The Best Business Loan & Financing Resources For Tennessee Small Businesses

The state of Tennessee has attracted residents and tourists alike throughout the years in cities like Nashville, Pigeon Forge, and Knoxville. The state has also caught the attention of many businesses of all sizes. Large corporations including FedEx, Regal Entertainment Group, and Nissan are headquartered in the state. But it’s not just the big players that call Tennessee home. The state also offers great opportunities for small business owners.

Whether you’re in the planning stages of your business or you’ve launched and you’re ready to grow, there’s one thing every small business owner has in common: the need for capital and resources. While this doesn’t guarantee your success as an entrepreneur, access to capital and other small business resources can certainly increase your odds of owning and operating a thriving business.

But where do you find these resources? In this guide, we’ll review the best resources throughout Tennessee for business owners in all stages. We’ll look at lenders, free and low-cost resources for startups, and small business grants that can give you free — yes, free — money for your business. Ready to launch or take your business to the next level? Keep reading to learn more.

Online Business Lenders For Tennessee Businesses

Why choose an online business lender? “Why not?” would be the better question. Online lending allows you to shop around for loan options and lenders, apply for loans, sign your documents, and receive funding without ever stepping foot into a bank. Online lending is ideal for the busy entrepreneur who wants a fast, streamlined application process. With some lenders, you may even receive your funds as quickly as the next business day.

If you’re in Tennessee, you have many online lending options available to you. Start your search for capital with one of these lenders.

Lendio

Lendio makes it easy to shop for the perfect loan for your small business. With a single application, you can receive and compare offers from multiple lenders. From there, you can choose your loan and get the funds you need in as little as 24 hours.

Lendio has a network of over 75 lending partners ready to loan money to your small business through:

• Small Business Administration Loans: $50,000 to $5 million
• Term Loans: $5,000 to $2 million
• Lines Of Credit: $1,000 to $500,000
• Short-Term Loans: $2,500 to $500,000
• Equipment Financing: $5,000 to $5 million
• Commercial Mortgages: $250,000 to $5 million
• Business Credit Cards: $1,000 to $500,000
• Accounts Receivable Financing: Up to 80% of receivables
• Startup Loans: $500 to $750,000
• Merchant Cash Advances: $5,000 to $200,000

Borrower requirements, repayment terms, and interest rates vary by lender and financial product. Time to funding also varies. Submitting an application through Lendio is free and does not affect your credit. However, if you accept an offer, a hard credit pull may be performed.

SmartBiz

You don’t have to go to your local bank to take advantage of the lowest interest rates and best repayment terms. Small Business Administration (SBA) loans offer competitive rates and terms up to 25 years. While you can apply for SBA loans through traditional lenders, an easier option is using SmartBiz.

SmartBiz has simplified the SBA loan process, making it easier for you to apply for an SBA loan while expediting the time to funding. Through SmartBiz, you have a few options for getting the capital your business needs.

One option is SBA working capital and debt refinancing loans. You can apply for $30,000 to $350,000 with interest rates of 8.25% to 9.25%. Repayment terms are up to 10 years. Funds from these loans can be used for a variety of business purposes, including:

• Equipment & Inventory
• Marketing Programs
• Operating Expenses
• Hiring Employees
• Refinancing Existing Debt

The minimum requirements for this loan program include:

• Time in business of at least 2 years
• U.S. citizen or permanent resident
• Personal credit score of 640 or above
• Cash flow to support loan payments
• No bankruptcies or foreclosures within the last 3 years
• No past defaults on government-backed loans
• No outstanding tax liens

If you need capital to really build or expand your business, an SBA 7(a) commercial real estate loan may be the right choice for you. This loan provides $500,000 to $5 million for refinancing your existing commercial mortgage or purchase commercial space. Loan proceeds can’t be used to purchase investment properties or to fund new construction.

Interest rates for a 7(a) commercial real estate loan are 7% to 8.25%. You may have up to 25 years to repay your loan.

To qualify, you must meet these requirements:

• Time in business of at least 3 years
• U.S. citizen or permanent resident
• Personal credit score of 675 or above
• Cash flow to support loan payments
• No bankruptcies or foreclosures within the last 3 years
• No past defaults on government-backed loans
• No outstanding tax liens
• Property must be at least 51% owner-occupied
• Estimated purchase price must exceed $500,000

If an SBA loan isn’t the right solution for your business, you can also apply for a bank term loan through SmartBiz. Through its bank partners, SmartBiz can help you receive up to $200,000 with interest rates starting at 6.99%. Payments are made monthly over 2- to 5-year terms.

LoanBuilder

Why give the lender control of the repayment terms and borrowing amount of your small business loan? Instead, “build” the perfect loan for your business through LoanBuilder.

LoanBuilder gives you access to $5,000 to $500,000 to use to build and grow your small business. You can use the LoanBuilder Configurator to explore your options and find the loan amount and duration that works for you. Once you’ve submitted all documentation, you could receive funds as quickly as the next business day.

LoanBuilder keeps its fee structure simple. You pay just one set fee for your loan. Fees range from 2.9% to 18.72% of the borrowing amount and are based on creditworthiness. Payments are made weekly over a period of up to 52 weeks.

All borrowers must own a U.S.-based business and must meet these additional minimum requirements:

• Time in business of at least 9 months
• At least $42,000 in annual revenue
• No active bankruptcies
• Personal credit score of 550 or above

OnDeck

OnDeck has helped entrepreneurs grow their small businesses by providing $10 billion in funding. The lender offers two flexible financing options to meet the needs of your business: term loans and lines of credit.

An OnDeck term loan gives you up to $500,000 for your small business expenses. For expenses that yield an immediate return on investment, apply for a short-term loan. You’ll have 3 to 12 months to repay your loan, which can be used for expenses such as:

• Updating your business
• Purchasing inventory
• Launching a marketing campaign
• Hiring seasonal employees

Short-term loans through OnDeck have simple interest rates starting at 9%. This means that you’ll pay a set fee based on your borrowing amount. For example, if your $10,000 loan has a 9% simple interest rate, you’ll pay $900 in interest — or a total of $10,900. Additional fees may apply.

For larger projects, you may receive a long-term loan with repayment terms of 15 to 36 months. These loans are best for:

• Expanding your business
• Purchasing a new location
• Large-scale inventory purchases
• Buying equipment
• Developing a new product

Long-term loans have annual interest rates starting at 9.99%. Additional fees may apply.

To receive either loan option, you must meet these requirements:

• Time in business of at least 1 year
• At least $100,000 in annual revenue
• Personal credit score of at least 600

If you want a more flexible option than OnDeck’s term loans, you may qualify for a line of credit. Your line of credit can be used for any business purpose but is best for covering unexpected expenses and managing gaps in revenue. Lines of credit are available up to $100,000 with APRs starting at 13.99%. Interest only applies to the borrowed amount.

There are no draw fees for using your line of credit. However, you will have to pay a $20 monthly maintenance fee for your account. If you draw at least $5,000 within 5 days of opening your account, this fee is waived for 6 months.

You may qualify for a line of credit if you meet these minimum requirements:

• Time in business of at least 1 year
• At least $100,000 in annual revenue
• Personal credit score of at least 600

Fundbox

Another option for receiving a line of credit is to apply for financing through Fundbox. A big difference between Fundbox and other lenders is that there are no minimum personal credit score requirements.

Instead, Fundbox analyzes the performance of your business when you link your business bank account or accounting software. You may qualify for a credit line of up to $100,000. You can draw funds as needed for emergency expenses, working capital, covering payroll, or other purposes.

Once you’ve made a draw on your account, you’ll have 12 or 24 weeks to repay the lender. Weekly payments are made toward the principal balance  — the borrowed funds — plus a flat fee. Fees start at 4.66% of the drawn amount. If you repay early, you’ll save money because all remaining fees are waived. If you don’t make a draw, no fees will be charged.

To qualify for a Fundbox line of credit, you must meet these requirements:

• Business checking account
• U.S.-based business
• At least $50,000 in annual income
• At least 2 months of activity in supported accounting software OR at least 3 months of transactions in a business bank account

Prosper

Small business loans aren’t your only option for getting much-needed capital for your business. You can also apply for a personal loan to use for business purposes. Why use a personal loan? You can use your personal credit score and income information to qualify. This is ideal if you’re a startup or new business, don’t meet annual revenue requirements, or haven’t yet established a business credit profile.

One lender that specializes in personal loans is Prosper. Prosper offers loans of up to $40,000 to qualified borrowers. Repayment terms are 3 or 5 years and APRs range from 5.99% to 36%.

To qualify for a Prosper personal loan, you must meet these requirements:

• Personal credit score of 640 or above
• Debt-to-income ratio below 50%
• Source of income
• No bankruptcies within the last 12 months
• Less than 5 credit bureau inquiries within the last 6 months
• At least 3 open trades reported on a credit report

Banks, Credit Unions, & Nonprofit Lenders In Tennessee

If you want to take a more traditional route, Tennessee is full of banks, credit unions, and nonprofit lenders ready to distribute funds. The next step is to find the lender that has the right financial solution for your small business. Don’t have your own financial institution? Start your search with these options.

First Tennessee Bank

First Tennessee Bank has served its customers for over 150 years. Today, the bank that got its start in Memphis provides personal and business banking services to residents in cities including Chattanooga, Bristol, Kingsport, and Jackson.

As a small business owner, you can take advantage of services such as:

• SBA 7(a) Loans: Up to $5 million
• SBA 504 Loans: Up to $5 million
• Secured Term Loans: $25,000 to $3 million
• Unsecured Term Loans: $25,000 to $500,000
• Lines Of Credit: $25,000 to $100,000
• Real Estate Loans: Starting at $100,000
• Equipment Leases: Starting at $5,000
• Business Credit Cards
• Accounts Receivable Financing

Borrowers can learn more by phone or email. To apply for business financing, visit your local bank branch.

Eastman Credit Union

If you’d prefer to work with a credit union, one of the largest in Tennessee is Eastman Credit Union. ECU is headquartered in Kingsport and has over 220,000 members in cities including Bristol, Johnson City, and Kingsport.

ECU offers competitive rates on a variety of small business financial products such as:

• Business Lines Of Credit
• Equipment Loans
• Commercial Vehicle Loans
• Construction Loans
• Business Credit Cards
• Commercial Real Estate Loans
• Investment Property Loans
• Church & Organization Loans

To apply, you must be a member of ECU. Becoming a member is easy. You qualify if you:

• Live, work, attend school, worship, or own a business in an eligible area
• Work in the healthcare industry in select counties
• Are employed by ECU’s sponsor companies or contractors
• Have a family member that is an eligible member of ECU

Pathway Lending

Pathway Lending is the largest Community Development Financial Institution (CDFI) in the state of Tennessee. This nonprofit lender serves residents throughout the state by offering products such as:

• Microloans
• Term Loans
• Equipment Loans
• Commercial Real Estate Loans
• Accounts Receivable Financing
• Lines Of Credit

Pathway Lending provides financial solutions for nearly any business need, including debt consolidation, emergencies, equipment and inventory purchases, working capital, real estate, or business acquisitions.

To qualify for financing, the lender considers a number of factors such as your personal credit score and information about your business. To receive the lowest rates, the lender requires:

• Excellent personal credit
• Low debt-to-income ratio
• Long credit history with successful credit lines

However, if you don’t meet these requirements, you may still qualify. All startup and established businesses in the state of Tennessee are invited to apply using the lender’s online applications.

Small Business Grants In Tennessee

Think a small business grant is right for your business? Small business grants certainly have their benefits. After all, it’s free money with no requirement to repay. But the downside is that many small businesses pursue these grants. This means you’ll face a lot of competition … if you even qualify at all. Many grants have very specific requirements, such as being open to businesses in specific industries or businesses owned by women, minorities, or veterans.

As the old saying goes, don’t put all your eggs in one basket. In other words, don’t rely solely on small business grants for the financing you need. However, it never hurts to explore your options, and who knows? You could be the lucky recipient of one of these grants available to business owners in Tennessee.

Launch Tennessee Microgrants Program

If you plan to apply for SBIR/STTR Phase I, Phase II, or Fast-Track awards, you may qualify for a grant through Launch Tennessee. Through this program, you can receive funds to use for grant-writing assistance. You may be eligible for up to $4,000 for Phase I assistance or up to $6,000 for Phase II or Fast-Track assistance.

To qualify for this grant, your business must be referred by a member of the Launch Tennessee network, such as a lead mentor or accredited angel investor. In addition to the referral letter, an application, executive summary, and proof of completion of an approved SBIR/STTR training program are required.

Tennessee Valley Federal Credit Union Idea Leap Grant

The Tennessee Valley Federal Credit Union provides grant opportunities for small business in Tennessee through its Idea Leap Grant program. Through this program, five winners receive grants to grow their small businesses. Winners will receive between $2,500 and $20,000.

To qualify, entrants must meet the following requirements:

• Be at least 18 years old
• Operate a for-profit business in TVFCU’s 13-county community
• Business must be in good standing with the Tennessee Secretary of State or the County Clerk’s Office
• Business must have 2 to 20 employees on its payroll
• Business must not have received bankruptcy protection
• Business must have no judicial liens or attachments
• Entrant must be an authorized agent of the registered business
• Annual revenue can’t exceed $1.5 million
• Business must meet TVFCU Business Services membership criteria

You can learn more about the program and how to apply through the TVFCU website.

FastTrack Job Training Assistance Program

The Tennessee Department of Economic & Community Development offers the FastTrack Training Assistance program which provides grants to new and expanding businesses to support the training of full-time employees. Funding is determined by a number of factors including:

• Amount of company investment
• Wages of new full-time jobs
• Number of new full-time jobs
• Types of skills and knowledge that needs to be obtained
• Location

You can request more information and learn more about the program through the Tennessee Department of Economic & Community Development website.

Loans & Resources For Startups In Tennessee

Starting your own business is exciting but the path to entrepreneurship is often challenging and downright scary! While there’s nothing out there that will fully clear your path to entrepreneurship, having access to the best resources can help you more easily overcome those hurdles you’re bound to encounter. Start your journey with these great resources.

Tennessee Small Business Development Center

The Tennessee Small Business Development Center (TSBDC) provides resources to owners of startups and established businesses. Through TSBDC, you can receive free small business advising about starting your own business or issues your existing business is facing.

TSBDC also offers interactive seminars both online and off. All services are free or low-cost. If you’re unable to find the services you need from TSBDC, the organization can refer you to local and nationwide resources to help you launch or grow your business. A variety of online resources are also available to small business owners.

There are 16 offices located throughout the state of Tennessee in cities including Chattanooga, Memphis, Nashville, Jackson, and Knoxville.

SCORE

Another resource for small business advising is SCORE. Through SCORE, you can receive advice from an expert mentor at absolutely no cost. That isn’t all that SCORE offers, though. You can attend educational workshops and events, or just use SCORE’s online resources such as templates and business guides.

SCORE offices are located throughout the state of Tennessee in cities including Nashville and Memphis.

The Company Lab

If your business is located in southeast Tennessee, The Company Lab can help you get your business off the ground. This startup accelerator offers a variety of resources to startups including:

• Wayfinding Meetings: Meet with a staff advisor to discuss your business idea and figure out the steps to make your dream a reality.
• Expert Advice: You can receive advice from local experts on a variety of business topics, all at no cost.
• Events: Network with other entrepreneurs in the startup community through one of The Company Lab’s regularly-scheduled events.

The Company Lab is located in the city of Chattanooga. You can learn more through the organization’s official website, by phone, or by sending an email.

Launch Tennessee

Launch Tennessee offers a variety of resources and programs to startups and small businesses throughout the state.

You can visit an Entrepreneur Center to take advantage of mentorships, coworking spaces, and other great resources. Entrepreneur Centers are located in six cities throughout Tennessee.

Launch Tennessee also offers Resource Workshops, Mentor Networks, and Technology Transfer Offices. In addition, Launch Tennessee funds microgrants to provide grant-writing assistance to companies applying for SBIR/STTR awards.

What To Consider When Choosing A Lender

You know the financing options open to you, and maybe a few lenders stick out. Now, your next task is to narrow down your lender choices to just one. With so many choices, how do you determine which is the best for you? Start by considering these factors:

Borrower Requirements

Before you submit your loan application, consider how you and your business appear through the lens of the lender. Most lenders approve borrowers with high credit scores, solid debt-to-income ratios, and an established business that’s bringing in steady income. Other lenders — like online alternative lenders — may focus more on the performance of your business, but rates and fees may be much higher.

Take a look at the whole picture before you select your lender. Pull your free credit score, take a look at your credit report, and run a few financials on your business. You can also calculate your DTI ratio to see if you’re a good candidate for business financing … or if most lenders consider you a risk.

Once you have this overview of your business, look for lenders whose qualifications you meet. If an excellent credit score is required but yours is just good, move on to other options. Make sure that you meet all time in business, annual revenue, personal credit score, and business score requirements before hitting “Send” on that application.

Total Cost Of Borrowing

You may go into the loan application process looking for just the lowest interest rate, but there are other factors to consider. For example, one lender may have a lower interest rate but may tack on additional fees that make the overall cost of borrowing much higher.

Of course, you want to aim for a product with a low interest rate, but remember to look out for added fees, such as application fees, origination fees, and account maintenance fees. You want to make sure that you pick a product that your business is able to afford.

Repayment Terms

Consider the repayment terms of each lender. If you’d prefer a monthly payment, lenders that offer weekly payments may not be the best fit. You want to choose a lender that offers a repayment schedule that works best for your business.

Also, keep an eye out for prepayment penalties, which could be a drawback if you plan to pay off your lender as quickly as possible.

Type Of Loan

What type of financing are you seeking for your small business? A lender that specializes in SBA loans won’t be able to help you if you want a revolving form of credit, such as a business credit card or line of credit.

Final Thoughts

Whether you already own a small business or you’re ready to launch, the state of Tennessee has plenty of resources and lenders ready to help your business take off. Just remember that entrepreneurship isn’t a race to the finish. Take the time to create a plan, do your research, and shop around for the best options for your business. Look beyond the short term and make decisions that will help you build a successful, thriving small business in the great state of Tennessee. Good luck!