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Pennsylvania Small Business Loans

Small businesses make up 99.6% of all Pennsylvania-based businesses. Here, 1 million small companies employ over 2.5 million workers, - and the state offers valuable support for business owners through widely-available small business loans. If you are an entrepreneur looking for additional...

Pennsylvania Small Business Loans
Tetiana Sitiugina-Babiuk
Financial Sector Specialist and Content Strategist

There are several local small business loan options around for entrepreneurs in Pennsylvania, with loan amounts ranging from $1,200 to $250,000. Many local lenders are keen to help people with special circumstances, so make sure to do some research on possible benefits available to you. For example, if you are a woman struggling financially and looking to start a business to lift your family out of poverty, consider mentioning your background when applying for a small business loan in Pennsylvania.

Top Pennsylvania Small Business Loan Options

Below, you will find a list of local loan providers within Pennsylvania, along with the benefits of each loan, the loan amounts, rates, and any other useful features. These include banks, NGOs, and government institutions.

1. Pennsylvania Industrial Development Authority

PIDA offers low-interest business loans that are less expensive than bank loans. PIDA’s terms and loan amount ranges from less than $100,000 for capital purposes, and the loan amounts get bigger if the purpose is for machinery (up to $1.5 million) or construction (up to $2.25 million). The repayment period goes from three years to 15 years for the respective fields. PIDA can be a bit strict when it comes to giving out loans, so you’ll need sufficient collateral to qualify. PIDA has a 2% fixed interest rate for fifteen years or a 1% fixed rate for seven years.

2. Small Diverse Business Capital Access Program

The Small Diverse Business Capital Access Program (SDBCA) target market is entrepreneurs from minority groups. You can have less than 100 employees to qualify.

The maximum loan amount depends on what loan you're applying for. If you're applying for a line of credit, the amount will be up to $100,000, whereas if you're applying for a term loan, the amount will be up to $200,000. To start, you’ll have to get certified via the Pennsylvania Department of General Services as a minority group. SDBCA’s interest rate is 2% for the duration of the loan of small business owners.

3. Freedom Credit Union

Freedom Credit Union has been around for quite a while. Credit unions offer better rates, fees, and extra services than banks do. The catch is that you’ll have to be a member of the Freedom Credit Union.

Freedom Credit Union gives you three options, including term loans, business credit cards, lines of credit, real estate, as well as business vehicle loans. Freedom Credit Unions are easy since they don’t reject your application so sternly as many banks would. Credit cards for business purposes hold a high value so that you can make the kind of purchases that your business needs to succeed.

4. Mid Penn Bank

Mid Penn Bank is great at working with smaller businesses to accompany their needs.

Mid Penn Bank specializes in agricultural loans, which means that if you're a farmer in Pennsylvania, you're in luck! The maximum loan is $2 million, and the interest rate is 3.75% for business owners or 2.79% for NGOs. The repayment is for two years, and no collateral is needed for PPP members.

5. Community First Fund and FINANTA

In 2020, FINANTA merged with Community First Fund, a Pennsylvania CDFI or Community Development Financial Institution. Community First Fund is an NGO dedicated to supporting development of affordable housing, creating educational opportunities, and providing financial assistance to job-creating businesses.

Applying for a loan from the Community First Fund will be highly beneficial for you if you're from a certain previously disadvantaged group, since most of their loans are given to finance these groups. If you’re investing in your community, there are also programs you can use. Loan amounts are less than $50,000 for startups. The interest rate is merely 1%, and there are no payments necessary for the first 10 months. This renowned NGO also provides training for entrepreneurs.

Top Online Pennsylvania Small Business Loan Options

Online business loans have become more popular over the last decade as banks have receded from giving out loans to small businesses. Online lenders often provide easier and faster access to small business loans than banks do but at higher rates. Businesses should consider online loans if they get stuck at the bank. Here are the top providers of online business loans and why.

1. Fundbox - Best for Lines of Credit

This online fin-tech company provides lines of credit and small business loans to Pennsylvania-based entrepreneurs with no guarantees required. Through Fundbox, you can receive a quick and flexible line of credit up to $100,000, - and having this financial resource can prove useful for short-term financing needs, such as unexpected cash shortages or stocking up.

The company has quick turn-around times, low minimum credit score requirements, and no hidden fees, so it’s easy to see why Fundbox is recommended above other online lending options.

The Bottom Line

Keep in mind, however, that to receive a line of credit from Fundbox, you will need to have been in business for three months or more, have an average annual revenue of $25,000 or more, and have a personal credit score of no less than 500. Once you get approved, you can expect to see the needed funds in your bank account as soon as the following business day.

Try Fundbox

Learn more about Fundbox in our comprehensive review.

2. Fundera - Best for Startup Loans

Fundera is a loan hub that not only connects you to the most affordable loans from banks across the country but is also fast and convenient. In addition, Fundera’s personal advisors are available to help business owners with the online application process, so, if you aren’t sure where to start, give them a call.

When applying for a Pennsylvania small business loan through Fundera, you will need much less supporting documentation as compared to conventional landers, and you can expect a much faster approval process. The maximum loan amount available through this lender is $600,000, with repayments spread over a five-year period. The payment system will be set up right away, which means you can better plan your cash flow and budget.

The Bottom Line

However, keep in mind that while Fundera provides a higher loan amount, it will usually require collateral.

Try Fundera

Learn more about Fundera in our comprehensive review.

3. Ondeck - Best for Commercial Mortgage

Ondeck is another online Pennsylvania small business loan provider that might be an excellent option for a younger company without a long track record.

The maximum term loan amount offered by Ondeck is $250,000, with fixed monthly payment rates, which can prove convenient for planning the cash flow in advance. While the maximum maturity period of 18 months can be somewhat discouraging for businesses looking for longer repayment opportunities, the company provides additional discounts for prepayment. This means that you will be able to lower your rates if you pay sooner than expected.

Try Ondeck

Learn more about Ondeck in our comprehensive review.

Additional Pennsylvania Small Business Financial Resources

Beyond the commercial loan programs and the online lenders mentioned above, Pennsylvania also provides additional financial resources such as government offers or small business grants. The grants listed below include state grants, local grants, as well as national grants.

Other Resources for Pennsylvania Small Businesses

Beyond financial assistance, Pennsylvania also provides resources like access to coaching, mentorship, and networking with other business owners. The resources have been listed below:

  • SBA’s website will show you if you can qualify for perks because you're a minority and how to go about it. You can visit the SBA website.
  • Pennsylvania Department of General Services website will show you the certain perks you’ll receive when you have a diverse workforce, and this website helps you create a diverse workforce.

How to Prepare for a Pennsylvania Small Business Loan

Here are the steps that you need to take to ensure that you’re in the best position to qualify for an affordable loan in Pennsylvania:

  • Register your business. This is the first important step. Registering your business means that you can buy or sell your services or products legally.
  • Consult a lawyer, accountant, and insurance agent. They’ll help you with the legal side of things.
  • You need to turn your idea into a well-thought-out business plan. This is where you will have to strategize and figure out the logistics, do your market research, and figure out all the costs involved in operating your business, as well as how you’ll advertise your business and what you’ll pay employees.
  • You need to name your business. You’ll have to make sure that you’re not stealing any other business name, and you’ll have to trademark it.
  • You can also improve your credit score. Improving your credit score helps when applying for a loan so that you’ll be accepted more easily.

The Bottom Line

The best small business loan for a Pennsylvania-based business depends on what your needs are. If you have bad credit, you’ll want an option that is more lenient with this. If you want to have a bigger loan, or you want a longer repayment package or a lower interest rate, then you’ll have to look for the things that are most important to you as a business owner and choose a loan that suits you.

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About the Author

Tetiana Sitiugina-Babiuk

Tetiana Sitiugina-Babiuk

Financial Sector Specialist and Content Strategist

Independent writer, content strategist, and financial sector specialist. Tatiana has an extensive experience in working with financial institutions such as Bank of Canada and Risk Management unit at FinDev Canada. She holds an MA in Financial Risk Management from the University of Toronto.

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