The Best Business Loan & Financing Resources For Connecticut Small Businesses
Connecticut, like its sister Northeast corridor state New Jersey, is a major thoroughfare between the region’s megalopolises. Whether you’re trying to capture some of that traffic or are serving Connecticut’s own towns and cities, there are tons of ways to finance your small business.
Below, we’ll look at some of the financial options available to enterprising Connecticutians looking to start or expand their businesses.
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The Best Online Business Lenders For Connecticut Businesses
Connecticut’s dense population and small geographic profile mean you’re usually not too far away from a traditional business lender. However, digital lenders do offer some advantages over banks, particularly for borrowers with poor credit or who need an immediate cash infusion.
While the rates offered by online lenders are usually higher, they have more flexible lending standards and shorter application processes. There are a huge number of them, however, so sorting through them can be a bit of a chore.
Here are a few recommendations if it’s your first time in the market.
Credit scores can be a catch-22 for businesses; in order to repair your credit, you have to get credit. Luckily, lenders like Fundbox make it a bit easier to sidestep that conundrum.
Fundbox doesn’t have any hard credit requirements, they do want to see that your business does at least $50K/year in revenue. They’ll assess your borrower-worthiness based on a number of other factors which you can read about in our review.
Fundbox offers lines of credit and invoice factoring.
As easy way to avoid having to do a lot of comparisons yourself is to work with a company like Fundera. Fundera doesn’t originate their own loans. Instead, they maintain a network of affiliates that you can apply to with a single application. It’s a great way to save time if it’s your first time in the alternative lending market.
Amex Merchant Financing
If your business accepts American Express cards at point of sale, you can take advantage of Amex’s Merchant Financing program. These are short-term loans with flat fees, meaning they’re paid back quickly and don’t accumulate interest in the traditional sense. Instead, Amex will quote you a flat fee (which is usually the amount you borrow plus a percentage of that amount).
Term lengths are available in 6, 12, or 24-month versions, with early payoff incentives.
If you’re just starting out, you won’t have the business history and revenue stream necessary to qualify for many business loans. You can make an end run around that Catch-22 by applying for a personal loan that can be used for business expenses.
Upstart’s loans are a good fit for entrepreneurs with good credit who need less than $50,000. You’ll have a nice chunk of time to pay off the loan as well.
Like Fundera, Lendio is more of a lending platform than a lender. With a single application, you can tap their entire network of lenders, saving yourself a lot of time in the process.
If you have poor credit but your business is well-established, Credibly is worth considering. They offer both short and medium-term loans up to $400,000. Just be aware they’re not the cheapest option out there.
Connecticut Banks & Credit Unions
Just because online lenders are new and shiny doesn’t mean they’re the best option for your business. If you’re looking for the best rates on business loans, that usually means dealing with a traditional bank or credit union. In contrast, expect a longer application process, and one that you may have to conduct in person at a physical branch (there are exceptions).
Often the best place to start looking is with a lending institution with which you already have accounts. This has two advantages: they already have some of your financial records, which can make the process easier, and you’re a known quantity to them, which can make approval more likely.
You’ll need stellar credit, but some of the best rates can be found at big national banks with a presence in Connecticut.
Chase branches are quite common in Connecticut, particularly in the southwest near the New York Metro area. Despite being the nation’s biggest bank, Chase is very traditional when it comes to business loans; you’ll need to apply in person.
• Must have excellent credit (high 600s)
• Must have access to a Chase Bank branch
|Read our Chase Bank review|
Bank Of America
Bank of America Financial Centers are well-dispersed throughout Connecticut, though a little more sparsely in the east. Their loan process is a little more modern and flexible than many of the other large institutions.
|Line of credit borrower requirements:
• Must have been in business at least 2 years.
• Must have a personal credit score of 670 or above.
• Must have revenue > $200,000 for unsecured products, or greater than $250,00 for secured products.
|Read our Bank of America review|
TD Bank is a good option for East Coast states like Connecticut that want the perks of a big bank without necessarily having to deal with the Big Four. You can find TD Bank in most of Connecticut’s metro areas, and along the I-95 corridor.
• Must have been in business for 2 years
• Must have excellent credit, 680 or above
|Read our TD Bank review|
Some borrowers may prefer to not deal with for-profit lenders at all and instead work with a credit union. Credit unions are chartered to return value to their members, so the best credit unions may offer rates better than what you’d find at a comparable bank. Not all credit unions offer business loans, however, so you may have to settle for personal loans if you go this route.
Some of the more accessible credit unions in Connecticut include:
- Connecticut State Employees Credit Union
- American Eagle Financial Credit Union
- Charter Oak Federal Credit Union
- Sikorsky Financial Credit Union
- Connex Credit Union
Small Business Grants In Connecticut
In a perfect world, why would anyone get a loan when you can get free money in the form of grants? Grants are a great way to finance your business debt-free, but actually getting them is a very time-consuming process, and one that is highly competitive.
For some general advice on where to seek them, check out our grant feature.
Some state-specific grants to check out include those from:
- Connecticut Center for Advanced Technology, Inc: Based in East Hartford, the CCAT is a non-profit organization that offers grants to manufacturers in southern New England.
- Connecticut Innovations: An organization offering a number of grants to companies engaged in research, innovative technology, or that have a high potential for growth.
- Small Business Express Program: Offers grants to small businesses with under 100 employees, is based in or planning to relocate to Connecticut, and will create new jobs. Preference is given to companies involved in exporting.
Resources For Startups In Connecticut
Connecticut has a vested interest in helping businesses get off the ground. If you’re just starting out, there are a number of resources you can turn to for information, advice and sometimes material assistance.
Remember that the federal Small Business Administration is also a resource for businesses throughout the United States, with their loan-guarantee programs being of particular interest.
Additional resources for Connecticutians include:
- Connecticut State Department of Economic And Community Development: A great central resource for information about Connecticut’s business industries, as well as funding opportunities.
- Connecticut Innovations: Mentioned above, this venture capital organization can be a great resource for businesses that fit their profile.
- Connecticut Center for Advanced Technology, Inc: Also mentioned above, this organization is focused on supporting manufacturing within the state.
- Connecticut Small Business Development Center: Provides counseling services to businesses within the state. It works cooperatively with the SBA.
What To Consider When Choosing A Lender
Remember that a loan is a product that you are buying, not charity. And like any other product, you have to evaluate it to make sure it fits your needs and goals. Weeding out lenders who aren’t going to give you a deal that will work for you is important.
How can you go about this? Here are some factors to consider:
- Your Industry: Some lenders specialize in lending to a specific industry. Others can’t or won’t lend to certain industries. If they can’t write you a loan, cross them off your list.
- Borrowing Amount: If you need $5,000, you’ll be looking at different lenders than if you need $5 million. Choose the right tool for the job.
- Rates & Fees: How much is it going to cost you? Are the lender’s rates in line with the industry standard? Do they tell you what additional fees they charge, or do they hide them?
- Time To Funding: Do you need the money right away or next quarter? Choose a lender that can work with your timetable.
- Term Lengths: You’ll want to know how quickly you have to pay the money you’re borrowing back. Make sure you can afford the loan over the long-term.
- The Type Of Expense Being Financed: Some financial products are limited in what they can be used for. Do you need a lump sum of cash? Or do you need a line of credit that you can draw upon periodically?
- Collateral: Secured loans and lines of credit require some form of collateral, usually in the form of an asset, real estate, or cash deposit. If you don’t have collateral to put it, you’ll want to look at unsecured loans.
Whether you’re running a lobster shack or a cutting edge tech company, there are numerous ways to finance your small business in Connecticut. Hopefully, you now have a better sense of the options available to you as you grow and expand.
Just starting out? Check out our resources for startups.