Wisconsin is an excellent state for small businesses. Its diverse economy is especially strong in manufacturing, agriculture, and tourism. Many Wisconsin small business owners seek financing for startup costs, expansion projects, working capital, equipment purchases, and more.
The world of business loans has changed drastically over the last few decades thanks to the emergence of digital solutions like fintech and online lenders. While having more diversity in funding options creates much more opportunity, the number of available options can make finding the best option more challenging. Choosing the right business loan for your specific need and cash flow is essential to avoiding pitfalls and ensuring success in the Badger State.
This guide explores what you should know about Wisconsin small business loans, including the available options, pros and cons, and the application process. Specifically, we’ll answer these questions and more:
Wisconsinites can access various business loan program options to fund their operations.
Working Capital Loans: Working capital loans in Wisconsin 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 Wisconsin 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 Wisconsin 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 partially guaranteed 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 WI small business owner. An SBA loan in Wisconsin 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 Wisconsin 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 Wisconsin 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 Wisconsin 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, paying off existing business debt, 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 Wisconsin 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 Wisconsin 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.
Wisconsin offers several state-specific programs and specialized lending options to help small businesses succeed. Many of these programs aim to finance businesses that traditional lenders overlook.
Wisconsin offers SSBCI programs through the Wisconsin Housing and Economic Development Authority (WHEDA). These programs help small businesses access funding by providing loan guarantees and direct loans to eligible businesses.
The SSBCI program supports various sectors, including manufacturing and technology. Specific programs include:
Potential borrowers seeking financial assistance for their small or micro startup or established businesses can turn to WWBIC for loans of up to $350,000. The organization provides support to both women and men in evaluating their business’s financial requirements and navigating the loan application process. Prospective loan applicants are advised to carefully review the details before proceeding with their loan request to ensure preparedness.
Various local funding options exist throughout Wisconsin. Many cities offer specific loan funds to help small businesses grow. For example, Milwaukee has a business loan program assists startups and existing businesses.
These lending options often feature lower interest rates than traditional banks. Many local governments partner with community organizations to provide resources. This collaboration ensures that businesses have access to necessary capital.
Local chambers of commerce also promote funding opportunities. They connect entrepreneurs with potential investors and lenders, and networking events help businesses find the right partners for their needs.
| 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 |
Wisconsin has a diverse economy. Small businesses play a vital role in this economic landscape. They provide jobs and contribute to local communities. Small businesses make up over 99% of all businesses in the state. This shows how important they are for growth and stability.
Here are some of the most prominent sectors in Wisconsin:
This industry leads the way in Wisconsin’s economy. It produces machinery, food products, and electronics. Manufacturing accounts for a significant portion of the state’s GDP. Many small manufacturers focus on niche markets.
Agriculture is another major player in Wisconsin’s economy. The state is famous for its dairy farming, especially cheese production, earning the nickname America’s Dairyland. Other crops include corn, soybeans, and cranberries.
Tourism plays a crucial role in the state’s economy too. People visit for its natural beauty, parks, and lakes. Events like the Wisconsin State Fair attract many visitors each year, boosting local businesses.
Wisconsin’s healthcare industry is rapidly growing. Hospitals, clinics, and research facilities thrive here. Major cities like Milwaukee and Madison have large healthcare systems that employ thousands of people.
Information technology has seen considerable growth recently. Companies develop software, manage data, and offer IT services. Tech startups are also emerging across the state, especially in urban areas.
This sector is also strong in Wisconsin. Several national banks and insurance companies operate here, providing financial services to individuals and businesses.
Small business loans in Wisconsin offer several advantages for entrepreneurs looking to grow their businesses. These loans provide access to much-needed capital that can be used for various purposes, such as expanding operations, purchasing equipment, hiring staff, or marketing efforts.
Many Wisconsin business loans come with competitive interest rates and flexible repayment terms, making them a cost-effective financing option for small businesses. By securing a business loan, entrepreneurs can also improve their credit scores by making timely payments, which can open doors to additional funding opportunities in the future.
Small business loans also offer an opportunity to network with lenders and other business owners. Furthermore, these loans can help businesses weather financial challenges or take advantage of growth opportunities, ultimately contributing to their overall success and sustainability.
Small business loans in Wisconsin come with some drawbacks that entrepreneurs should consider. One disadvantage is the potential for high interest rates, which can increase the overall cost of borrowing.
Strict eligibility requirements may make qualifying for loans challenging for some businesses. Another drawback is the risk of default, which can have serious consequences for the business owner’s credit score and financial stability.
Some loans may also require collateral, which can put business assets at risk if repayment becomes an issue. In addition to collateral, some small business loans require a personal guarantee, which can also put personal assets at risk.
The application process for business loans can be time-consuming and complex, requiring extensive documentation and financial information. While business loans can provide vital funding for growth and expansion, weighing the potential drawbacks before committing to borrowing is essential.
The application’s required paperwork depends on your chosen Wisconsin 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 Wisconsin 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 Wisconsin 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.
Wisconsin business owners have several lender options.
Traditional lenders include banks and credit unions. These conventional financial institutions typically provide large borrowing amounts and low interest rates. However, it can be challenging to qualify for conventional loans. These lenders usually require excellent credit, several years in business, high annual revenue, and collateral.
National banks often have extensive credit facilities but can be impersonal and focus more on enterprise-level companies than small businesses. Local lenders, like community banks and credit unions, typically provide more personalized service and understand the local market. In addition, traditional lenders typically have stricter limitations on how to use the funds and require consistent monthly payments.
Alternative lenders have transformed the business financing industry in Wisconsin and across the nation. Small business owners no longer have to rely on traditional loans. Alternative business financing options include online lenders, nonbank lenders, and peer-to-peer funding platforms.
These funding options typically use fintech tools to provide quick and easy online applications with expedited underwriting to deliver quick decisions. Furthermore, alternative lenders typically use digital transfers to deliver fast funding, with some options offering same-day funding. In most cases, alternative lenders have much less stringent qualifications, making needed capital available to credit-challenged business owners and younger companies.
The tradeoff for the increased accessibility and funding speed is that alternative business loans often have higher interest rates. However, many WI business owners consider the extra cost worth it if they can’t qualify for traditional business loans or need urgent funding.
Small business loan marketplaces (like UCS) in Wisconsin offer a convenient and efficient way for small business owners to access multiple funding options with just one application. By applying through these marketplaces, business owners can save time and effort by avoiding the need to fill out numerous applications for different lenders. The process is streamlined, allowing them to receive multiple funding offers quickly and compare interest rates, terms, and loan amounts to choose the best option for their specific needs.
Some marketplaces even offer a concierge approach, connecting businesses with loan experts who can guide and support them throughout the application process, helping them navigate their options and make informed decisions. This personalized assistance can be invaluable for small business owners seeking the right financing solution for their business growth.
Wisconsin is home to several Community Development Financial Institutions (CDFIs) that provide financial services to underserved communities. These CDFIs focus on offering affordable loans, financial education, and other resources to help individuals and small businesses thrive.
Some notable CDFIs in Wisconsin include Forward Community Investments, Wisconsin Women’s Business Initiative Corporation (WWBIC), and Impact Seven. These organizations work tirelessly to promote economic development, create jobs, and support community revitalization efforts throughout the state. Through their innovative programs and partnerships, CDFIs in Wisconsin are making a positive impact on the lives of many residents and contributing to the overall well-being of the communities they serve.
Several government agencies and nonprofit organizations offer assistance programs for small businesses in Wisconsin.
The Wisconsin Housing and Economic Development Authority (WHEDA) offers business assistance programs to support small businesses in the state. These programs provide financing options, technical assistance, and resources to help businesses grow and succeed.
WHEDA’s focus on economic development aims to create a thriving business environment in Wisconsin, contributing to the state’s overall economic growth. Small businesses can benefit from WHEDA’s support to overcome financial challenges, access capital, and expand their operations.
Small Business Development Centers (SBDC) in Wisconsin provide valuable business assistance to entrepreneurs and small business owners. These centers offer various services, including business planning, financial analysis, marketing strategies, and access to funding opportunities.
SBDC advisors work closely with clients to develop customized solutions tailored to their specific needs, helping them navigate the complexities of starting and growing a successful business. Whether it’s guidance on securing loans or advice on expanding operations, SBDCs play a crucial role in supporting the economic development and success of companies in Wisconsin.
The Wisconsin Economic Development Corporation (WEDC) offers a range of business assistance programs to help small businesses thrive in the state. From financial assistance to technical support, WEDC provides resources and guidance to entrepreneurs looking to start or expand their businesses.
Whether it’s accessing capital, navigating regulations, or finding new markets, WEDC is committed to supporting the growth and success of businesses in Wisconsin. With their expertise and dedication, WEDC plays a crucial role in fostering a vibrant business environment in the state.
Businesses in Wisconsin can benefit from the assistance provided by the Small Business Administration (SBA) offices in the state. These offices offer a range of resources and support services to help businesses start, grow, and succeed. From access to capital through loan programs to business planning and development guidance, SBA offices in Wisconsin play a crucial role in supporting the local business community.
Additionally, they provide valuable networking opportunities and workshops to help entrepreneurs navigate the complexities of running a successful business. Businesses looking to expand or improve their operations can turn to SBA offices in Wisconsin for assistance tailored to their specific needs.
Many small businesses in Wisconsin can benefit from grants. These grants help with funding and support growth. Various programs exist to assist different types of businesses. Below is a list of some small business grants available in Wisconsin.
Wisconsin business tax credits are incentives provided by the state to encourage businesses to invest in certain activities or industries. These credits work by allowing businesses to reduce their tax liability by a certain amount based on their eligible expenses or investments.
A low credit score limits financing options, but credit-challenged Wisconsin small business owners 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 WI 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 Wisconsin can be a game changer for your venture. Understanding the various loan types, specialized financing options, and the advantages and disadvantages of securing funding helps you make informed decisions that align with your business goals.
Taking on debt carries risk, so finding a funding program that can help you achieve your goals with a repayment structure conducive to your cash flow is essential. Many options are available, so ensure you compare terms, interest rates, and lender reputations before deciding on a Wisconsin business loan.
Contact us if you’re ready to start your WI business loan journey. Our alternative funding experts can help you find the best option to fuel growth in the Badger 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.
UCS will never communicate with a prospective client on Facebook, Facebook Messenger, or any other type of social media. Further, any email communications will always come from an official UCS email address and not a Gmail, Yahoo, or other email domain. If you believe you have been contacted by someone posing as an employee of UCS, please email [email protected].
