How to Apply for a Small Business Loan in Kentucky


Small Businesses are central to the sustained establishment of the macro-economy of any state. They contribute an appreciable percentage to the national GDP and are key players of the economic boom we enjoy today. Whether they be in the fashion and design industry, technological, manufacturing and assembly industry, agricultural or real estate industry to name but a few, small businesses contribute to healthy competition, resulting to better products and service delivery to the end consumer. The vital role of small businesses cannot be underestimated and thus it is important to secure their financial wellbeing, increase and establishment, even in light of the current COVID-19 pandemic. The Corona Virus outbreak has had a grave impact on businesses world-wide. Small business owners have indeed been left with much to grapple with in light of these tragic times. Fortunately, it is not all gloom and doom for these small business owners in Kentucky as several initiatives have been taken to help curb the situation.

According to Small Business Loans Kentucky is blessed with several features that make it an economic hotspot for investors and financial lenders. Its location is proximate to densely populated regions such as the East Coast and Ohio River Valley. There are several government-initiated programs that are geared to promote business growth in the state and, a relatively low cost of living that promotes business growth as running expenses are generally low. With these factors in place, it is easier for small business owners to access Small Business Loans from lenders.

Small Business Loans

Small Business Loans have been a significant constituent of business financing for decades. These loans are tailor made to suit the unique needs of small businesses. They are primarily applied for start-up purposes, business expansion, equipment acquisition, payroll expenses, mortgage and insurance expenses. In most cases, they are easily accessible, are offered with low interest rates and may be granted without collateral.

In Kentucky, the US Small Business Administration popularly known as SBA, has partnered with several local banks to ensure that credit facilities and capital is readily accessible to eligible small business owners in the region. According to Kentucky Bank, which is a SBA lender, the two popular SBA loans provided are:

  • SBA 7(a) Loan Program – which is the most popular of the two
  • SBA Express Loan Program -This grants up to $350,000 in capital.

According to SBA Lenders the top 5 of the leading 20 Banks that provide SBA amenities in Kentucky are: US Bank; The Huntington National Bank, Community Trust Bank; Republic Bank and Trust; Hancock Bank and Trust and United Midwest Savings Bank respectively. Cumulatively, the average interest rate of all 20 banks range from 5.8% to 10.2% and the average loan amount from $ 41,980 to $ 2, 181, 667. Several other banks provide Small Business Loans throughout the Kentucky region, namely: Paducah Bank, United Community Bank, People Exchange Bank, Magnolia Bank and Montecillo Banking Corporation. With each of these lenders, the loans provided have unique tailor-made features that help address the financial needs of the target small business market which give them an appealing and competitive edge. It is recommended to visit the websites of any such bank near you for more in depth information on each of the small business loan packages available.

According to Kentucky Small Business Development Center other state-sponsored credit facilities accessible to small business owners include:

Pay Check Protection Program

This is a government instituted program that makes it feasible for small business owners to access an 8 week capital fund to facilitate payment of their running costs such as payrolls, rent and any debts owed by the business to its creditors.

Economic Injury Disaster Loans (EIDL)

Due to the COVID-19 pandemic, EIDLs are now accessible directly from the SBA Disaster Assistance Program. These loans are availed to small business owners to mitigate the financial effects of the pandemic. The purpose of the loans is to help small business owners to settle any debts payable, pay salaries and allowances to their employees. It is however, not to be employed in the expansion, re-innovation, or re-stocking of the business. The loan has a low interest rate and up to $2M can be granted.

How to Apply for a Small Business Loan

For a business owner to secure a small business loan, there are key criteria that need to be complied with in order to attract a potential lender. According to Small Business Loans Kentucky when approaching a credit institution or bank to apply for a loan whether physically or via online application on the institution’s website, the following things are worth noting:

1. Credit Worthiness

This refers to the credit history of the business itself, if it is a company, or that of the owner of the business, in the case of sole proprietorship or a partnership. Most lenders tend to provide credit to individuals with a credit score of 680 and above. An applicant ought to ensure that they have a long standing history of credit worthiness. Anyone who does not can try applying alongside a credit partner who has a great credit score.

2. Ability to repay

The lender must be certain that the business is able to repay the loan with the given interest in the specified duration. This entails an analysis of the monthly income of the business and the annual profit and loss accounts.

3. Selection of a Funding Option

Once the lender or agent is satisfied of the credit worthiness of the applicant, the best suited funding option is identified. This process is a consultative one. Funding options vary in terms of amount, interest rate (when applicable) and duration of payment. The selection also takes into account the ability of the client to repay.

4. Collateral

In instances where the amount borrowed is to exceed a specified limit, collateral may be needed. This is the common case for most small business owners, if the amount exceeds the sum of $25,000. However, this is not always the case as banks and other lending institutions may have differing specifications on collateral.

Typically, when the above is verified and approved by the lender, the applicant is to receive the loan within reasonable time. If the threshold is not met, usually the institution will communicate as such and reject the application. However, given the current pandemic, the state of Kentucky has endeavored to make small business loans accessible to all business owners who are in need of the same, thus the criteria is accommodative and not as stringent as before. Indeed, it is the right time to Take Action!

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