The State of Michigan is the 6th largest state in landmass and the 10th most populous state in the U.S., with over 10 million people. The capital of Michigan is Lansing, but the largest city is Detroit, which is among the nation’s most populous and largest metropolitan economies.

Although Michigan has developed a diverse economy, it is widely known as the center of the U.S. auto industry, with three of the country’s major automakers residing within the state. Michigan is also known for tourism due to its abundance of natural resources that accommodate various types of tourism and feed many different small businesses in the industry. The lower half of the state is a center for manufacturing, agriculture, and the tech industry.

Michigan is known as a “university research corridor,” as it’s home to major institutions like the University of Michigan, Michigan State University, and Wayne State University. These establishments are essential to the state’s economy, with Michigan’s public universities attracting more than $1.5B in research and development grants each year. The state has the third-highest number of engineering graduates annually in the country. Michigan’s workforce is well-educated and highly skilled, making it an attractive location for new businesses. 

Even with all the positive aspects of Michigan’s economy, small business owners still face many challenges when searching for business financing, primarily through traditional banks or credit unions. Traditional lenders often have stringent guidelines, credit requirements, mountains or paperwork, and limited business loan products to offer. That’s where AdvancePoint can come in to help.

How to Get a Business Loan in Michigan?

AdvancePoint has a business financing marketplace full of a variety of alternative loan programs for small businesses. Let’s explore the ten most popular business financing options.

The 10 Best Small Business Financing Options for Michigan Small Businesses

1. Long-Term Business Loans for Michigan Small Businesses

Long term small business loans are small business loans with a duration of greater than two years. Businesses are offered a fixed amount of upfront and charged principal & interest. Unlike a business line, a business owner cannot draw money as you go with a long term loan. Typically, long term business lending is for business expansion and growth or to finance large long term projects.

Product Overview

Rates: Interest rates starting at 5.50% or treasury index plus 1% to 2.5% 

Terms: 2 to 10 years

Fees: Origination fees range from 0% to 3%

Payment: Monthly or Bi-Weekly

Credit Standards: Good to excellent preferred. All types considered.

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2. Business Lines of Credit for Michigan Small Businesses

Business lines of credit are open revolving lines of credit. This type of financing allows businesses to draw funds when needed on-demand or to make purchases—a business line charges a principal & interest rate. Business lines of credit do have a credit limit that cannot be exceeded without approval and is not open-ended forever and require renewal either semi-annually or annually to be extended. 

Product Overview

Rates: 5.50% interest rates or treasury index plus 1% to 2.5%

Terms: Open revolving line

Fees: Origination fees ranging from 0% to 3% 

Payment: Monthly, Bi-Weekly or Weekly

Credit Standards: Good to excellent preferred. All types considered.

3. Small Business Credit Cards for Michigan Small Businesses

Business credit cards are open revolving credit lines that charge a principal & interest rate with a limit. A card is issued that can be used for making payments or purchases. Businesses utilize business credit cards in conjunction with other small business financing products. The primary use of this financial product is for the purchase of small items for the business.

Product Overview

Rates: Introductory rates starting at 0% up to 28.99% principal & interest

Terms: Open revolving line with a  limit 

Fees: $0 to $500 annual fees

Payment: Flexible monthly

Credit Standards: Must have good to excellent and deep history

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4. Short Term Small Business Loans for Michigan Small Business

Short term business loans are defined as loans that are typically repaid within 6 to 18 months. This small business funding features a lump sum offered up front with a fixed payback amount calculated using a factor rate over a short term of time. Rates are not principal & interest, but a “factor rate,” that costs more than traditional loans. Most businesses choose short term business loans when they do not qualify for traditional business loans. Short term small business loans charge more for costs, and the payments are more frequent to compensate for the higher risks business lenders take in offering this product. These loans are popular with small businesses because of the reduced documentation requirements and credit tolerances that are laxer than traditional loans.

Product Overview

Rates: Factor rates range from 1.09% up to 1.45%

Terms: 6 to 18 months in duration (typically 12 months or less)

Fees: 0% to 5% origination fees

Payments: Weekly, Bi-Weekly and in some cases daily Monday-Friday

Credit Standards: All types considered 

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5. Business Cash Advance for Michigan Small Business

Business Cash Advances (BCA) is also known as the Purchase of Future Sales Agreement that advances future sales at a discount to a business. The business is responsible for paying back a fixed payback amount known as a specified amount, which is higher than the amount that was advanced to the company. This difference between the advance amount and the payback amount is called the “Factor Rate or cost,” which is a fixed cost. This is not principal & interest costs. The advance is repaid by taking a fixed percentage of future overall deposits called the specified percentage. The payments are collected by an ACH fixed daily or weekly payment deducted from a business account based on the specified percentage of future sales. At the end of every month, reconciliation can occur. If the fixed payments are taken are more than the set future percentage of sales, a business owner can request a refund back to the business for overpayment so that the set specified percentage of sales collected for the business matches the revenue volumes. Repayment continues until the payback amount is paid back in full. There is no term limit with advances as the fixed payback percentage ever changes due to fluctuating revenue.

Product Overview

Rates: Factor rates range from 1.09% up to 1.45% 

Terms: No term limits. Payments continue until paid in full based on specified 

percentage collection method and are dependent on future revenues

Fees: Origination fees that range 0% to 5% 

Payment: Weekly or daily Monday-Friday fixed ACH

Credit Standards: Poor to excellent accepted. All types considered.

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6. Merchant Cash Advance for Michigan Small Businesses

A Merchant Cash Advance (MCA) is also known as a Purchase of Future Sales Agreement that operates very similarly to BCA’s, but the most significant difference is the repayment process, which is connected to the future credit card revenues instead of overall sales. MCA’s take a set percentage of future credit card sales at the time of batch of credit cards until the advance is paid back in full. Businesses find this valuable when they have fluctuating revenues and don’t want to be locked into a fixed payment that could negatively impact cash flow or margins of profit if revenues decline or fluctuate.

Product Overview

Rate: Factor rates that range from 1.09% up to 1.45% 

Terms: No term limits (payoff depends on future credit card sales)

Fees: Origination fees range from 0% to 3%

Payment: Set fixed percentage of future credit card revenues

Credit Standards: All types considered from poor, fair, good, or excellent.

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7. Equipment Financing for Michigan Small Businesses

Philadelphia area businesses that use equipment to operate their business often turn to equipment financing for the purchase of machinery. This type of funding uses the equipment as collateral. Business owners must have very good to excellent credit, but the good news is that limited paperwork is necessary to get approved. 

Product Overview

Rate: Factor rate ranging from 1.09% up to 1.45%

Terms: 2 to 7 years

Fees: Origination fees range from 0% to 3% 

Payment: Weekly or daily Monday-Friday fixed ACH

Credit Standards: All types considered.

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8. Small Business Administration (SBA) Loans for Businesses in Michigan

The Small Business Administration (SBA) provides programs, guidelines, and loan guarantees to approved lenders for businesses. The Small Business Administration’s (SBA) mission is to help American enterprises to start, build, and grow their businesses successfully. The SBA is not a lender. The Small Business Administration provides a guarantee that gives the approved lender the ability to take on the risk of business lending under Small Business Administration (SBA) terms that they might not ordinarily take on.  This reserves rights for the lender for any recourse needed. The Small Business Administration (SBA) loans are highly sought after by Michigan small businesses.

Product Overview

Rate: Interest rates starting at 5.50%, treasury index plus 1% to 2.5%  

Terms: 3 to 25 years 

Fees: Origination fees 0% to 3%

Payment: Fixed monthly

Credit Standards: Good to excellent preferred, but all credit considered. 

Small Business Administration (SBA) Loans

SBA Standard 7 (a) loan program- SBA loan 7(a) is the SBA’s primary program is designed to provide financial assistance to small businesses. The terms and conditions, like the guaranty percentage and loan amount, may vary by the type of loans to small businesses.

SBA Loan Program 504- The SBA 504 Loan is a powerful economic development loan program that will provide small businesses another avenue for business financing while promoting business economic development and job creation. The use of proceeds from SBA 504 Loans must be used for fixed assets such as construction, commercial real estate, land or land improvements (and certain soft costs), or can also be used to refinance existing debt.

SBA Disaster Loans– Economic Injury Disaster Loans (EIDL)-This type of SBA loan not only provides assistance after natural disasters like tornadoes, wildfires or floods but when President Trump declared COVID -19 a nationwide health emergency based on the recommendation of the CDC on March 13th, congress provided small businesses access to this program for emergency financing.

SBA Paycheck Protection Program (PPP) loan-The Small Business Administration (SBA) has established the SBA Paycheck Protection Program loan. This SBA loan provides loans to small businesses affected by the COVID-19 crisis and needs financial help. Under the right conditions, this loan program offers forgiveness.

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9. Invoice Financing for Michigan Small Businesses

Invoice financing advances the outstanding balance to a business owner to increase the speed of cash flow to the business. This solution provides cash quickly, and there is no need to wait for outstanding invoices to be collected and received by the client. Invoice financing has affordable costs ranging from 1% to 2.5% fee off of the face value of the invoice advanced.

Product Overview

Rate: None

Terms: No term limits 

Fees: 1% to 3% fee based on invoice. Monthly service fees may apply depending on

the volume of invoices factored

Credit Standards: Credit of the clients need to be favorable, NOT the business owner advancing off invoices.

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10. Purchase Order Financing for Michigan Small Businesses

Purchase order financing offers businesses the ability to raise money to pay suppliers upfront for verified purchase orders. Purchase order loans will finance an entire order or a portion of it, depending on the purchase order funder. When the supplier is ready to ship the order, the purchase order financing company collects payment directly from the customer. The purchase order funder will subtract their fees and then sends the balance of the invoice to your business. 

Product Overview

Rate: None 

Terms: No term limits 

Fees: 1% to 3% fee for each purchase order. Monthly service fees depending on volume may also apply.

Credit Profile: All parties need favorable business credit history but all credit considered

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The fast, convenient and straightforward way to get the money you need for your business – now! Get Your Quote Today by filling out our simple form.

Why Does Your Business Need Financing?

The 8 most common uses of proceeds from business financing:

  • Working Capital
  • Equipment
  • Inventory
  • Business Expansion
  • Business Development
  • Cash Flow shortages
  • Emergencies
  • Advertising and Marketing
  • Employees
  • Economic Development
  • Real Estate Acquisition
  • Any legitimate business purpose or use

Frequently Asked Questions

Is a Business Loan Difficult to Obtain in Michigan? Do I Need a Down Payment?

It is not difficult to obtain business financing in Michigan. There is no down payment required for most business loans or alternative business financing.

Can I Qualify for Small Business Financing in Michigan If I Have Bad Credit?

There are many business financing options available for business owners with bad credit. Products and terms will vary depending, and the risks associated with this type of financing will impact terms, pricing, and costs.  

Can I Get Business Funding With No-Docs?

Business credit cards are the only true no documentation product. Other business financing products have less or reduced documentation requirements you may want to consider because the less documentation you provide, the more likely terms will be less favorable. 

Can I Get a Start-Up Business Loan in Michigan? Is It Hard Starting a Business in Michigan

Getting start-up business financing, you may find to be extremely difficult and challenging. SBA loans are the most traditional financing choice, but they are challenging to get approval on. A business’s search will need to include non-traditional means to raise money like private sources or investors. 

Additional Resources, Support and Information about Small Business Loans in Michigan Initiatives, Programs, and Small Business Grants in Michigan for Small Businesses

Michigan Small Business Grants

Up to $20 million in grants and loans now available to Michigan’s small businesses to fulfill the economic needs of small businesses from the impact of the Coronavirus (COVID-19) outbreak. The loan programs are now accepting applications, with key information available at michiganbusiness.org/covid19.

Michigan Small Business Association (MSBA) 

The Small Business Association of Michigan is the only statewide and state-based association that focuses solely on serving the needs of Michigan’s small business community. SBAM’s goal is to advocate for small businesses, bring business owners together to share knowledge, create collaboration and partnerships, and to deliver group buying power.

Michigan Economic Development Corporation (MEDC) 

Whether you’re just getting started or expanding your existing business, the MEDC can help. Michigan Economic Development Corporation markets Michigan and provides the tools and environment to drive job creation and investment. Michigan Economic Development Corporation has compiled information and resources for small businesses, major employers, entrepreneurs, and others regarding our response to the economic impact of COVID-19.

Michigan Small Business Development Center (SBDC) 

The State of Michigan Small Business Development Center (SBDC) offers expert assistance at no cost to entrepreneurs looking to start or grow a business.

Advice, Tips, Warning’s for Michigan Business Owners

When looking for financing for your business, always begin the process by defining the purpose and use of the funds you may acquire. Do you know the obstacles that exist when getting approved (credit Issues, business banking account cash flow issues, time in business, financial statement issues)?

Business financing is significantly different than consumer financing. Underwriting for business financing is much more risk-averse than consumer lending, so you need to take your time in looking through all the options that are available by lenders. 

AdvancePoint Capital has been very successful in helping businesses search for business financing solutions easily and painlessly without wasting time or, more importantly, your hard-earned money.

As we always say, compare, shop, and you will always save!

How to Apply for Business Funding in Michigan?

Applying for a loan with AdvancePoint Capital is a simple, easy, and streamlined application process with decisions in hours, not days. Start with this online form (don’t forget your email), then fill out the short application page, wait a few hours for your approval, and then get your funding! Or you can call toll free phone number and speak to a loan specialist.

The fast, convenient and straightforward way to get the money you need for your business – now!

Get your Quote Today by filling out our simple form.

 

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* All loans made by either WebBank, an FDIC-insured Utah industrial bank, or Bank of the Internet Federal Bank, an FDIC-insured federally chartered thrift located in California. In connection with the loans, the Banks' underwriting conditions and terms apply.