How to Get a Small Business Loan in Florida

Business owners may choose to start and run a company in Florida for many reasons. The Sunshine State offers a thriving environment for businesses. For starters, it has the fourth biggest state economy behind California, Texas, and New York.

The Sunshine State is one of seven states with no personal income tax, so business owners benefit from an overall tax burden.

Florida businesses also enjoy sales and use tax exemptions on various business purchases, such as machinery and equipment.

According to the U.S. Small Business Administration (SBA), there are 2.8 million small businesses in Florida. They make up 99.8% of all businesses in the state and employ around 41% of its workforce.

Keep reading to find out how to apply for a small business loan to start and grow your company in the Sunshine State.

What to Consider When Applying for a Small Business Loan in Florida

Aside from beaches and nice weather, Florida offers a great landscape to start and run a business. Whether you’re considering joining an already thriving industry or trying out a unique idea, there’s room for your business in the Sunshine State.

Popular industries include leisure and hospitality due to tourism and the presence of theme parks like Disney World, Universal Studios, and Busch Gardens. The state’s economic development also means apparel, health and beauty, food and beverage, and sporting goods businesses can flourish. And according to Enterprise Florida, sectors like employment services, health care, and construction are also projected to grow.

If you’re interested in taking advantage of all that Florida has to offer, we list some steps that can help you get a Florida small business loan.

How Much You Need for Your Florida Business

Even though entrepreneurs can apply for grants and raise money from investors to meet their financing needs, getting funding from those kinds of business resources can take a lot of effort and time.

Business owners can also take advantage of SBA business loan programs, such as Microloans and SBA 504. And there are business development and assistance programs like the State Small Business Credit Initiative (SSBCI).

But these programs usually have strict requirements that entrepreneurs looking for quick funds might not be able to fulfill easily. So, many companies rely on small business loans to expand and grow their businesses.

However, taking on more debt than you can afford may hurt your company’s growth. That’s why you should have a clear idea of how you’ll spend the money (and how you’ll repay it) before applying for any loans.

Here are a few steps to determine the amount you need to apply for:

  1. Set a business goal you want to achieve with the funding. For instance, do you want to purchase equipment or launch a new product or service?

  2. Gather as much detail as you can about your expansion plan. For example, if your idea is to launch a new product or open a new location, list everything you need for that project. Then, calculate how much money you need to implement it.

  3. Add 10% to 20% to the amount you’ve calculated for contingency and additional expenses. Also, see if you can fund some of the capital you need from your profits to lower your loan amount.

  4. Look at the different loan options. Find the best loan option depending on your business needs and figure out the cost of borrowing to determine if your cash flow can cover the payments.

Figuring out how much to borrow is a delicate balance. Borrowing more than you can afford to repay might overburden your business with debt. But if you don’t get enough funding, you might have to spend more time applying for new loans (or worse — you may have an unfinished project that isn’t earning money while you have a loan to repay).

That’s why it’s important to spend some time planning to get the funding you need and can afford.

This is a great time to draw up a business plan if you don’t already have one. A business plan can help you stay focused on your goals and provide a blueprint for growing your company. And in some cases, lenders may even ask to see your business plan when you’re applying for a loan.

Check out the SBA’s business plan templates if you need help writing one.

How Long You’ve Been in Business

Naturally, lenders want to ensure you can pay them. And one area they use to assess your creditworthiness is your time in business.

Lenders consider established companies as less risky. Traditional banks are more strict in this regard; they typically require that businesses be operational for at least 24 months to qualify for most loans.

Widen your search to find alternative lenders that may have more lenient requirements.

For instance, the lenders we work with at Clarify Capital accept loan applications from companies that have been in business for six months or longer.

Your Business Revenue

A big goal of lenders when assessing your loan application is to make sure you can repay your loan. So, a positive income signals to the lender that you have enough cash flow to make the loan payment. They want to know you have consistent money coming in.

Your revenue also helps lenders calculate the maximum amount you can borrow. For quick loan approval, we recommend that your business has at least $10,000 per month in revenue.

Credit Score Needed to Get a Florida Business Loan

Your credit score reflects how responsible you have been with your debts in the past. Most types of credit scores fall under two main scoring models: FICO and VantageScore. FICO scores are commonly used in lending decisions and range from 300 to 850.

This three-digit number is a summary of your credit report and represents your creditworthiness. It measures how long you’ve had credit, how much credit you have, how much of your available credit you use, and if you pay on time. So, when it comes to your personal credit score, the higher the better.

A higher credit rating also helps you get better interest rates and repayment terms. That’s why it’s important to monitor your credit score. If your score is low, taking out small business loans or starting a line of credit and using them responsibly may improve your credit rating.

Traditional banks typically require excellent to good personal credit scores to qualify for small business loans. But online lenders can be more lenient and may consider your company’s cash flow and growth projections.

At Clarify, we work with business owners with a credit score of at least 550. If you have a lower credit score, call and speak to a Clarify advisor to discuss your options.

Lender-Specific Requirements

Loans typically involve documents, whether you’re dealing with banks, credit unions, or online lenders. In fact, documentation is one of the reasons SBA loans and bank loans can sometimes take weeks or months to complete. You can make the application process easier and quicker by having the following documents ready.

Legal documents: You’ll need to establish that you are who you say you are. Be prepared to present legal documents, such as your driver’s license, passport, federal tax ID, and employee identification number (EIN). Keep a copy of your business license handy, as well.

Bank statements and tax returns: Lenders may also ask you to provide information about other debts and leases under your name. Plus, they may want to see your personal and business income taxes. So, have copies of your last two to three years of tax returns on hand and the last three to six months of personal and business bank statements.

Business financial statements: Lenders may ask for financial statements to assess your company’s ability to repay a loan. Be prepared to present two to three years of balance sheets, cash flow statements, and profit and loss statements.

Collateral for secured loans: If you’re applying for a secured loan, you’ll also need the necessary documents for the collateral. Collateral could be business assets like equipment, vehicles, real estate, inventory, or accounts receivable. You may need to show the title for the real estate or serial numbers for vehicles and pieces of equipment.

Types of Small Business Loans for Florida Businesses

When looking for a small business loan, you can choose between a secured or unsecured loan.

With a secured loan, you’d pledge a personal or business asset as collateral in case you can’t repay the money. On the other hand, unsecured loans are supported only by your creditworthiness and the contract.

Below is more information about these types of loans.

Secured Business Loans

A secured loan refers to any loan that requires collateral. The most common examples are mortgages and car loans, which are backed by the home or car. Equipment financing is a popular secured business loan, though small business owners can typically use any kind of personal or business asset to secure a loan.

When you take out a secured loan, you enter into an agreement where the lender can put a lien on the asset you put up as collateral. A lien is simply a claim or legal right against an asset. It provides the lender with a legal right to seize and sell the property or asset if you default on your loan. The lender removes the lien once you pay off the loan. Then, you own the assets free and clear again.

Some assets you can use as collateral for business financing include:

  • Real estate
  • Vehicles
  • Stocks, mutual funds, or bond investments
  • High-end collectibles and other valuables (e.g., precious metals, antiques, etc.)
  • Equipment or machinery
  • Accounts receivables

Secured loans tend to come with lower interest rates, fewer fees, and longer-term loans. But because your assets can be confiscated if you don’t pay off your loan, be careful to only apply for secured loans that you can repay.

Types of secured loans you can apply for include:

  • SBA loans: Banks, credit unions, and other financial institutions administer SBA loans. If a borrower defaults, the SBA pays up to 85% of the loans. The most popular SBA loans include microloans, SBA disaster assistance, and the Paycheck Protection Program (PPP).

  • Equipment financing: Equipment financing is a type of loan designed to help businesses buy equipment and machinery. With this loan, borrowers can purchase the necessary equipment for their company without paying out of pocket. Furthermore, business owners don’t have to put up additional collateral because the equipment secures the loan.

  • Invoice factoring: Invoice factoring is a type of credit where a business sells its outstanding invoices to a lender. A factoring company advances up to 99% of the company’s accounts receivable for a fee. The lender is paid when it collects the invoices from the borrower’s customers.

Unsecured Business Loans

An unsecured business loan doesn’t require a borrower to put up collateral. So, you can take out a loan without the risk of offering personal or business property.

Since there’s no collateral, financial institutions and alternative lenders approve unsecured loans based on your creditworthiness and other business-related factors. For this reason, unsecured loans may have higher interest rates than secured loans.

Unsecured business loans tend to have quick processing times. And the requirements are easier to meet for new businesses with no credit history. That’s why it’s an excellent option for business owners looking for quick access to working capital.

However, lenders generally don’t offer large amounts for unsecured loans. So, it may not be enough capital for companies looking to borrow a significant amount. In addition, unsecured loans also have shorter repayment terms. Ensure your business cash flow can cover the monthly payments before taking out a loan.

Examples of unsecured loans include:

  • Short-term business loans: Short-term loans are a type of financing with short repayment periods ranging from six months to two years. The loan amount, plus interest and fees, are repaid through fixed, regular monthly payments.

  • Business line of credit: A business line of credit works similar to a credit card. The business owner gets a set credit limit from which they can withdraw. With a line of credit, borrowers are only charged interest for the amount they borrow, and the account replenishes as it’s repaid.

  • Working capital loan: Working capital loans are loans available to business owners needing capital to cover operating expenses. Operating expenses include rent, salaries, and inventory.

  • Merchant cash advance: In a merchant cash advance agreement, a business receives cash in exchange for a percentage of its future revenue. Then, the borrower pays the loan amount daily or weekly through a deduction from its sales.

Florida Small Business Loan FAQs

Get answers to your questions below.

How Much Does It Cost to Start a Small Business in Florida?

There really is no set cost to start a business in the state of Florida since the initial expenses for each business type vary widely. For instance, different business structures — such as sole proprietorships, partnerships, limited liability companies, and corporations — have different registration fees.

In addition, brick-and-mortar businesses may require more capital than an online store. Furthermore, companies must comply with industry regulations, which could increase their startup costs.

In general, here are some of the costs that come with starting a business in Florida:

  • Registration fees, licenses, and permits
  • Insurance costs
  • Office space/storefront costs
  • Inventory and supplies
  • Equipment and machinery
  • Technology (e.g., software, point-of-sale systems)
  • Employee expenses (e.g., training, salaries, and wages)
  • Advertising and marketing

What Business Licenses and Permits Do Florida Businesses Need?

When you start a business, it’s important to know the licenses and permits you’ll need on the federal, state, and local levels. Ensure your Florida business stays compliant with the following:

  • Business licenses: This type of license permits you to run a business. But the exact business license you need depends on your industry, business activities, and location.

  • Business tax receipt: Almost all Florida businesses are required to get a sales and use tax permit. It applies to anyone who sells goods or provides services. Visit Florida’s Department of Revenue for more information on the requirements for your business.

  • Professional license: Some professions require an additional license to operate a business in Florida. These include barbers, body piercing artists, engineers, automobile dealers, electrical contractors, harbor pilots, surveyors, and sports agents. The Department of Business and Professional Regulation (DBPR) handles the licensing. Check their website for the list of professions and how to apply.

  • Occupational permits: You’ll need an occupational permit to operate home-based businesses, commercial real estate, or large entertainment venues. Apply for this document with the clerk of court in the county where you operate.

  • Health and safety permits: The health and safety permits you need depend on your industry and if you operate in a commercial location.

  • Alcohol and tobacco permits/licenses: You need these licenses if you sell alcohol and tobacco in any capacity.

  • Building and zoning permits: Florida cities, towns, and counties may have restrictions and designated areas where businesses can operate. For example, Miami Beach requires all businesses to obtain both a Certificate of Use and an occupational license. Check the requirements and get the permits you need where you’re operating.

What Credit Score Do I Need to Get a Florida Business Loan?

Lender requirements vary depending on the specific type of loan and lender. But when it comes to credit scores, the higher the better.

Borrowers with higher scores tend to be approved for loans with lower interest rates and better repayment terms. Above-average credit scores of 740 to 850 allow you to apply for just about any business loan option. Traditional banks may require personal credit scores as high as 670. But borrowers with fair and good credit scores ranging from 580 to 739 can also get approved through online lenders without difficulty.

At Clarify Capital, we recommend that borrowers have a credit score of at least 550. But we work with all business owners regardless of credit. If you have poor credit or no credit history, don’t hesitate to speak to a Clarify advisor to discuss your options.

Clarify Capital Helps Florida Businesses Get the Loans They Need

At Clarify Capital, we aim to help you get the funding you need as quickly and easily as possible. That’s why you’ll have a dedicated Clarify advisor to walk you through the whole application process.

Your advisor will help you understand your business loan terms and choose the best financing option for your business needs. Contact Clarify Capital today to get the funding you need for your Florida-based business.

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