Tennessee Small Business Loans

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The great state of Tennessee is home to over 6.8 million people, making it the 16th most populous state in the United States of America. Located in the southeastern U.S., Tennessee borders eight other states and is dominated on the eastern and western borders by the Appalachian Mountains and Mississippi River, respectively. Nashville and Memphis are Tennessee’s two largest cities, with Nashville being the larger of the two. The former is the capital, with a population of 1,346,045, making it the state’s economic powerhouse. Memphis is a metropolitan area located on the western side of the state, with over 650,000 residents. Knoxville and Chattanooga are other notable cities of economic opportunity in the southeastern state.

Tennessee is a diverse economy that includes agriculture, manufacturing, and real estate. Tennessee is also known for its expansive country music industry in Nashville and tourism attractions that bring visitors all across the state. In Tennesee, you can see The Great Smoky Mountains National Park, the nation’s most visited national park, located in the eastern part of the state, and a section of the Appalachian Trail, which follows the Tennessee–North Carolina border).

With all that the state has going for it from an economic perspective, Tennessee small businesses still face many challenges getting business loans from traditional lenders like banks or credit unions. These lenders have stringent guidelines, rigid credit requirements, mountains of paperwork, and limited business loan options to offer to small businesses. That’s where AdvancePoint can come in to help your business. We have fantastic financing options available that credit unions or banks do not offer.

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How To Get a Small Business Loan in Tennessee

AdvancePoint is an excellent resource with a business lending marketplace full of various alternative business loans and lending partners for small businesses to help your business grow.

The 10 Best Small Business Loan Options for Tennessee Small Businesses

Long Term Business Loans for Tennessee Small Businesses

Lenders define long term small business loans as small business loans with a duration greater than two years. Long term loans offer businesses a fixed amount of upfront and charged principal & interest. Unlike a business line of credit, business owners cannot draw money as they go with long term loans. Typically, long term loans are an excellent resource for business expansion and growth or help your business finance large projects.

Product Overview

  • 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% (depends on risk and lender)
  • Loan Payments: Monthly or bi-weekly
  • Credit Score Standards: Good to excellent preferred, but all types considered.

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Long-Term Business Loans

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Business Line of Credit for Tennessee Small Businesses

A business line of credit is an open revolving line of credit. This type of funding allows businesses to draw funds when needed on-demand or make purchases. Additionally, a business line charges a principal & interest rate. Business lines of credit have a credit limit that cannot exceed set limits without a lender’s approval and is not continually open-ended. It requires renewal by lenders either semi-annually or annually to be extended.

Product Overview

  • Interest Rates: Starting at 5.50% or treasury index plus 1% to 2.5%
  • Terms: Open revolving line of credit
  • Fees: Origination fees ranging from 0% to 3% (depends on risk and lender)
  • Payment: Monthly, bi-weekly, or weekly
  • Credit Score Standards: Good to excellent preferred. All types are considered.

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Business Line of Credit

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Short Term Small Business Loans for Tennessee Small Business

Short term business loans are defined as loans that are typically repaid with 6 to 18 months. These loans feature a lump sum offered upfront with a fixed payback amount, which is calculated using a factor 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 conventional business loans. Short term loans charge more for costs and are shorter in repayment duration. The loan payments are more frequent to compensate for the higher risks business lenders take in offering this product. These loans are a popular resource for small businesses because of the reduced documentation requirements and relaxed credit compared to those of traditional loans.

Short Term Small Business Loans Overview

  • Interest 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 (depends on lender and risk)
  • Payments: Weekly, bi-weekly, and in some cases daily (Monday-Friday)
  • Credit Standards: All types considered
  • Processing Period: Funding can be same day to 24 hours

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Short Term Business Loans

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Business Cash Advance for Tennessee 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 costs taken out of the bank account monthly are more than the set future percentage of monthly sales, small business owners can request a refund back to the business for overpayment so that the set specified percentage of sales collected for the company matches the revenue volumes. Repayment continues until the payback amount is paid back in full.

There is no time limit with advances as the fixed payback percentage ever changes due to fluctuating revenue. You do not need to provide a business plan. The most popular use for a business cash advance is working capital to help your business.

Product Overview

  • Rates: Ranges from 1.09% up to 1.45%
  • Terms: No time limits. Payments continue until paid in full based on a 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 are considered.

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Business Cash Advance

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Merchant Cash Advance for Tennessee Small Businesses

merchant cash advance 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. This product is another great resource for working capital to help your business.

Product Overview

  • Rates: Range from 1.09% up to 1.45%
  • Terms: No time 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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Merchant Cash Advance

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Equipment Loans and Financing for Tennessee Small Businesses

Tennessee area businesses that use equipment in their operations often turn to equipment financing lenders to purchase machinery using the equipment as collateral. Small business owners must have very good to excellent credit, but luckily, very little paperwork is necessary to get approved.

Product Overview

  • Rate: Range from 1.09% up to 1.45%
  • Terms: 2 to 7 years
  • Fees: Origination fees range from 0% to 3%
  • Payments: Weekly or daily (Monday-Friday) fixed ACH
  • Credit Standards: All types considered (Lenders vary on credit score requirements)

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Equipment Loans

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Small Business Administration (SBA) Loans for Businesses in Tennessee

The Small Business Administration (SBA) is a federal government agency that provides programs, guidelines, and loan guarantees to approved Virginia SBA Lenders to issue business loans to small 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 lenders the ability to take on the risk of business lending and credit decisions under Small Business Administration (SBA) terms that they would not ordinarily do so on their own and has rights reserved for any recourse need.

Small Business Administration (SBA) loans are highly sought after by Tennessee small businesses, and there are many government-approved lenders to choose from. It can be common for an SBA loan to require a business plan. SBA application processes can be lengthy, but with the help of an experienced SBA-approved lender to help your business through the application process, the application package can be a smooth and efficient experience.

Product Overview

Interest Rates: Starting at 5.50%, treasury index plus 1% to 2.5%
Terms: 3 to 25 years
Fees: Origination fees 0% to 3%
Payments: Fixed monthly
Credit Standards: Good to excellent preferred, but all credit considered (all rights reserved)

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 with a good track record. Like the guaranty percentage and loan amount, the terms and conditions may vary by the type of loans to small businesses. Real estate may be used for collateral but is not required.

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, owner-occupied commercial real estate, mixed-use real estate and 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.

U.S. Small Business Administration has two government offices in Tennessee
Tennessee District Office-2 International Plaza Drive Suite 500, Nashville, TN 37217, and Memphis, TN.

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Small Business Administration (SBA) Loans

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Invoice Financing for Tennessee 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 with invoice financing in place. Invoice financing has affordable costs ranging from 1% to 2.5% fee off of the face value of the invoice advanced.

Product Overview

  • Rates: None
  • Terms: Not a traditional loan
  • Fees: 1% to 3% fee based on the invoice. Monthly Service fees may apply depending on the volume of invoices factored
  • Credit Standards: The client’s credit must be favorable, NOT the owner advancing off invoices.

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Invoice Factoring

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Purchase Order Financing for Tennessee 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’s balance to your business.

Product Overview

  • Interest Rates: None
  • Terms: Not a traditional loan
  • 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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Purchase Orders Loans

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Business Credit Cards vs. Business Loans

Business credit cards are open revolving credit lines that charge a principal & interest rate with a limit. Business credit cards are issued to be used for making payments or purchases. Tennessee businesses utilize business credit cards in conjunction with other small business financing products. This financial product’s primary use is to purchase small items or working capital to help your business.

Product Overview

  • Interest Rates: Introductory interest 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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U.S. Small Business Administration

How to Grow Your Business in Tennessee
View the Tennessee Small Business Resource Guide for information and assistance in growing your local business, exploring funding options, and contracting.

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

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Why Do Tennessee Small Business Owners Need Financing?

The list of the most common reasons small business owners use business financing.

  • Working capital loans
  • Equipment purchasing and repair
  • Inventory
  • Business plan expansion (capital for growth)
  • Special projects
  • Cash flow shortages
  • Website development and website maintenance
  • Emergency resources
  • Advertising and marketing to acquire customers
  • Jobs creation (employees)
  • Employee training resources and expenses

Frequently Asked Questions by Business Owners in Tennessee

It is not difficult to obtain business funding in Tennessee. There are many business lenders and funder’s that service Tennessee. Choose your lender and business loans wisely.

The internet can be an invaluable resource when searching for a business lender. In 2020, most businesses now search on the internet for business lending websites to glean additional information, find reviews on a business lender, and in many cases, inquire about getting more information and apply for a quote on a business lender website. This allows businesses to shop, compare, and potentially save significantly.

Are website’s trustworthy? Well, about as trustworthy as visiting any business. You are not evaluating the website as much as you are the business itself and those you communicate with within the company. The website is merely a port of entry, just as if you were walking into businesses on a main street, without leaving the comfort of your home. Both in-person and online are virtually the same. The companies you consume from earn your trust by offering reliable products and treating customers with respect.

There are many business lending options available for business owners with bad credit. Financing options will vary depending on the risks associated with this type of funding and will impact terms, pricing, and costs. The business loan amount may also be limited due to bad credit as well.

Business credit cards are the only tried and true “no-doc” product. Other solutions with reduced documentation requirements are less ideal. You may want to reconsider your options because the less documentation you provide, the less favorable they will be.

Getting start-up business loans can be extremely difficult and challenging. SBA loans are the most traditional option, but gaining approval is a challenge. A business owner’s search will need to include non-traditional means to raise money like private sources or investors.

Initiatives, Programs, and Small Business Grants in Tennessee for Small Businesses: Additional Resources, Support, and Information About Small Business Loans in Tennessee.

The Tennessee Department of Economic & Community Development has many valuable resources and services to help small businesses.

The TN Placemakers Entrepreneurship Fund is a pool of monetary resources dedicated to assisting communities across the state, from rural to urban, to develop and train small businesses and entrepreneurs by allowing them to obtain funds for broad and diverse activities. The two funding groups are (1) Assess & Plan, Build & Sustain, and Support & Train, and (2) Pivot & Recover. Pivot & Recover is a new funding group tied to the impact of the pandemic.

The Tennessee SmartStart™ Communities uses a “no wrong door” approach for starting or growing businesses in their community. “No wrong door” means that those businesses get the right resources at the right time, no matter which “door” they try.

Tennessee Community Development Financial Institution (CDFIS)- The Community Development Financial Institution (CDFI) Fund is an innovative federal agency within the Treasury Department that was established in 1994, through the Riegle Community Development and Regulatory Improvement Act, to promote community development in distressed urban and rural communities by increasing the availability of credit resources, investment capital and financial services available.

Tennessee Incentives and Grants for Businesses- Grant programs, incentives, resources, services, and information for business owners in Tennessee.

Pathway Lending- Located in Nashville, TN, Pathway Lending is a Community Development Financial Institution that increases access to Capital for underserved businesses in Tennessee and the Nashville & Memphis metropolitan areas. Pathway Lending provides capital resources and educational services to businesses throughout Tennessee. Pathway Lending was certified as a Community Development Financial Institution by the US Treasury in 2002 to provide services to businesses.

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