The Commonwealth of Massachusetts provides many small business opportunities for established and aspiring entrepreneurs. Featuring the largest economy in New England, the Bay State thrives on tourism, transportation and shipping, agriculture, and much more.
However, many Massachusetts small business owners require funding to fuel growth in the state’s competitive market. Fortunately, MA small businesses have various lender and business loan options serving different purposes, such as working capital, equipment, hiring, expansion, etc.
This guide breaks down what you should know about Massachusetts small business loans, including the available options, benefits, drawbacks, and application process. Specifically, we’ll answer these questions and more:
Bay Staters can access various business loan programs to fund their operations.
Working Capital Loans: Working capital loans in Massachusetts 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 other business loans, making them a popular choice for small businesses needing quick funding.
Business Line of Credit: A business line of credit in Massachusetts is a flexible financing option that allows small businesses to access funds as needed. Instead of a lump sum payment, funds for a 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 Massachusetts 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 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 loans offer favorable terms such as lower interest rates and more extended repayment periods than traditional bank loans, making them an attractive option for an MA small business owner. An SBA loan in Massachusetts can be used for various purposes, including working capital and equipment purchases. SBA 504 loans fund commercial real estate and other major fixed assets.
Invoice Factoring: Invoice factoring in Massachusetts 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 Massachusetts 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 Massachusetts are a type of financing in which a business borrows a lump sum and repays it with interest over a set period, with fixed interest rates 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, commercial real estate, 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 Massachusetts is a type of small business loan specifically used to buy machinery and equipment 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 Massachusetts 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, secured term loans, and accounts receivable financing.
Massachusetts offers various specialized small business financing programs.
The Massachusetts Growth Capital Corporation (MGCC) is a quasi-public organization that provides financial resources and technical assistance to help small businesses grow and thrive in Massachusetts. MGCC aims to support entrepreneurship, job creation, and economic development in the region through various loan programs, grants, and partnerships.
By offering access to capital and business resources, MGCC plays a crucial role in fostering innovation and driving the growth of small businesses in Massachusetts. Focusing on underserved communities and industries, MGCC plays a vital role in promoting economic equity and opportunity throughout the state.
MassDevelopment offers various lending programs tailored to support small businesses in Massachusetts. These programs provide access to capital for companies looking to expand, purchase equipment, or invest in real estate.
MassDevelopment understands the unique needs of small businesses and aims to provide flexible financing options to help these enterprises thrive. Whether through low-interest loans, loan guarantees, or other financial assistance, MassDevelopment is committed to supporting the growth and success of small businesses in the state. Their lending programs are designed to be accessible and responsive to the specific challenges faced by small business owners, making them a valuable resource for entrepreneurs looking to take their businesses to the next level.
MassVentures focuses on venture capital investments. It aims to support innovative startups and growing companies by providing funding to help them scale their operations. Investments typically target technology-driven companies, which helps stimulate economic growth in Massachusetts. Entrepreneurs can also benefit from mentorship and networking opportunities.
Local financing programs exist in various regions, like Boston. These programs often partner with community banks and credit unions. They provide tailored solutions for business owners.
For example, Boston offers the Boston Small Business Fund, which assists local entrepreneurs with loans and grants. Other cities may have similar initiatives to boost local economies. Business owners can find many options available to them. Each program has its specific focus, aiming to improve cash flow and support growth.
| 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 |
Massachusetts’s economy is diverse and robust. Small businesses play a vital role in this economy. They create jobs, drive innovation, and help local communities thrive.
Here are some of the most prominent industries in Massachusetts:
This industry includes hospitals, research facilities, and biotech firms. Massachusetts is home to many top hospitals and universities. Companies here work on new medicines and treatments. The state is known for its strong focus on medical research.
Education is a significant part of the Massachusetts economy. The state has many prestigious colleges and universities, like Harvard and MIT. These institutions attract students from all over the world, provide jobs, and contribute to local economies.
This industry includes banks, investment firms, and insurance companies. Massachusetts has a long history in finance. Many firms offer services to both individuals and businesses. This industry helps manage money and investments effectively.
Technology companies thrive in Massachusetts. The state is known for software development, cybersecurity, and IT services. Many startups begin in tech hubs like Boston and Cambridge. These companies often seek funding through business loans to grow their operations.
Tourism is an essential industry in Massachusetts. Historic sites, beautiful landscapes, and cultural events attract millions of visitors each year. Popular destinations include Boston, Cape Cod, and Salem. This industry supports many small businesses like hotels and restaurants.
Manufacturing remains vital to the state’s economy. Companies produce goods ranging from electronics to food products. Advanced manufacturing techniques help improve efficiency and quality. Many manufacturers rely on business loans for equipment upgrades or expansion.
Small business loans in Massachusetts offer numerous advantages to entrepreneurs looking to start or expand their businesses. One benefit is access to capital, allowing businesses to invest in equipment, inventory, marketing, and other essential expenses.
These loans can help businesses manage cash flow fluctuations and cover unexpected costs. Additionally, small business loans can provide flexibility in repayment terms, offering options that align with the business’s revenue stream.
Furthermore, obtaining a business loan can help establish and build credit for the business, potentially leading to better terms and rates in the future. With a business loan’s support, Massachusetts entrepreneurs can seize growth opportunities, create jobs, and contribute to the local economy.
Small business loans in Massachusetts come with several disadvantages that entrepreneurs should consider before taking on debt. One major drawback is the high interest rates associated with these loans, which can significantly increase the overall cost of borrowing.
Strict eligibility requirements and lengthy application processes can make qualifying for traditional business loans challenging. Moreover, some lenders may require collateral, putting business assets at risk if the business cannot repay the loan.
Another disadvantage is the potential impact on cash flow, as monthly loan payments can strain a business’s finances, especially during slower periods. Finally, taking on debt can limit a business’s flexibility and financial freedom, as funds must be allocated towards repaying the loan rather than investing in growth or innovation.
The application’s required paperwork depends on your chosen Massachusetts 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 information required for all Massachusetts business loans:
SBA Loan options require additional documents and information, such as a business plan. Visit our SBA Loan page to 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 Massachusetts 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 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 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.
Massachusites have access to various lender options.
Traditional lenders, like banks and credit unions, often provide lower interest rates than other options. However, they have stricter qualifications. Most traditional financial institutions require excellent credit, several years in business, high annual revenue, and collateral requirements.
Large national banks may offer more resources but can be less personal. Local banks focus on the community and better understand local businesses. Credit unions also prioritize members, which can lead to better service. Carefully consider your needs when choosing between a commercial or community bank.
Online lenders have changed the landscape for small business loans. These nonbank and online lenders offer streamlined online loan applications, providing quick decisions and fast funding.
The downside is higher interest rates. Many businesses choose this route for convenience, even if it costs more. When selecting a lender, it is essential to weigh the speed against the cost.
Small Business Loan Marketplaces have become a game-changer for business owners in Massachusetts. They allow applicants to apply to multiple lenders with one application, saving time and increasing their chances of approval.
Some marketplaces offer loan experts who guide business owners through their options. They help find the best fit based on business goals and cash flow needs.
Community Development Financing Institutions (CDFIs) play an essential role in Massachusetts. They focus on helping underserved communities get access to capital. CDFIs often provide loans with flexible terms and lower rates. This makes them suitable for businesses that might struggle with traditional financing options. Their mission is to promote economic growth in local areas.
Government programs support small businesses in Massachusetts. These programs help small business owners access funding, resources, and guidance. The goal is to encourage growth and improve the local economy.
The Massachusetts Executive Office of Economic Development (EOED) plays a crucial role in fostering economic growth and prosperity in the state. As the primary agency responsible for driving economic development initiatives, the EOED works to attract new businesses, support existing industries, and create job opportunities for residents.
Through strategic partnerships with local businesses, government agencies, and educational institutions, the EOED helps to stimulate innovation, entrepreneurship, and investment in key economic sectors. By providing resources, incentives, and guidance to businesses of all sizes, the EOED aims to build a vibrant and resilient economy that benefits all residents of Massachusetts.
The Massachusetts Small Business Loan Review Board reviews loan applications and the loan process when small business owners feel they were unfairly denied a small business loan. Small businesses can file an appeal with the board. If the appeal is successful, the lender must reconsider the loan application, but it does not guarantee approval.
Massachusetts’s Small Business Administration (SBA) offices are crucial in supporting small business owners in the state. These offices provide various services and resources to help entrepreneurs start, grow, and succeed in their ventures. Small business owners can access counseling, training, and technical assistance through the SBA offices.
Additionally, they offer assistance with securing small business loans and access to capital, which is often a significant challenge for many small businesses. MA small business owners can find a list of preferred SBA lender options that offer multiple SBA loan types. The SBA offices in Massachusetts also guide navigating government contracting opportunities and provide support in disaster recovery efforts.
Local programs also assist small businesses throughout Massachusetts. SCORE is one such program that provides mentoring services. Experienced volunteers guide small business owners through challenges.
Regional Tourism Councils promote local tourism-related businesses. They offer grants and marketing assistance to enhance visibility. Local Chambers of Commerce also provide networking opportunities and resources.
These organizations collaborate to create a supportive environment for small businesses and offer valuable tools for growth and success.
Massachusetts offers various grants to support businesses. These grants help with growth and development. They assist small businesses in many ways. Here are some options available:
Massachusetts offers several tax credits to help small businesses grow. These credits can reduce the amount of tax a business has to pay. They support various activities, from hiring employees to investing in new technology.
Here is a list of some key tax credits available in Massachusetts:
A low credit score limits financing options, but credit-challenged Bay Staters can still access needed capital 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 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 Massachusetts 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.
Navigating business loans in Massachusetts can be a game changer for your venture. With various options available, from specialized financing to government assistance, you have the tools to support your business goals.
Understanding the advantages and drawbacks helps you make informed decisions. Whether you’re just starting or looking to expand, there’s a loan or grant that fits your needs.
Contact us if you’re ready to explore your small business loan options in Massachusetts. Our alternative financing experts can help you find the best funding programs to fuel growth in the Bay 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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