How to Apply for a Small Business Loan in Arizona

Arizona Businesses

Arizona’s small business market has been flourishing in the last couple of decades, with over 400,000 registered small businesses all over the state. Impressively enough, about 75% of those businesses are registered as sole proprietorships. Running a small business in a thriving environment is no small feat, and not just in Arizona. It takes dedication and creativity for any single entity to stand among a sea of emerging and evolving industries. Thousands upon thousands of businesses in various niches open their doors every year, and many of those businesses often require help financially.

The Need For A Loan

There are different resources a small business can utilize in order to lessen or eliminate the financial strain. Businesses often experience different types of financial needs—from startup costs to the current extreme of a pandemic outbreak many entities are experiencing in real time. Some financial resources small businesses can use include investors, grants, and various other state or local business programs. In the state of Arizona, applying for a small business loan is one of the best ways you can secure funds for your company, especially during rough times.

Since the outbreak of COVID-19 hit mainland United States, thousands of businesses have slowly closed their doors—some temporarily while others, permanently. Congress recently passed the CARES Act (Coronavirus Aid, Relief, and Economic Security) in order to lighten the economic burden for many individuals and families. The CARES Act has also been written to support small businesses throughout the nation. This federal resource is currently under review in the state of Arizona. Once the details have been ironed out, the CARES Act is set to help many small businesses that have suffered throughout the state due to the Coronavirus.

How Business Loans Work

In the meantime, small business owners in Arizona should familiarize themselves with how small business loans work. Borrowing a business loan is different from taking out money for personal use. The stakes are higher, especially since business loans are generally larger in amount. To successfully take out a loan for your business, you’ll need to be able to show proof of capital. Banks and lenders would want to see your profitability before considering your approval. You’ll need to show that your business is bringing in revenue routinely and that you are not a high-risk candidate. There are a number of factors banks and lenders typically look at when profiling a small business for a loan approval. An assessment will be made determining the number of clients, contracts, sales, and other such values within the last year.

Although your business profile is scrutinized greatly in a loan application, it doesn’t mean your personal accounts aren’t taken into consideration as well. In fact, if you happen to have a poor personal credit score, it’s highly unlikely you’ll get approved for a business loan. This applies to any entity, especially if you are a sole proprietor.

The entire process of applying for a small business loan could be tedious. This is when organization comes to play an invaluable part. You’ll have to show proof of sales for the last year, so you’ll need copies of receipts, contracts, and any other paperwork that shows your company numbers. Expect a lender to run a thorough background check on both you and your business.

The SBA

Recently, the U.S. Small Business Association (SBA) approved Arizona’s declaration for an Economic Injury Disaster Loan in light of the recent COVID-19 outbreak. This allows individual businesses to borrow up to $2 million to help their companies stay afloat.

In the state of Arizona, the process of application is fairly simple, but approval doesn’t come as easily. If you are a small business in Arizona and your company has been affected by the pandemic, you can apply for a low-interest disaster loan directly from the SBA website.

CARES Act Information

If you’re maintaining your payroll during the pandemic, you may qualify under the CARES Act to receive a 100% federally guaranteed loan known as the Paycheck Protection Program. Under this initiative, you can borrow up to 2.5 times your average monthly payroll costs, as long as that amount does not exceed $10 million. As a small business, you need to have fewer than 500 employees, be a sole proprietor or independent contractor, be a self-employed entity in any industry or trade, and so forth. You can find other qualifications here in this packet.

Traditional Business Loans

If you’re looking for a traditional small business loan, the Arizona Commerce Authority offers information on a variety of loans. The state offers a list of loan programs you can choose from to determine which would best suit your small business needs. Arizona has microloan programs that can help budding businesses get established. Most lenders on this list are non-profit and community-based loans. The maximum you can borrow under a microloan program is $50,000. To apply for a microloan, choose from one of the lenders on this site and contact the direct phone number listed.

Other loan programs offer financing for all other reasons. Loans could range from $25,000 to $5,000,000 depending on the lender. Two of the biggest lenders in Arizona include the Local Initiatives Support Corporation or LISC Phoenix and the Verde Valley Regional Economic Organization or VVREO. To apply for these loans, you’ll need to contact them directly in order to file an application. You can also apply for a federal small business loan under the SBA. You’ll need to visit this site directly in order to apply.

Whether you’ve been affected by the COVID-19 or not is out of the question. All businesses throughout the state of Arizona and throughout the nation are experiencing unprecedented changes during this time. There are plenty of resources available for all small businesses. Make sure to check out the links in order to access more information and apply for a small business loan.

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