Montana is well-regarded as a pro-business state with friendly tax policies, a competitive cost of doing business, and a streamlined regulatory environment. The state’s government works closely with private enterprises to foster an entrepreneurial spirit in Big Sky Country.
Despite the business-friendly policies, the state’s sparse population and low GDP present some challenges. Many Montana business owners rely on financing to help overcome these challenges. Fortunately, Montana small business owners have many loan options, but choosing the best lender and loan for your business needs is essential.
This guide explores what you should know about business loans in Montana, including the available options, pros and cons, and the application process. Specifically, we’ll answer these questions and more:
Montanans can access various business loan program options to fund their operations.
Working Capital Loans: Working capital loans in Montana 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 Montana 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 Montana 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 MT small business owner. An SBA loan in Montana 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 Montana 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 Montana 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 Montana 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 payments. These loans are typically long-term financing, but there are also short-term business loans. Loan terms can vary. 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 Montana 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 Montana 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.
Montana has several specialized funding programs to support small businesses. These initiatives are designed to address the unique needs of Montana entrepreneurs, from startups to established enterprises, ensuring they have access to the resources needed to thrive.
The Big Sky Economic Development Corporation (EDC) Revolving Loan Fund (RLF) provides financial support to small businesses that might not qualify for traditional bank loans. This program focuses on fostering local economic growth by offering flexible, low-interest loans.
Eligible businesses can use the funds for working capital, equipment purchases, or facility expansion. To apply, businesses must submit a comprehensive business plan, financial statements, and demonstrate how the loan will promote job creation in the region.
The MicroBusiness Finance Program (MBFP) in Montana supports businesses with fewer than 10 employees. It provides loans up to $100,000 to help with startup costs, inventory purchases, or other small-scale business needs.
The program emphasizes empowering entrepreneurs who may face challenges securing traditional financing. Interested applicants should contact local economic development organizations to access funding and resources for business planning and financial management.
The USDA Business & Industry (B&I) Loan Guarantee program offers Montana businesses access to affordable financing backed by the federal government. By reducing lender risk, the program enables rural businesses to secure funding for purposes such as property acquisition, equipment, or debt refinancing.
Eligible businesses can apply through USDA-approved lenders. Applications require detailed financial projections and proof of eligibility for rural development assistance.
The Montana Growth Fund is a resource for small and medium-sized businesses seeking financing for expansion. The program offers a combination of loans and equity investments to help businesses grow their operations, create jobs, and increase economic activity. Applications typically involve submitting a detailed business proposal, including growth strategies and expected economic impacts.
Montana’s State Small Business Credit Initiative (SSBCI) 2.0 is a federally funded program that supports small businesses through credit enhancements and loan participation. It aims to address gaps in the market by providing guarantees or partnering with financial institutions to extend credit to underserved businesses. Interested businesses should contact local financial institutions to determine SSBCI participation and eligibility requirements.
| 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 |
Montana’s economy thrives on diverse industries supported by its natural resources, vibrant tourism, and entrepreneurial spirit. These key sectors drive job creation, attract investment, and shape the state’s unique economic landscape.
Here are some of the most prominent industries in Montana:
Agriculture is Montana’s backbone, driven by cattle ranching and wheat production. The state also produces barley, hay, and pulses, supporting global markets while preserving rural traditions and contributing to local food security.
Montana attracts millions of visitors annually to its national parks, ski resorts, and outdoor recreation areas. Tourism bolsters local economies, creates seasonal and full-time jobs, and showcases the state’s natural beauty to the world.
With abundant natural resources, Montana produces coal, oil, and renewable energy like wind and hydropower. This industry sustains economic development while driving innovation in cleaner and more efficient energy production methods.
Timber and wood products are significant to Montana’s economy. Sustainable forest management practices are central to balancing industry needs with environmental conservation efforts in the region.
Cities like Bozeman and Missoula are fostering tech innovation through startups and established firms. The sector benefits from a skilled workforce, local investment, and a supportive entrepreneurial ecosystem.
Montana’s healthcare industry meets the needs of a growing and aging population. The sector includes hospitals, clinics, and telemedicine services, ensuring access to quality care in rural and urban areas alike.
Montana business loans offer vital financial support for entrepreneurs and small business owners, enabling them to achieve their growth and operational goals. These loans provide access to essential capital that can be used for various purposes, such as purchasing equipment, hiring staff, or expanding facilities.
With a range of funding options available—including traditional bank loans, government-backed programs, and alternative lenders—businesses can find solutions tailored to their specific needs. Many of these programs also feature competitive interest rates, particularly those offered through local credit unions or economic development initiatives, making borrowing more affordable.
Additionally, business loans provide an opportunity to build credit, essential for securing future financing or favorable terms. Beyond financial benefits, many loan programs in Montana connect borrowers with valuable resources, including mentorship and networking opportunities. These connections can help businesses integrate into the local economic ecosystem, fostering growth and collaboration.
While Montana business loans can be an excellent resource, they also come with potential drawbacks that businesses must consider. One significant concern is the cost of debt, as even loans with competitive interest rates can add substantial financial pressure to businesses with tight cash flow.
Traditional lenders, such as banks and credit unions, often impose stringent qualification requirements, including excellent credit scores, several years of operation, and significant annual revenue, making it difficult for newer or smaller businesses to qualify. Collateral requirements are another potential drawback, as borrowers may need to put business assets, such as equipment or property, at risk.
Many loans also require personal guarantees, meaning an entrepreneur’s personal assets, like their home or savings, could be jeopardized if the business defaults. Late payments or defaults can harm business credit, further complicating future financing options. These risks emphasize the importance of carefully evaluating any business loan’s terms and long-term impact before proceeding.
The loan application process and required paperwork depend on your chosen Montana 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 Montana business loans:
SBA Loan options require additional documents and information, such as business tax returns, financial statements, and a formal 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 Montana 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.
Montana businesses can access various lenders, including traditional financial institutions, alternative lenders, and specialized marketplaces.
Banks and credit unions provide loans with competitive interest rates but often have stringent qualification criteria. Large national banks offer substantial funding options but may lack an understanding of the local market. Regional banks and credit unions are more flexible, tailoring solutions to Montana’s unique business environment.
Alternative lenders have transformed business financing by offering online applications, relaxed qualifications, and quick funding. Although their interest rates are higher, the accessibility and speed appeal to many Montana entrepreneurs.
Loan marketplaces simplify the search for financing. Entrepreneurs can apply to multiple lenders with one application, compare offers, and choose the best terms. Some platforms even connect applicants with advisors to guide them through the process.
CDFIs in Montana focus on supporting underserved communities with affordable loans and business development services. They often provide flexible terms and additional resources, making them a valuable option for startups and nonprofits.
Montana offers a range of government and nonprofit assistance programs to empower small businesses. These initiatives provide financial support, training, and resources tailored to the unique needs of entrepreneurs across the state. Small businesses can access the tools needed to thrive through public-private partnerships or local organizations.
Big Sky Economic Development (BSED) is a public-private partnership dedicated to fostering economic growth in Montana. It offers programs that help small businesses expand, improve workforce development, and attract new investments to the region. Notable initiatives include grant support for infrastructure improvements and workforce training.
The organization also operates a Small Business Development Program that provides consulting services, access to capital, and strategic planning assistance. Through these efforts, BSED plays a crucial role in strengthening Montana’s economic ecosystem and creating opportunities for business growth.
The Montana Financial Assistance Center promotes entrepreneurship and economic development by connecting businesses with financial and technical resources. It administers funding programs like grants and low-interest loans to help startups and expanding businesses.
Additionally, the center provides guidance on navigating federal and state funding opportunities, ensuring businesses can access the resources they need. The center helps entrepreneurs turn their ideas into sustainable ventures by offering tailored advice and funding connections.
The Small Business Administration’s (SBA) Regional Office in Montana offers invaluable resources to support local entrepreneurs. While it provides access to SBA-backed loans, its focus extends to educational programs such as workshops and webinars. These sessions cover topics like business planning, marketing strategies, and financial management.
The regional office also hosts networking events, helping business owners connect with mentors, industry experts, and potential collaborators. With its emphasis on education and community-building, the SBA plays a pivotal role in Montana’s small business landscape.
Montana’s Small Business Development Center (SBDC) offers comprehensive support to entrepreneurs through a network of regional offices. The SBDC provides free, personalized consulting on topics like business planning, market research, and financial management.
It also runs specialized programs, such as the Profit Mastery training series, which teaches businesses how to optimize profitability. Another key initiative is the assistance with securing funding, helping business owners prepare loan applications, and finding the right financial products. The SBDC serves as a vital resource for Montana businesses at every stage of their journey.
Local organizations like SCORE and Chambers of Commerce are instrumental in supporting Montana’s small businesses. SCORE offers free mentoring from experienced business professionals and workshops on topics such as marketing, operations, and strategic planning.
Chambers of Commerce across the state provide networking events, advocacy, and community-building opportunities to strengthen local economies. Additionally, some chambers offer business incubator programs to help startups launch successfully. These localized support systems foster collaboration and provide small businesses with the resources they need to succeed in their communities.
Montana offers several small business grants designed to foster growth, innovation, and economic development. These grants are typically aimed at startups, rural businesses, and enterprises in targeted industries.
Here are some of the available grants:
Montana provides various tax credits to support business growth, sustainability, and community contributions. These credits reduce tax liabilities and incentivize activities that benefit the state’s economy. Below are the key tax credits available:
A low credit score limits financing options, but credit-challenged Montana 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 MT 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 Montana provide essential funding to start, sustain, or grow your business. Understanding the available loan and lender options gives you the power to find the most advantageous loan for your business. This includes finding a loan you can qualify for that provides enough funding for your specific needs and a repayment structure conducive to your cash flow.
Consider shopping offers from multiple lenders to compare loan amounts, interest rates, and repayment terms. This lets you choose the best deal to get what you need while minimizing costs.
Contact us if you’re ready to start your Montana business loan journey. Our alternative lending experts can help you find the best business loan to fuel growth in Big Sky Country.
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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