How to Apply for a Small Business Loan in Louisiana

Louisiana

Owning one’s business is considered a sort of financial freedom. Especially when business is good, you’ll be smiling your way to the bank. But, it equally has its fair share of disadvantages. For example, when the economy is not doing good such as in the current Coronavirus crisis, small businesses suffer. There is hardly income coming in yet there are still bills and salaries to be paid. The uncertainty of how long this period will last also does not help matters. The good news is, there are several lenders willing to loan small businesses in Louisiana, especially during the current crisis.

Who is Eligible for Small Business Loans?

Small business loans are usually tied to a business’s capital hence if the business collapses, owners are not liable to pay. For this reason, financial institutions thoroughly scrutinize the business to ensure it is successful or has a high potential for growth. Though some may offer loans to startups, usually most banks prefer businesses that are not less than a year old as they hold better proof of resilience in the market. They then weigh the risks compared to the positives of the businesses to determine if they are creditworthy ventures.

What Do You Need?

It all depends on the lender. Once you state your interest in obtaining a loan, the lender shall provide you with a list of eligibility requirements. Generally, according to Small Business Administration, you will need all the necessary documentation to prove how your business receives income, how many employees are present, the character of ownership and the location of the business. The lender may also conduct a thorough credit report on the owner of the business to ascertain that they are viable candidates.

Financial Institutions & Programs that Offer Small Business Loans

Depending on where your business is located, below are some lenders in Louisiana you can approach for a small business loan;

1. Loan & Guaranty Programs – Louisiana Economic Development (LED)

In association with the federal State Small Business Credit Initiative (SSBCI), LED provides loan guarantees to small businesses. The program aims at developing, expanding, and retaining small businesses in Louisiana. Depending on the risk involved LED may 100% guarantee a small Business Loan or only guarantee upto 70% of a loan, not more than $1.5million. To qualify, a business should be based in Louisiana as per the definition of Small Business Administration. If applying for $100,000 or less, there must be proof of at least one permanent job created, and if more than $100,000 there must be at least two permanent jobs created.

According to Louisiana Economic Development, Gov. John Bel Edward’s recently unveiled a new Louisiana Loan Portfolio Guarantee Program (LGPF). This is a partnership between LED which will offer a loan guaranty fund, the Louisiana Bankers Association which will provide the loans and the Louisiana Public Facilities Authority which will be in charge of managing the program. A total of $50 million shall be disbursed to help facilitate the program. This will benefit small businesses, of not more than 100 employees, affected by the COVID-19 crisis. According to their capacity and needs, these businesses shall be allowed to borrow up to $100,000.

To find out more about the requirements and how to go about the application Please visit Louisiana Economic Development Website. There, you will also find useful links to valuable resources.

2. Pelican State Credit Union

The Pelican State Credit Union offers Small Business Loans (SBA) to both startups and existing businesses. The loans offered by this institution are a government initiative to assist small businesses to grow hence are government guaranteed. Depending on the nature of your business you can orrow up to $5 million Gross. The advantages of acquiring SBA loans include long term financing, no balloon demands, no-prepayment penalties, fixed maturity, and improved cash flow. Visit their website to view the requirements and the steps you need to follow to obtain a loan.

3. Paycheck Protection Program

According to Forbes, the U.S Small Business Administration (SBA) will guarantee loans of up to $10 million to any eligible small business. The loans shall be provided by given banks and credit unions including Bank of America, Capital One, Chase, Citibank, U.S Bank, and Wells Fargo just to mention a few. To be eligible to apply in any of these financial institutions you must have a relationship with them. Nevertheless, there may be exceptions.

Money obtained can be used to settle payrolls, rent, mortgage interest, and utilities. The advantage with this loan is that it can be forgiven if a business keeps up its payroll for 8 weeks at employees’ regular salary levels and also if the loan proceeds are used for qualifying purposes. However, only 25% of the loan’s forgiven amount should be used for non-payroll costs.

Other Options…

In case your application is declined by the above lenders; you can still approach other financial institutions that have been known to favor and support small businesses. They include;

  • Gulf Bank – New Orleans
  • Fidelity Bank – New Orleans
  • Pelican State Credit Union-Baton Rouge
  • Iberia Bank – Baton Rouge
  • Ouachita Bank – Shreveport
  • St Martin Bank – Lafayette
  • Nations Lending – Lake Charles
  • Origin Bank – Bossier City

Conclusion

According to Small Business Loans, there are over 350,000 small businesses in Louisiana, with most of them being operated by business owners solely without staff. With the current lockdown, most are in a financial crisis. If you are a business owner and are seeking a financial solution to your business issues utilize the above tips to get the most suitable loan for your business. Above are several banks and financial institutions that offer loans at affordable rates to the rescue of small businesses. Ensure to go through the terms and conditions of each one of them to enable you pick a lender and loan that will best suit your business needs.

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