Tennessee’s diverse economy provides ample opportunity for small business success. However, many entrepreneurs require financing help to drive growth in the Volunteer State.
Whether you need quick access to funding for working capital needs or long-term financing for major projects or purchases, understanding the available lender and business loan options is crucial. Choosing the right financing product for your needs and cash flow cycle can set you up for success and help you avoid business loan pitfalls.
This guide explores what you should know about Tennessee small business loans, including the benefits, drawbacks, and application process. Specifically, we’ll answer these questions and more:
Tennesseans can access various business loan programs to fund their operations.
Working Capital Loans: Working capital loans in Tennessee 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 Tennessee 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, 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 Tennessee 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 a TN small business owner. An SBA loan in Tennessee 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 Tennessee 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 Tennessee 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 Tennessee 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 Tennessee 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 Tennessee 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.
Tennessee aims to support small business growth and development through various programs. These initiatives provide funding and resources to help fuel job and economic growth in the state. May programs aim to help small businesses that struggle with credit approval from traditional financial institutions.
LiftFund Tennessee provides small business financing to entrepreneurs. This program focuses on underserved communities by offering access to various loan programs. The terms vary based on the borrower’s needs. LiftFund aims to help businesses grow and create jobs.
Businesses can use these funds for various purposes. They may need money for inventory, equipment, or working capital. The application process is straightforward. Applicants must provide basic information about their business and financial history.
Fund Tennessee operates as Tennessee’s State Small Business Credit Initiative (SSBCI), a federal program administered by the US Department of Treasury. The program’s LendTN initiative collaborates with Community Development Financial Institutions (CDFIs) to provide small business loans to entrepreneurs in Tennessee.
Through this partnership, Fund Tennessee aims to support and stimulate the growth of small businesses in the state by providing access to much-needed capital for expansion, innovation, and job creation. By leveraging the resources and expertise of CDFIs, Fund Tennessee can reach a broader range of small businesses and help them thrive in the competitive market landscape. This initiative is crucial in fostering economic development and sustainability in Tennessee’s local communities.
Launch Tennessee promotes innovation and entrepreneurship in the state. This program provides specialized loans for startups and tech companies, focusing on high-growth potential businesses.
Launch Tennessee offers multiple loan products, including seed funding and bridge loans. Each option caters to different stages of business development. Depending on their plans and goals, startups can receive up to $1 million.
Tennessee cities like Chattanooga, Nashville, and Memphis offer local small business funding programs. Each city has unique initiatives to support its entrepreneurs.
Chattanooga has the Chattanooga Area Chamber of Commerce, which provides resources and funding opportunities. It helps businesses find financing that fits their needs.
Nashville offers the Nashville Entrepreneur Center, which connects startups with investors and lenders. Entrepreneurs can access mentorship and funding options.
Memphis features the Memphis Small Business Loan Program. This initiative helps local businesses secure loans for growth and operations. It targets small businesses looking for support in a competitive market.
| 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 |
Tennessee has a diverse economy with small businesses playing a vital role. They create jobs and contribute to local communities. The state encourages entrepreneurship, which helps many industries thrive.
Tennessee’s economy is supported by the production of crops like soybeans, corn, and cotton, as well as livestock farming with cattle and poultry.
Millions of people visit Tennessee yearly to see attractions such as the Great Smoky Mountains and Graceland, boosting revenue and creating jobs in the hospitality and service sectors.
Major healthcare providers like HCA Healthcare and Vanderbilt University Medical Center contribute to the growth of the healthcare industry in Tennessee and offer various job opportunities.
Tennessee’s manufacturing sector produces automobiles, machinery, and chemicals, and it attracts companies with its central location and skilled workforce.
Cities like Nashville and Chattanooga are emerging as tech hubs, with startups in software development, cybersecurity, and health technology driving innovation and talent to the region.
Major banks and financial institutions operate within Tennessee. Memphis serves as a regional hub for logistics and finance, providing essential services for individuals and businesses.
Tennessee business loans offer entrepreneurs access to much-needed capital, fostering growth and success. These loans provide funds for various purposes, such as equipment purchases, staff hiring, and operational expansion.
Business owners can access various lender options, helping them find tailored solutions to their specific needs. The flexibility in loan amounts and terms allows businesses to choose the right funding and repayment options that align with their cash flow.
Tennessee’s industry-specific programs, such as those supporting agriculture and healthcare sectors, provide unique financing opportunities, boosting overall economic growth. Businesses can secure better loan terms by improving credit scores through timely repayments.
Business loans also facilitate networking opportunities, leading to partnerships, mentorships, and new clients. Additionally, these loans can spur innovation by enabling businesses to invest in new ideas or technology to stay competitive in the market. Tax benefits on interest payments may further reduce the overall cost of borrowing money.
Tennessee business loans can present several disadvantages for entrepreneurs. High interest rates can significantly increase the amount owed, straining finances and limiting future investments.
The lengthy application process, which may involve extensive paperwork and waiting periods, can hinder urgent cash flow needs. Strict eligibility requirements, such as strong credit scores and financial history, can lead to loan denials, especially for new businesses.
Repayment terms can be challenging, with missed payments resulting in penalties and damage to credit scores. Collateral requirements put personal or business assets at risk if the loan is not repaid.
Additionally, restrictions on fund usage imposed by some lenders limit flexibility in resource management. Rising debt levels from multiple loans can create financial instability and stress for businesses trying to grow.
The application’s required paperwork depends on your chosen Tennessee 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 Tennessee business loans:
SBA Loan options require additional documents and information. 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 Tennessee 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.
Business owners in Tennessee have a diverse range of lender options.
Many small business owners in Tennessee turn to traditional lenders, such as banks and credit unions. These lenders often provide competitive rates and terms for business loans. However, traditional lenders usually require strong credit scores and detailed financial statements. They may also ask for collateral. This can be challenging for new businesses without established credit histories.
Large national banks in Tennessee may offer more extensive resources and streamlined business loan processes than local banks and credit unions. However, local banks and credit unions often provide personalized service, quicker decision-making, and a deeper understanding of the local market, making them attractive options for businesses seeking a more tailored approach to financing.
Alternative lenders, such as online lenders and peer-to-peer funding platforms, have become increasingly popular options for business financing in the Volunteer State. These lenders focus less on credit scores and more on cash flow and revenue, making them more accessible to many small business owners.
Alternative financing options typically provide easy online applications with minimal paperwork, quick approvals, and fast funding times. However, the tradeoff for the increased accessibility and fast access to capital is that these lenders often charge higher interest rates and fees. Even so, many Tennessee business owners prefer the convenience and quick funding of alternative lenders.
Small business loan marketplaces (like UCS) have become a game-changer for Tennessee business owners seeking financing help. Business owners can submit one application to receive multiple loan quotes, saving time and effort when searching for financing options. Marketplaces often feature both traditional and alternative lenders.
Some marketplaces also feature loan experts who can help applicants understand their funding offers and choose the best option for their goals and cash flow. This personalized service helps small business owners take the mystery out of the lending process as they often go over loan uses and costs to avoid any hidden surprises.
Community Development Financial Institutions (CDFIs) focus on supporting local businesses in underserved areas. They provide loans with favorable terms to help stimulate economic growth. CDFIs like the Tennessee Small Business Development Center are key in this area.
These institutions often work with startups and small businesses that struggle to secure funding elsewhere. They may offer lower interest rates and flexible repayment plans. CDFIs aim to strengthen communities by investing in local entrepreneurs.
The state of Tennessee features various government and nonprofit organizations that assist small business growth and development.
The Tennessee Department of Economic and Community Development (TNECD) offers various programs and resources to support small businesses in the state. TNECD provides assistance in areas such as access to capital, workforce development, business recruitment, and retention.
Through initiatives like the Small Business Innovation Grant Program and the Rural Opportunity Fund, TNECD aims to stimulate economic growth and create opportunities for small businesses to thrive. Additionally, the department offers guidance on navigating regulations, expanding markets, and accessing technical assistance. Overall, TNECD plays a crucial role in fostering a supportive environment for small businesses in Tennessee.
The federal government agency US Small Business Administration (SBA) is crucial in supporting Tennessee businesses through its various offices and resources. In Tennessee, the SBA has district offices located in Nashville and Memphis. These offices provide services to small business owners, including counseling, training, tips on finding an SBA-preferred lender, and access to capital through loan programs.
Tennessee Small Business Development Centers (SBDCs) support the growth and success of small businesses in the state. These centers offer various services, including business consulting, training workshops, and access to resources and networks.
SBDCs provide guidance on various aspects of running a business, such as marketing, finance, and operations. By partnering with experienced advisors and industry experts, small business owners can receive valuable insights and support to help them navigate challenges and achieve their goals. Overall, Tennessee SBDCs serve as valuable resources for entrepreneurs looking to start, grow, or sustain their businesses in the state.
Many nonprofit organizations and community organizations provide additional support for small businesses. For example, SCORE is a nonprofit organization that offers mentoring to entrepreneurs. Their experienced volunteers help guide new business owners through challenges.
Tennessee offers various business grants to support small enterprises. These grants help businesses meet their funding needs. They can cover costs like equipment, expansion, and training. Here’s a list of some available small business grants in Tennessee.
Tennessee offers various tax credits to support small businesses. These incentives help reduce costs and encourage growth. Understanding these options is essential for business owners.
A low credit score limits financing options, but credit-challenged Volunteers 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).
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 Tennessee 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 Tennessee offer entrepreneurs the financial support they need to grow and expand their ventures. Whether it’s a small business looking for startup capital or an established company seeking funds for expansion, various loan options are available to suit different needs.
By understanding the requirements, terms, and repayment options of these loans, business owners can make informed decisions that will benefit their companies in the long run. With the right loan, businesses in Tennessee can thrive and reach new heights of success.
Contact us if you’re ready to start your Tennessee business loan journey. Our alternative financing experts can help you find the best options to fuel growth in the Volunteer 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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