North Carolina is an excellent state for small businesses. In 2022 and 2023, CNBC ranked it the #1 state for business, and in 2024, it came in second place behind Virginia.
With the ninth-largest population in the country, diverse industries, and an excellent workforce, many entrepreneurs are drawn to the Tarheel State. However, new and established businesses often require financing to fuel growth in the state’s competitive business environment.
This guide provides what you must know about North Carolina small business loans, including the pros, cons, and application process. Specifically, we’ll answer these questions and more:
North Carolinians can access various business loan programs to fund their operations.
Working Capital Loans: Working capital loans in North Carolina are a type of financing designed to cover a business’s day-to-day operational expenses. These loans often fund inventory purchases, payroll, rent, and other short-term financial needs. They can provide businesses with 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 NC small businesses needing quick funding.
Business Line of Credit: A business line of credit in North Carolina is a flexible financing option that allows small businesses to access funds up to a predetermined credit limit. It works similarly to a credit card, where you can borrow and repay funds as needed, only paying 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 North Carolina is a form of small business funding in which repayments are based on a percentage of the company’s 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 are guaranteed by the US Small Business Administration and provide funding to help businesses start, grow, and succeed. 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 small business owners. An SBA loan in North Carolina can fund various purposes, including working capital, equipment purchases, real estate acquisition, etc.
Invoice Factoring: Invoice factoring in North Carolina 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 in North Carolina is a form of alternative funding in which a business receives a lump sum of money upfront in exchange for a percentage of future credit card sales. Small businesses that can benefit from this type of funding include those with fluctuating revenue streams or those needing quick access to capital. 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 North Carolina are a type of financing where a business borrows a lump sum and repays it over a set period with a fixed interest rate and consistent monthly payments. These loans are ideal for small businesses looking to fund long-term investments like equipment purchases, business expansion projects, or commercial real estate acquisitions. 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 North Carolina is a type of small business loan specifically used to purchase equipment or machinery needed for operations. Equipment loans enable businesses to acquire necessary assets without draining their cash reserves. Typically, the purchased equipment serves as collateral for the loan, making it easier for companies to secure funding.
Asset-Based Loans: Asset-based loans (ABL) in North Carolina 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 amount. 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.
Small business owners in North Carolina can access several specialized loan options, including government-backed loans and business funding from nonprofit financial institutions.
The Carolina Small Business Development Fund (CSBDF) helps small businesses in North Carolina. It offers loans to those who may not qualify for traditional bank financing. The fund focuses on supporting local entrepreneurs and provides capital for various needs, including equipment and working capital.
The program’s core loan product offers up to $350,000 statewide for emerging entrepreneurs and established businesses. The loan offers flexible repayment terms and is available for most industries.
In addition, the fund provides the following specialized loan products:
Durham Small Business Opportunity Loan Fund: Provides financial assistance to small businesses in Durham, North Carolina, to help them grow and thrive. In partnership with the CSBDF, this fund offers low-interest loans to entrepreneurs who may not qualify for traditional bank financing, ultimately supporting the local economy and fostering business development in the community.
Meck Lending: Provides loans of up to $75k to small businesses in Mecklenburg County, North Carolina. These loans help entrepreneurs access the capital they need to start or grow their businesses, contributing to the local community’s economic development.
Rural Microentrepreneur Assistance Program (RAMP): The RAMP microloan program offers loans up to $50k at 7% interest rates to qualifying rural small businesses. This program aims to support entrepreneurship and economic development in underserved rural communities by providing resources and support to startup businesses. Through initiatives like this, small businesses can thrive and contribute to the growth of rural economies.
The SSBCI Capital Access Program in North Carolina is designed to help small businesses access much-needed capital to grow and succeed. This program works by providing financial assistance to participating lenders, such as banks and community development financial institutions, which in turn offer loans to eligible small businesses.
These loans can be used for various purposes, including working capital, equipment purchases, real estate acquisition, and more. By partnering with lenders through the SSBCI program, small businesses in North Carolina can access the funding they need to expand their operations and create jobs in the local community.
USDA loans are another option for rural businesses in North Carolina. The US Department of Agriculture supports these loans to foster economic growth in rural areas and improve the quality of life by providing funding for business operations.
These loans can cover various expenses, such as land purchases and building renovations. Loan amounts can go up to $50,000 or more, depending on the business’s needs. USDA loans often have lower interest rates than traditional loans, making them an excellent choice for rural entrepreneurs looking to expand their operations.
Local governments play a crucial role in enhancing financing opportunities. They work alongside organizations like the SBA, CSBDF, and USDA. Their efforts help create programs that support small businesses and provide technical assistance.
Many cities and counties offer financial education centers. These centers provide resources and workshops for business owners. They focus on financial literacy and business planning skills. Owners can learn about budgeting, credit scores, and loan applications.
Counseling services are also available through local governments. Business consultation services help owners navigate the challenges they face. This support increases the chances of success for new ventures.
| 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 |
North Carolina has a strong economy, and many businesses thrive here. The state supports various industries, each contributing to job creation and economic growth. Understanding these sectors helps when seeking business loans.
This industry is vital to North Carolina. It ranks among the top states for producing tobacco, sweet potatoes, and poultry. Farmers often need loans for equipment and land.
Manufacturing plays a significant role in the state’s economy. North Carolina produces textiles, furniture, and machinery. Many manufacturers rely on loans to upgrade technology and expand operations.
Charlotte is the nation’s second-largest banking sector after New York City. It is home to several large banks and financial institutions, including Bank of America and Truist Financial. This sector provides many jobs and requires funding for new projects and services.
North Carolina invests heavily in renewable energy sources like solar power. The state ranks second in the nation for solar energy production. Companies in this field often seek loans to finance new installations.
North Carolina’s film industry has grown significantly. The state offers tax incentives to attract filmmakers. This sector requires funding for production costs, which can come from business loans.
Tourism is an essential part of the state’s economy. North Carolina attracts millions of visitors annually with its beaches, mountains, and historical sites. Businesses in tourism often need loans for marketing and expansion.
Small business loans in North Carolina offer numerous benefits. They provide essential capital to support business development and growth, including funding for startups, expansions, equipment, hiring, working capital, and commercial real estate.
Getting a competitive interest rate on a North Carolina small business loan may be possible. The state offers several programs to assist rural businesses or those from underserved communities. In addition, Charlotte’s financing hub may enable some small business owners in North Carolina to access favorable bank or credit union programs.
Many of these loans come with flexible repayment terms. Small businesses also have access to various alternative lenders and online business funding platforms that can provide fast funding with less stringent qualifications than traditional lenders.
Obtaining and successfully repaying small business loans can help build your business credit profile, opening the door to more advantageous financing options in the future. Seeking business loans can also lead to networking opportunities.
Small business loans in North Carolina come with several disadvantages that borrowers should consider. One significant drawback is the potential for high interest rates, which can make loan repayment challenging and potentially turn a small loan into a substantial financial burden.
Strict eligibility criteria, such as a good credit score and a solid business plan, can be difficult for new businesses to meet, limiting their access to much-needed funds. Repayment terms can pressure business owners, especially if unexpected challenges arise, leading to stress and potentially impacting operations and growth plans.
Additionally, obligations tied to loans can restrict flexibility, forcing businesses to prioritize debt repayment over reinvestment in growth opportunities. Debt accumulation from multiple loans can become overwhelming, risking default and damaging credit scores.
Lender fees further increase the overall cost and stress associated with North Carolina business loans. In addition, many lenders require collateral or a personal guarantee, which puts business and personal assets at risk in the case of a default.
The application’s required paperwork depends on your NC business loans. 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. 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 North Carolina business loans:
SBA Loans 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 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 North Carolina 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 at this time. Instead, your needs and financial circumstances might be better suited for another financing tool, like business credit cards 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.
Many financing options exist for small business owners in North Carolina. They can choose from traditional banks, credit unions, and alternative lenders. Each option has its benefits and drawbacks, so small business owners should evaluate their needs before choosing a lender.
Traditional lenders include banks and credit unions. They often provide lower interest rates than other options. However, they have stricter qualifications, which means that not every business will qualify easily.
National banks like Bank of America and Wells Fargo operate across the country. They offer various loan products but may not focus on local businesses. Local banks such as First National Bank and CommunityOne Bank understand the regional market better. They can tailor loans to fit local needs. Credit unions like Coastal Federal Credit Union also support small businesses with competitive rates.
Alternative lenders are another choice for business loans in North Carolina. These lenders usually offer faster funding and have more flexible requirements, making it easier for businesses to get approved. However, their interest rates are typically higher.
Online platforms provide quick access to funds. They focus less on credit scores and more on cash flow. This can benefit newer businesses or those with less-than-perfect credit histories.
The rise of fintech business financing marketplaces has revolutionized the lending landscape in North Carolina. These platforms connect entrepreneurs with a diverse network of lenders, streamlining the borrowing process. Fintech platforms like United Capital Source leverage technology to provide access to various funding options, empowering business owners to find the best financing solutions for their needs.
Community Development Financial Institutions (CDFIs) are vital in North Carolina’s lending landscape. They focus on helping underserved communities and small businesses. CDFIs often provide loans with more favorable terms than traditional lenders.
CDFIs in the state include organizations like Self-Help Credit Union and the Carolina Small Business Development Fund. These organizations aim to support local economies by offering funding that aligns with community needs.
North Carolina provides various resources to help small businesses grow and thrive.
In addition to financial programs, CSBDF offers crucial assistance programs to small business owners. It also provides various events and training programs. Business owners can request business assessments and solutions to help them develop. The program also offers specialized resources like the Women’s Business Center and Programa Empresarial Latino.
EDPNC is a private, nonprofit organization dedicated to promoting economic growth in North Carolina. By working with businesses, local governments, and other stakeholders, the EDPNC helps to attract new companies to the state, support existing businesses, and create jobs for North Carolinians.
The EDPNC plays a crucial role in driving economic development and prosperity throughout the state through various programs and initiatives. With a focus on innovation, entrepreneurship, and collaboration, the EDPNC is a crucial player in shaping the economic landscape of North Carolina for the future.
Local SBA offices provide direct support to business owners. They offer one-on-one counseling sessions to discuss financial options and help navigate the loan and grant application process.
Each office hosts events where business owners can learn about available assistance. Networking opportunities allow entrepreneurs to connect with potential partners or investors.
The SBA has local offices in the following North Carolina regions:
Local business development agencies play an essential role in helping small businesses. They provide guidance on starting and growing a business and often partner with the SBA to offer workshops and training sessions.
Organizations like the North Carolina Small Business and Technology Development Center (SBTDC) assist entrepreneurs in North Carolina. They help create business plans and understand market needs. Their services are free or low-cost.
North Carolina offers several business grants to support local entrepreneurs. These grants help businesses access funding for various projects. Many agencies and offices provide these opportunities.
North Carolina offers various tax credits to support businesses. These incentives help companies save money and stimulate the economy. Here is a list of some key business tax credits available in North Carolina:
Many people wonder if they can secure a business loan in North Carolina with bad credit. The answer is yes, but it may not be easy. Lenders often look at credit scores when deciding whether to approve a loan. A low credit score may limit options, but there are still possibilities.
North Carolina small business owners can potentially access bad credit business loans from lenders that focus on the overall health of their business rather than just their credit score. Many alternative lenders provide loans for those with bad credit.
These lenders often have more flexible requirements. They may consider other factors, such as cash flow or business plan strength. This approach can help businesses that struggle with traditional financing.
However, interest rates may be higher for those with bad credit. It’s essential to read the terms carefully before signing anything. Understanding all fees and conditions will help avoid surprises later.
Some small business owners use bad credit business loans as temporary financing. They can provide funding for urgent needs and possibly help repair credit with timely payments. Once credit improves, business owners could qualify for more advantageous business financing and repay the bad credit business loan.
Small business loans can be a game-changer for your North Carolina business. From specialized financing to government assistance, there’s a path for every entrepreneur.
Understanding the advantages and disadvantages helps you make informed choices. Even if your credit isn’t perfect, you can find lenders that cater to your needs.
Research your options and contact lenders or local programs that can help you thrive. Your next step could be the key to unlocking your business’s potential. Contact us if you’re ready to start exploring your financing options now.
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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