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Michigan Small Business Loans

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PrimeRates Guide to Small Business Loans in Michigan

More than 48% of the state’s workforce is employed by small businesses with approximately 1.9 million Michiganders working under a small business operation.

In addition, total reported new lending to businesses via loans of $1 million or less reached more than $7 billion in 2019. The rate of lending via small business loans has held fairly steady since 2010.

We’ve compiled a quick guide for small business owners in the state of Michigan to learn more about business loans and other forms of financial assistance available to help you grow your business.

How a loan can help your small business in Michigan

There are many ways that a loan can be used to help your small business in Michigan.

Small business loans help entrepreneurs gain access to the capital needed to finance start-up costs, operating expenses, emergencies, or expansion costs without needing to have cash up front.

The funds from a business loan can be used to cover a variety of expenses from equipment purchases and real estate transactions to staffing needs and day-to-day operations.

Types of small business financing options in Michigan

Business owners in Michigan have several financing options to consider:

  • SBA loans: The SBA offers a variety of business loans specifically for small businesses. SBA loans are backed by the government so lenders can lend more generously. To get an SBA loan you’ll need to find an SBA approved lender. Check local banks to see which ones can offer SBA loans. While SBA loans may have favorable terms that can be time-consuming and difficult to qualify for. 
  • Term loans: Business term loans are a form of installment loan that allows borrowers to benefit from a set repayment period and monthly payment. They typically also have a fixed interest rate, although rates can be variable. These perks make them a very attractive and common financing option for Michigan business owners.
  • Online business loans: Alternatively, business owners can seek out the opportunity to find financing from an online lender. Online lenders have fewer operating costs and so can pass the savings on to the consumer with lower interest rates and fees. In addition, the underwriting process with online lenders is relatively quick and easy, giving you access to funds in just a few business days. For these reasons, online business loans are becoming increasingly popular.
  • Commercial business loans: Commercial business loans are another type of installment loan that allows business owners to finance various large purchases such as vehicles, real estate transactions, and construction costs that are for commercial purposes. This type of loan can be found from banks, credit unions, and online lenders in some cases.
  • Business credit cards: Credit cards can be a smart way to monitor spending and control cash flow, but they are not the best means of financing. In some cases you may be able to get a credit card with a 0% promotional period. For purchases this can help you spread out the cost without paying interest. 
  • Lines of credit: Businesses that need access to cash frequently may want to consider a line of credit. A line of credit can also be beneficial for seasonal businesses, which there are plenty of in Michigan. A line of credit is typically secured by an asset and can be drawn on at any time during the loan.

Small business financing resources in Michigan

The U.S. Small Business Administration (SBA) is a good starting point for businesses in any state to access resources and information about financing options including loans, investment capital, disaster assistance, surety bonds, and grants. SBA-backed loans are a popular option for many entrepreneurs.

In addition, business owners in Michigan can take advantage of the following small business resources:

Small business grants available in Michigan

Grants are gifts of financial assistance that do not need to be paid back. Small business grants are designed to help business owners succeed and boost the local economy.

Many grant programs today offer assistance to specialized areas of the community such as rural development or minority-owned businesses.

Small business grants can be obtained from government agencies, corporations, and organizations.

Business owners in the state of Michigan have several options when looking for small business grants:

  • The State Trade Expansion Program (STEP) Grant provides grants in amounts up to $15,000 to small businesses seeking to expand through international business development activities (such as attending trade shows or updating marketing materials for an international audience).
  • The Michigan Defense Center offers a Proposal Writing Services Grant that assists Michigan businesses with writing bids to Department of Defense and Department of Homeland Security contract opportunities.
  • Eligible businesses in the state of Michigan can benefit from the Michigan Business Development Program (MBDP) which awards funds to companies who are creating jobs and making qualified investments in the area.
  • The Critical Industry Program (CIP) offers grants, loans and other financial assistance to businesses that need to "create or retain qualified jobs as a result of a technological shift in product or production or make capital investments, or both, in Michigan."
  • The Michigan Community Revitalization Program (MCRP) incentivizes companies for restoring eligible properties for the improvement of the local community and the creation of jobs.
  • Likewise, the Match on Main reimbursement grant program offered through the MEDC awards eligible small businesses up to $25,000 to support the creation and growth of companies located in Michigan Main Street districts. The MEDC also operates the Community Development Block Grant (CDBG) program which is a federal program receiving funds from HUD.
  • The MIOSHA Workplace Improvement to Safety and Health (MIWISH) Grant Program and Consultation Education and Training (CET) Grant Program both exist to help organizations improve workplace safety and employee health.

In addition to the resources above, business owners can also check state agencies such as the Michigan Department of Education and Michigan Department of Transportation for grants.

Federal agencies that typically offer small business grants include the SBA and USDA. Lastly, grants may be available at the municipal or county level as well, so be sure to check the local area in which you live.

Tips for applying for a small business loan in Michigan

Business owners in the state of Michigan should take the following tips into consideration when applying for a small business loan:

  • Consider your credit – It’s important to verify the accuracy of your credit report and credit score before applying for any type of loan. Having a Prime credit score (generally considered to be 660 and above) gives you access to the best loan offers and the lowest interest rates. If your credit is not up to par, you can take steps to fix it before applying or consider using a cosigner.
  • Have a business plan – When applying for your Michigan small business loan, the most commonly requested item from lenders is a business plan. A well-written business plan not only helps you qualify for a loan – but also helps your company plan ahead and succeed. Any solid business plan should include an executive summary, a marketing plan, a financial plan, and an operations plan among other key elements.
  • Gather your paperwork – Besides a detailed business plan, your lender may want to see additional paperwork that proves the existence of your business and its financial success. Be sure to gather this information for your application and be prepared to prove how long you have been in business and what your current annual revenue is, as some lenders have minimums. Documentation you might need includes: profit and loss statements, financial projections, earnings reports, tax returns, and bank statements.
  • Consider alternative lenders – Credit unions and online lenders offer some of the lowest interest rates and most flexible loan terms due to increased cost savings. Online lenders have less overhead and can typically lend to consumers in all 50 states. Credit union membership is typically based on your employer, university, or place of residency. The most popular credit unions in the state of Michigan include Members First Credit Union, Michigan State University Federal Credit Union, Lake Michigan Credit Union, State Farm Federal Credit Union, Wildfire Credit Union, Advia Credit Union, Marquette Community Federal Credit Union, and TruNorth Federal Credit Union.

Once you have determined which type of financing is best for you and compared the various loan options, it’s time to start the application process. Financial experts recommend getting prequalified for any type of loan, especially when your business is on the line. Finding the best deal on a business loan can save you hundreds (if not thousands) of dollars in interest and fees that can be invested back into your business. To unlock the best small business loan offers in Michigan, visit Primerates online.

Compare rates and get funded

Comparing rates and understanding all of your options can help you make educated business decisions. At PrimeRates, we work with a variety of lenders who offer loans for businesses of all sizes. Within a few minutes you can receive personalized business loan offers that you actually qualify for - all without impacting your credit score. Say goodbye to the days of window shopping interest rates and unlock offers that you can actually take advantage of. 

Unlock competitive small business loans in Michigan. . . check offers at Primerates today!

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