Arkansas is an excellent state for small businesses due to favorable conditions such as business-friendly regulations, a low cost of living and doing business, and a ready workforce. The business success rate is one of the highest in the nation at 78%, reflecting the pro-business atmosphere in The Natural State.
However, many Arkansas small business owners still require financing help to start or grow their enterprises. While the state offers diverse loan lender offers, selecting the best Arkansas business loan for needs and cash flow is essential to success.
This guide explores what entrepreneurs should know about business loans in Arkansas, including the available options, pros and cons, and the application process. Specifically, we’ll answer these questions and more:
Arkansans can access various business loan program options to fund their operations.
Working Capital Loans: Working capital loans in Arkansas provide financing to cover a business’s day-to-day operational expenses. Typical uses of working capital loan funds include inventory purchases, payroll, rent, and other short-term financial needs. They provide the cash flow to keep operations running smoothly and seize economic opportunities. Working capital loans are typically easier to qualify for than most other types of business loans, making them a popular choice for small businesses needing quick funding.
Business Line of Credit: A business line of credit in Arkansas is a flexible financing option that allows small businesses to access funds as needed. Instead of a lump sum payment, funds for a small business line of credit are activated as an available credit limit. A revolving line of credit works similarly to a credit card, where you can borrow and repay funds as needed and only pay interest on the amount you use. This type of financing is ideal for covering short-term expenses, managing cash flow fluctuations, or seizing growth opportunities without applying for a new loan each time.
Revenue-Based Financing: Revenue-based financing in Arkansas is a form of alternative small business funding where the company’s revenue determines eligibility and amounts. Repayment comes directly from a percentage of future revenue. This type of financing program allows businesses to access capital without taking on additional debt, making it an attractive option for companies with fluctuating revenue streams.
SBA Loans: SBA loans provide funding to help businesses start, grow, and succeed. The Small Business Administration (SBA) partially guarantees these loans, providing security for lenders and allowing small businesses better access to capital. These partially guaranteed loans offer favorable terms such as lower interest rates and more extended repayment periods than conventional loans, making them an attractive option for an AR small business owner. An SBA loan in Arkansas can be used for various purposes, including working capital and equipment purchases. SBA 504 loan programs fund commercial real estate and other major fixed assets.
Invoice Factoring: Invoice factoring in Arkansas is an alternative business funding option in which a business sells its accounts receivable to a third party at a discount. This provides immediate cash flow, allowing the business to cover expenses or invest in growth without waiting for customers to pay their invoices. The factoring company then collects the total amount from the customers directly.
Merchant Cash Advance: A merchant cash advance (MCA) in Arkansas is a form of financing where a business receives a lump sum of money upfront in exchange for a percentage of future credit card sales. Small businesses with fluctuating revenue streams or those needing quick access to capital typically use this type of funding. While merchant cash advances can provide fast funding, they often come with high fees and may not be suitable for all businesses.
Business Term Loan: Business term loans in Arkansas are a type of financing in which a business borrows a lump sum and repays it with interest over a set period, with a fixed interest rate and consistent monthly loan payments. These loans are typically long-term financing, but there are also short-term business loans. Businesses usually use term loan proceeds for significant investments like equipment purchases, paying off existing business debt, commercial property purchases, or business expansion projects. The interest rates and terms of business term loans can vary depending on the lender and the borrower’s creditworthiness.
Equipment Financing: Equipment financing in Arkansas is a type of small business loan specifically used to purchase equipment and machinery for operations. Equipment loans allow businesses to acquire necessary assets without draining their cash reserves. Typically, the financed equipment serves as collateral for the loan, making it easier for companies to secure funding.
Asset-Based Loans: Asset-based loans (ABL) in Arkansas allow small businesses to unlock the value of the assets on their balance sheet to secure funding. ABL lenders have business assets appraised and then issue loan amounts based on the appraisal value. The assets become collateral for the loan, meaning the lender can claim the assets in case of default. Some examples of asset-based business loans include commercial real estate loans, certain construction loans, secured term loans, and accounts receivable financing.
Arkansas has a growing economy, and many small businesses thrive here. These businesses are vital for job creation and community growth. Entrepreneurs can find support to meet their goals with different business loan options.
The Arkansas Small Business Revolving Loan Guaranty Program helps small businesses secure funding by providing loan guarantees to lenders, reducing their risk. Companies can receive up to $250,000 with favorable terms. This support makes it easier for owners to get small business financing.
The Capital Access Program is another resource in Arkansas. It aims to help small businesses access funding. This program encourages banks to lend money by providing a reserve fund that protects lenders against potential losses. This means more small business funding opportunities for entrepreneurs.
The FORGE Community Loan Fund offers unique services for small businesses. This organization focuses on underserved communities and provides loans ranging from $2,500 to $100,000. The goal is to help local businesses grow and succeed. Offering flexible terms supports the business financing journey of many entrepreneurs.
Arkansas Capital Corporation provides various financing options. It focuses on helping startups and existing businesses expand. Arkansas Capital Corporation also offers assistance with business plans and financial projections. This guidance helps ensure that borrowers meet their small business financing objectives.
Communities Unlimited offers small business loans across Arkansas. Its focus is improving the economic status of communities. Communities Unlimited provides tailored support based on each business’s needs, which helps improve overall business finances in the area.
LiftFund provides microloans for small businesses in Arkansas. Since its establishment in 1994, it has helped many entrepreneurs start or grow their ventures. Loan amounts vary from $500 to $50,000, depending on the need. LiftFund aims to empower business owners through education, resources, and funding.
| LOAN TYPES | MAX AMOUNTS | RATES | SPEED |
|---|---|---|---|
| Merchant Cash Advances | $7.5k – $1m | Starting at 1-6% p/mo | 1-2 business days |
| SBA Loan | $50k-$10m | Starting at Prime + 2.75% | 8-12 weeks |
| Business Term Loan | $10k to $5m | Starting at 1-4% p/mo | 1-3 business days |
| Business Line of Credit | $1k to $250k | Starting at 1% p/mo | 1-3 business days |
| Receivables/Invoice Financing | $10k-$10m | Starting at 1% p/mo | 1-2 weeks |
| Equipment Financing | Up to $5m per piece | Starting at 3.5% (SBA) | 3-10+ business days |
| Revenue Based Business Loans | $10K – $5m | Starting at 1-6% p/mo | 1-2 business days |
Arkansas has a diversified economy, including many industries supporting its growth. This diversity helps businesses thrive, and each sector plays a vital role in the state’s economy.
The following are the six most prominent industries in Arkansas:
Agriculture is a significant part of Arkansas’s economy. The state is known for its rice, soybeans, and poultry production. Farmers grow crops and raise livestock throughout the region. This industry provides jobs and food for many people.
Manufacturing is another key industry in Arkansas. Companies make products like furniture, machinery, and food items. This sector employs thousands of workers. Manufacturing helps drive the economy forward.
Retail is essential to Arkansas’s economy. Stores sell everything from groceries to electronics. Retailers create jobs and provide goods for consumers. The state is also home to Wal-Mart, the largest retailer in the world.
Transportation and logistics are crucial for moving goods across the state and beyond. Arkansas has major highways and railroads that connect it to other regions. Companies in this industry help businesses distribute their products efficiently.
Healthcare is a growing industry in Arkansas. Hospitals and clinics provide essential services to residents, and the demand for healthcare professionals continues to rise, creating job opportunities for many people.
Tourism is crucial to Arkansas’s economy. The state has beautiful parks, lakes, and historical sites that attract visitors. Events and attractions bring in revenue and support local businesses.
Small business loans in Arkansas offer several advantages. Accessing capital is crucial for growth. These loans help businesses expand operations or invest in new equipment. This access to funds allows owners to take their ideas further.
Arkansas provides diverse loan options tailored to various business needs. From short-term loans to long-term financing, there are solutions for everyone. Owners can choose what fits their situation best, and this variety helps them meet unique financial goals.
Competitive interest rates are another benefit. Lower rates mean businesses pay less over time. These savings can be reinvested into the company, allowing more opportunities to grow and succeed.
Building business credit is essential for future financing options. Taking out a loan and making timely payments increases credit scores. A strong credit score opens doors to larger loans down the road.
Networking opportunities arise from obtaining these loans. Many lenders have connections within the local business community. They may introduce owners to mentors or potential partners. This support can lead to collaborative efforts.
Arkansas also encourages entrepreneurship through state programs. These initiatives aim to boost small businesses and create jobs. Arkansas business owners can gain valuable resources and advice by participating.
Business loans in Arkansas can have significant drawbacks. One major issue is the cost of debt. Borrowers often face high interest rates, which can lead to paying back much more than the original loan amount. These interest rates can vary widely based on the lender and the borrower’s credit history.
Many traditional lenders have strict qualifications. They require businesses to show strong financial health and a solid credit score, making it difficult for new or small businesses to qualify.
Collateral requirements add another layer of difficulty. Lenders may ask for assets, like property or equipment, to secure the loan. If a business cannot repay the loan, it risks losing these valuable assets.
Personal guarantees are also common in Arkansas business loans. This means that business owners must agree to pay back the loan personally if their business fails. This can put personal finances at risk and create stress for borrowers.
Late payments or defaults can damage credit scores. A lowered credit score affects future borrowing options. It can lead to higher interest rates on future loans or even denial of credit altogether.
The loan application process and required paperwork depend on your chosen Arkansas business loan. Funds can be approved and distributed for most products within three business days.
Here’s how to apply:
The first step is choosing the most sensible solution to the problem at hand. This should require a decent amount of research, as each product is designed for different types of expenses and cash flow cycles. Are you looking to cover a short-term or long-term cost? Is demand expected to increase or decrease in the coming months?
Considering the funds’ purpose will also help us determine the correct borrowing and terms for your needs.
Here are the documents and additional information required for all Arkansas business loans:
SBA Loan options require additional documents and information, such as business tax returns and a business plan. Visit our SBA Loan page for further information and learn what’s needed for the application.
You can begin the application process by calling us or filling out our one-page online application. Either way, you’ll be asked to enter the information from the previous section along with your desired funding amount.
Once you apply, a representative will contact you to explain the repayment structure, rates, and terms of your available options. This way, you won’t have to worry about any surprises or hidden fees during repayment.
If and when you’re approved, funds for Business Term Loans, Business Lines of Credit, Working Capital Loans, Equipment Financing, Merchant Cash Advance, Revenue-Based Business Loans, and Accounts Receivable Factoring should then appear in your business bank account in anywhere from 24 hours to one week. For SBA Loans, it usually takes 3-5 weeks (or more in some cases) to receive funding.
Your Arkansas business loan isn’t just a way to get financing for your business. It’s also an excellent opportunity to start building (or improving) your credit.
Regardless of the type of business loan you get, make all your required payments on time and in full. If you get a business credit line or another form of revolving credit, keep your loan balance below the credit limit.
Consistently making your business financing payments on time and in full will positively impact your credit. And that means preferred rates and terms when you next need business financing.
If your application is declined, you might have applied for the wrong product for your cash flow. In this case, we would likely recommend a different product with a less hazardous repayment structure.
Your loan application might also be declined after it is determined that you cannot afford to take on more debt. Instead, your needs and financial circumstances might be better suited for another financing tool, like a business credit card or even a personal loan. Both options can be accessed through the UCS site and are usually much more accessible to qualify for than business loans.
If your credit score is preventing you from accessing financing, you should consider credit repair services. We can help you identify the issues that keep your score down and develop practical solutions for eliminating them.
Arkansas small business owners have several business loan and lender options.
Traditional lenders include banks and credit unions. These institutions often provide lower interest rates on commercial business loans. However, they have strict eligibility requirements. Businesses usually need excellent credit scores to qualify. They frequently require several years of operation and high annual revenue. Collateral is also a common requirement.
Large national banks differ from local lenders like regional banks and credit unions. National banks may offer more funding options but can be less personal. Local lenders, like the Arkansas Federal Credit Union, often understand the community better and may provide more tailored services.
Alternative lenders have revolutionized access to small business loans in Arkansas. These online lenders allow quick applications through their websites. They use fintech tools to make fast decisions and provide speedy funding. Many small business owners appreciate this convenience.
Alternative lenders usually have more lenient qualifications than traditional lenders. While they charge higher interest rates, the benefits often outweigh the costs. Business owners can access funds quickly, which helps them seize opportunities or manage cash flow.
Small Business Loan marketplaces (like UCS) are changing the game for Arkansas entrepreneurs. These platforms let business owners apply to many lenders with just one application. This method saves time and reduces stress during the loan process.
After applying, approved businesses often receive multiple funding offers. This allows them to compare options and choose the best deal for their needs. Some marketplaces even connect applicants with experts who guide them through the selection process.
Community Development Financial Institutions (CDFIs) play a crucial role in Arkansas. CDFIs focus on providing loans to underserved communities or businesses that traditional lenders might overlook. They aim to support economic growth in local areas.
CDFIs often offer flexible terms and lower interest rates than other lenders. They are also dedicated to helping businesses succeed, making them an excellent option for many Arkansas entrepreneurs.
Arkansas promotes small business growth through various government assistance programs. These programs help small business enterprises by providing financial support and resources. They aim to create jobs and boost the economy.
Arkansas Development Finance Authority (ADFA) offers a Small Business Loan Guarantee Program for financing, a Rural Services Block Grant Program for rural infrastructure projects, and technical assistance/training workshops for small businesses. Loan guarantees help secure financing, grants fund infrastructure projects in rural areas, and workshops cover business planning, marketing, and financial management. These programs support small businesses in Arkansas to start, expand, and succeed.
The Arkansas Economic Development Commission offers a small business assistance program to support entrepreneurs and startups in the state. Through this program, businesses can access resources such as funding, mentorship, and networking opportunities to help them grow and succeed. The program aims to foster economic development and create a thriving business ecosystem in Arkansas by providing tailored support and guidance.
The Small Business Administration (SBA) regional office in Arkansas provides a range of resources and assistance for small businesses in the state. Small business owners can access counseling and training programs to help them start, grow, and succeed in their ventures.
The SBA also offers guidance on obtaining loans, navigating government contracts, and understanding compliance regulations. The SBA regional office in Arkansas also hosts workshops and events to connect small business owners with mentors, networking opportunities, and other valuable resources.
The Arkansas Small Business and Technology Development Center offers a wide range of assistance to small businesses in the state. Its services include one-on-one consulting, training workshops, and resources to help entrepreneurs start, grow, and succeed in their ventures. Whether developing a business plan, navigating regulations, or accessing funding opportunities, the center provides personalized support tailored to each business’s specific needs.
Additionally, they offer guidance on marketing strategies, financial management, and technology integration to help small businesses thrive in today’s competitive market. Through its expertise and resources, the Arkansas Small Business and Technology Development Center plays a vital role in supporting the growth and success of small businesses in the state.
Arkansas offers various small business grants to help entrepreneurs. These grants support different needs, from startups to expansions. Programs vary in focus and eligibility. Here are some key options available in Arkansas.
Arkansas offers several tax credits to support local businesses. These credits help reduce costs and encourage growth, and small businesses can benefit from these programs in various ways.
A low credit score limits financing options, but credit-challenged Arkansas small business owners can obtain financing with bad credit business loans. These specialized financing options focus on a business’s cash flow and growth potential more than the personal credit score of the business owner(s), increasing your chances of credit and lender approval.
Several alternative lenders specialize in providing business financing for credit-challenged entrepreneurs. Online lenders offer easy online applications with minimal documentation, quick decisions, and fast funding, which benefits small businesses with urgent capital needs.
However, business loans for bad credit often carry high interest rates and increased fees. In addition, you may receive a lower maximum loan amount, have shorter repayment terms, and require more frequent repayment. These conditions can lead to further financial strain if not properly managed. Ensure you have a plan and budget before agreeing to a bad credit business loan.
A popular strategy for AR business owners is to use a bad credit business loan as short-term financing until their credit improves. With a better credit score, entrepreneurs can potentially access lower-cost, long-term loans and pay off bad credit business loan debt.
Business loans in Arkansas can help entrepreneurs access financing to achieve new heights. However, understanding the available options and how each works is crucial to selecting the best deal.
Compare offers from various lenders to find the business funding program that provides the necessary capital for your goals with a repayment structure conducive to your cash. This can help you ensure success and avoid business debt pitfalls.
Contact us if you’re ready to start your Arkansas business loan journey. Our alternative financing experts can help you find the best funding programs to fuel growth in The Natural State.
Fraud Disclosure:
Please be aware that individuals have been fraudulently misrepresenting to business owners (and others) that United Capital Source, Inc. (“UCS”) can assist small businesses in receiving government grants and other forgivable business loans, when in fact those grants or loans do not exist or are not available. These individuals have ulterior motives and are engaging in the unauthorized use of the names, trademarks, domain names, and logos of UCS in an attempt to commit fraud upon unsuspecting small business owners.
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