Kansas presents a profitable small business environment with business-friendly regulations and a skilled workforce. However, the attributes that make Kansas attractive to entrepreneurs also make it a competitive market.
Many small business owners in Kansas rely on financing solutions to overcome challenges and fuel growth. The Sunflower State offers various small business loan options, including bank business loans, alternative lenders, and state-backed programs. Choosing the best financing option for your needs, qualifications, and cash flow is crucial to ensuring success and avoiding business debt pitfalls.
This guide explores what you should know about small business loans in Kansas, including the available options, pros and cons, and the application process. Specifically, we’ll answer these questions and more:
Kansans can access various business loan program options to fund their operations.
Working Capital Loans: Working capital loans in Kansas 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 Kansas 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 Kansas 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 a KS small business owner. An SBA loan in Kansas 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 Kansas 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 Kansas 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 Kansas 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 Kansas 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 Kansas 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.
Kansas offers several specialized programs to support small business growth and development. These options help entrepreneurs secure the funds they need. Local funding options can provide tailored solutions for various business needs.
The GROWKS Loan Program supports small businesses in Kansas. This program focuses on helping companies that create jobs or expand operations. It provides flexible terms and competitive interest rates. Businesses can use these loans for equipment, working capital, or real estate. There are also GROWKS equity programs that provide funding.
The South Central Kansas Economic Development District (SKEDD) provides multiple loan types:
NBKC Bank offers various business banking products in Kansas. They provide loans for businesses of different sizes and industries. Their loans are straightforward to apply for and fast to approve. Borrowers benefit from competitive rates and flexible repayment terms.
The Local Initiatives Support Corporation (LISC) also provides business financing in Kansas. LISC focuses on underserved communities. Its loans aim to strengthen local economies by supporting small business formation. LISC offers resources and guidance alongside financial support.
The Economic Development Administration (EDA) has a Revolving Loan Fund in Kansas. This fund targets businesses looking to create jobs and promote economic growth. The loans are designed for long-term projects that need substantial funding. They often require matching funds from borrowers.
The PROPEL Small Business Loan Fund assists small businesses in Kansas. This fund aims to foster entrepreneurship and innovation. It provides funding options that help businesses grow and succeed. Entrepreneurs can access capital for expansion, equipment purchase, or operational costs.
| 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 |
Kansas has a diverse economy. It supports many small businesses across various sectors. The state is known for agriculture, manufacturing, and services. Each industry contributes to the local economy and creates jobs for residents.
Here are some of the most prominent industries in Kansas:
Agriculture is the backbone of Kansas’s economy. The state leads in wheat production. Farmers also grow corn, soybeans, and sorghum. Livestock farming is another big part of agriculture here. This industry keeps many people employed and helps local businesses thrive.
Manufacturing plays a significant role in Kansas’s economy as well. Factories produce everything from aircraft to machinery. Major companies like Spirit AeroSystems and Garmin have operations in the state. These manufacturers provide jobs and boost the economy through exports.
This is another critical industry. Kansas’s strategic location in the United States makes it an ideal hub for shipping goods. Companies like UPS and FedEx have large facilities here. This sector helps support other industries by moving products efficiently.
Healthcare services are growing rapidly in Kansas. Hospitals and clinics offer a wide range of medical services. The need for healthcare professionals continues to rise as the population ages. This industry creates many job opportunities for residents.
Retail is also essential in Kansas’s economy. Local shops and large retailers provide goods to communities. Many small businesses thrive alongside national chains. Shopping centers attract customers from surrounding areas, boosting the local economy.
Finance and insurance form another significant sector in Kansas. Banks, credit unions, and insurance companies help individuals manage their money. These institutions provide loans, mortgages, and investment options for residents and businesses alike.
Kansas offers many benefits for small business loans. One of the most essential advantages is access to capital. Businesses can use these loans to fuel growth. This funding helps them expand operations, hire new employees, or invest in equipment.
Diverse loan options are available for various business needs. Entrepreneurs can choose from traditional bank loans, SBA loans, and alternative financing. Each option has different terms and requirements. This variety allows businesses to find the best fit for their specific situation.
Competitive interest rates make Kansas business loans attractive. Lower rates mean businesses pay less over time. This can free up cash flow for other expenses, like marketing or inventory.
Building business credit is another critical advantage. Taking out a loan and making timely payments improves a company’s credit score. A strong credit profile opens doors for future financing opportunities.
Networking opportunities arise from engaging with local lenders and business organizations. These connections can lead to valuable partnerships and resources that help businesses thrive.
Business loans in Kansas have several drawbacks, which can affect a business’s financial health. Understanding these issues is vital for any entrepreneur.
The cost of debt can be significant. Businesses often pay interest on loans. This adds to their overall expenses. High interest rates can make it hard to repay the loan. Some lenders may charge fees that increase the total cost. A business might find itself trapped in a cycle of debt.
Stringent qualifications at traditional lenders also pose a challenge. Many banks require strong credit scores and detailed financial records, making it challenging for new businesses or those with poor credit histories to get loans. The strict requirements also limit access to necessary funds.
Collateral requirements can put a business at risk. Lenders often ask for assets as collateral. If a business cannot repay the loan, it may lose its assets. This could include equipment or property vital to operations. Losing such items can harm the business’s ability to function.
Personal guarantee requirements add another layer of risk. Some lenders require owners to personally guarantee the loan. This means personal assets could be at stake if the business fails to repay. Homes and savings accounts may be jeopardized, creating stress for business owners.
Late payments and defaults can damage business credit scores. Missing payments lead to penalties and additional fees, creating a vicious cycle of debt that is hard to escape. Poor credit affects future borrowing opportunities, making it harder to grow.
The loan application process and required paperwork depend on your chosen Kansas 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 Kansas 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 Kansas 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.
Kansas small business owners have several lender options to consider, from private lenders to Certified Development Companies (CDCs).
Traditional lenders include banks and credit unions. They often provide low interest rates, making them attractive to small business owners. However, qualifying can be challenging. Banks typically require excellent credit scores. They also look for businesses with several years of operation, high annual revenue, and consistent cash flow. Collateral and a solid business plan are usually necessary as well.
Large national banks have more extensive credit facilities but focus more on commercial enterprises than small businesses. This approach can make it hard for smaller companies to get help.
On the other hand, local lenders like regional banks and credit unions tend to be more flexible. They understand the local market better and may offer tailored solutions for Kansas businesses.
Alternative lenders have changed the landscape for small business financing in Kansas. They provide convenient online applications that save time. Many business owners find these lenders easier to qualify with fewer requirements. Approvals are quick, and funding times are fast.
However, alternative lenders often charge higher interest rates. Despite this cost, many business owners appreciate the accessibility and speed of funding. The ability to get money quickly can be crucial for a growing business.
Small Business Loan Marketplaces have been game changers for Kansas entrepreneurs. These platforms allow business owners to apply to a network of lenders using a single online application. This process saves time and reduces stress.
Once approved, businesses receive multiple funding offers. They can choose the best option based on their needs and cash flow.
Some marketplaces even use a concierge approach. This means they connect applicants with lending experts who guide them through the process and help select the best funding offer.
Community Development Financial Institutions (CDFIs) play an essential role in Kansas. These institutions focus on helping underserved communities gain access to capital. CDFIs often provide loans with favorable terms to small businesses struggling with traditional financing.
CDFIs understand local challenges and work closely with business owners to support their growth. They help foster economic development in Kansas communities by providing tailored financial products.
Kansas offers several small business assistance programs through government agencies and nonprofit organizations.
NetWork Kansas provides small business assistance to entrepreneurs in the state. This program connects business owners with resources and funding options and offers various services, including loans, mentoring, and networking opportunities.
In 2006, the state created NetWork Kansas to help local businesses grow. They focus on supporting startups and existing businesses. Entrepreneurs can access their online platform for guidance on funding and resources.
Kansas has several Small Business Development Centers (SBDC) across the state. These centers provide free or low-cost consulting services to small businesses, helping with business plans, marketing strategies, and financial analysis.
The SBDC network also offers workshops and training sessions. These sessions cover essential topics like accounting and social media marketing, and business owners can learn valuable skills to improve their operations.
The U.S. Small Business Administration’s regional office in Kansas offers various programs to assist small businesses. They provide loan guarantees, which help secure funding from lenders.
In 2020, the SBA launched the Paycheck Protection Program (PPP) to support businesses during the pandemic. Many Kansas businesses benefited from this program. The SBA also offers resources for disaster relief and recovery efforts.
Local organizations like SCORE and Chambers of Commerce offer additional support for small businesses. SCORE is a nonprofit that provides free mentoring services from experienced business professionals. They help entrepreneurs develop their ideas into successful businesses.
Chambers of Commerce also play a vital role in supporting local economies. They offer networking opportunities and advocate for small business interests. Many chambers provide resources such as workshops and events tailored to local needs.
Kansas offers several small business grants to help entrepreneurs succeed. These grants support various needs, from starting a new business to expanding an existing one. Here’s a list of some critical grants available in the state.
Kansas offers several tax credits to help support local businesses. These credits can reduce the amount of taxes a business owes. They also encourage growth and job creation. Here are some key tax credits available in Kansas.
A low credit score limits financing options, but credit-challenged Kansas 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 KS 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 Kansas can take your enterprise to the next level, but it’s crucial to understand how these loans work. Matching the right lender and loan for your needs and ability to repay can make all the difference.
Compare options from various lenders to find the best deal. You can also consider networking with other Kansas small business owners to find loans that worked for them.
Contact us if you’re ready to start your Kansas small business loan journey. Our alternative financing experts can help you find the best financing options to fuel growth in The Sunflower 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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