Maryland Small Business Loan

Before you apply for a loan, review the specifics with the lender you’re applying with. Some may require just a five-minute application, while others, like the SBA or banks, may have more involved processes that require you to provide your business plan and/or financial statements and tax returns.

There are business resources like the Maryland Small Business Development Centers and the Maryland Women’s Business Centers that can provide you with technical assistance, such as helping you create a business plan or apply for business loans.

When applying, regardless of what kind of financing you’re applying for, you’ll be asked to provide information about your company, including how long it’s been in business, its annual revenues, and address. You may also need to give details like your Social Security number.

Once you’ve been approved, you’ll be presented with loan options, including interest rate and repayment terms. If you agree to these, you’ll sign the loan documents, and then funds will be deposited into your business bank account in as little as one day.

Uses for Maryland Small Business Loans

Unless your business loan specifies what you must use it for, such as with equipment loans, you can use it for a variety of purposes related to your business.

Many small business owners use financing to expand their business, such as leasing a second location and renovating it. They might use a loan to hire employees or buy larger quantities of inventory. They might use the funds to buy equipment, or simply to have working capital available when they need it.
Whatever your need, Nav’s got great financing options to help you.

This article was originally written on July 12, 2021.

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Ask Gareth Shaw: ‘I’m scared I’ll get rejected for credit card because of mistakes I made in the past’

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‘Credit-builder’ cards can be used to demonstrate that you are a responsible borrower

Answer: Well done to you for getting back on your financial feet. Climbing your way out of debt is a marathon – it takes sacrifices and planning, so you’ve taken some really important steps in your financial journey.

The good news is that the negative information – the records of missed payments, defaults and even county court judgments – won’t stay on your credit report forever. Details of your late payments can be viewed for six years after they were settled. Searches and rejections of credit typically disappear after 12 months. So this dark cloud won’t hang over you forever.

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Before we talk about applying for credit again, there are steps you can take to improve your credit health. Firstly, you should review your credit reports and make sure there are no errors that could be holding your score back. You can get your credit report for free from each of the three credit reference agencies – TransUnion, Equifax and Experian – and can ask them to investigate errors. Lenders and credit reference agencies have 28 days to respond to disputes.

Registering to vote by getting on the electoral roll can boost your credit score, while you may even be able to add the record of your monthly rent payments to your credit score by asking your landlord to report rental payments to firms like The Rental Exchange, CreditLadder or Canopy.

Experian has launched a new tool that allows you to share information about your banking habits and subscriptions – information which is not traditionally factored into your credit score – in order to increase your score. That means paying your council tax or even paying for Netflix and Amazon Prime could give your score a boost.

If you still want a credit card, your choice is likely to be limited to a particular set of cards designed for people with poor or ‘thin’ credit histories. These are known as ‘credit-builder’ cards, or sometimes ‘bad credit’ cards.

These cards have higher interest rates compared to the most competitive products in the market, to reflect the risk that a lender is taking in by providing credit to someone with a history of repayment problems. You can expect to find an APR of around 29 per cent. They also have lower limits, so when you apply, don’t be surprised to find that the lender will initially only give you £250 to £500.

However, these cards can be used to demonstrate that you are a responsible borrower, can repay on time and stay within your credit limit.

Here’s the golden rule – avoid borrowing money on these credit cards. Purchases tend to be interest-free for 55 days, after which you’ll be charged a considerable amount of interest. So limit the use of these cards, and when you do use them, try to pay them off in full. If you don’t pay on time, you will lose any promotional offer, be hit with a fee and your provider will report your missed payment to the credit reference agencies, reversing any good work you might have done. Set up a direct debit to ensure that your minimum payments are met in advance of the credit card payment date.

When you apply, use an eligibility checker first. This will ask for some basic information and carry out a ‘soft search’ on your credit file, returning a list of cards and the probability of your application being successful. That would be a helpful guide to find a card that is likely to accept you.

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