Additional Alabama Small Business Financial Resources
If banks and financial institutions turn you down, you still have a couple of options within the state. Keep in mind that companies must meet size standards to be eligible for Alabama small business loans. Size standards usually regard annual income, number of employees, and can also vary by industry. Here are some of the main financial resources available to Alabama small businesses:
7(a) Loan Program
It’s a multi-purpose business program that can help you get equipment, inventory, and working capital. SBA’s guarantees on this kind of loan can reach up to $5million, or 75% of your total loan amount. For loans under $150,000, guarantees can make up for 85% of the original loan amount. You can also choose between other specialized loan programs, such as the SBA Express Program, which offers faster processing for amounts under $350,000.
This program offers loans up to $50,000 for equipment, supplies, furniture, and more. Borrowers who wouldn’t usually be eligible for loans in a regular institution can find support here. However, it can’t be used to pay for debts or buy real estate. This program also requires borrowers to undertake business-skill training before being accepted. This loan must be repaid within six years.
8(a) Business Development Program
This program was designed to promote the inclusion of those in social or economic disadvantage based on ethnicity. Small businesses accepted into this program receive support for nine years. Participants can enroll for up to $4million for services and acquisition of inventory, equipment, etc. Businesses enrolled in this program can also access the 7(a) Prequalification and Loan programs.
Other Resources for Alabama Small Businesses
The state and local governments of Alabama have a few more options for fledgling businesses. Further than money, they can offer guidance and support through four central departments:
Alabama Department of Commerce operates under direction of the Governor and focuses on the economic and workforce development within the state. As such, the organization provides local small businesses with the resources and information they need to succeed, from financial assistance to regular updates on regulatory issues. The organization also partners with numerous other groups throughout the state, all dedicated to support the growth and development of local small businesses.
The Alabama SBDC provides state-based entrepreneurs and small businesses with much-needed support and expert advice. For example, the organization conducts regular webinars and hosts training sessions to help entrepreneurs learn how to get their business on the road to success. It also provides free confidential one-on-one assistance from a trusted SBDC Business Advisors.
Microbusinesses are the largest segment of small businesses in the United States, and Alabama Microenterprise Network works to provide support and information to businesses and startups operating within this segment.
This statewide nonprofit association works to promote public awareness on the positive impact that microbusinesses have on the Alabama state in particular and the country in general. In addition, it serves as a trusted resource for information related to microbusinesses.
The Alabama Department of Economic and Community Affairs is dedicated to creating a positive impact on Alabama communities by offering grant programs and funding opportunities for local initiatives that communities would not be able to afford on their own. This includes addressing critical infrastructure needs like sewer, water, and broadband; building new trails and recreational features; assisting with energy efficiency; and more.
How to Prepare for an Alabama Small Business Loan
If you want to know how to get a small business loan in Alabama, you should watch for the borrower requirements, as they may vary from one financial institution to another. Still, there are vital factors to consider in preparing for a loan application.
For example, you should provide transparent information about your business goals. In addition, while not all lenders will ask for credit score reports, it’s advisable to improve yours because it improves your loan options. Here’s a shortlist of what you must have on hand before applying for a small business loan:
- A business plan. A business plan is a detailed document describing your business objectives and how you are going to achieve them. In a nutshell, it presents a written roadmap from financial, marketing, and operational standpoints.
- A loan checklist. Every lender and loan product comes with a specific checklist, which outlines the documents you need to provide to successfully apply for a loan. These documents can include your bank statements, personal identification, and more.
- Borrower Information Form – 1919. When applying for an SBA loan, you need to fill out a special Borrower Information Form - 1919 and submit it to the SBA-participating lender.
- Personal Financial Statement Form. A personal financial statement presents a snapshot of our personal financial position at a certain point in time. It lists your liabilities, your assets, and your net worth.
The state of Alabama is rich in financial and non-financial support for small businesses of all sizes, revenues, and credit scores. In addition, the state’s business environment is incredibly inclusive, with specialized assistance programs available for minority-owned businesses. From small business loans from Alabama-based banks and other traditional lenders, to business grants and mentorship from non-profit organizations, there is a variety of assistance available for those who search.