Small Business Loans in Colorado: How To Get Funding

Are you thinking of starting a new business in the state of Colorado? You’re in good company. Colorado ranked fourth on CNBC’s annual study of America’s top states for business and has a thriving hub for startups.

If you need capital but are overwhelmed with the prospect of looking for funding, we explore some loan options for your Colorado-based business.

5 Steps to Apply for a Small Business Loan in Colorado

Small business loans are critical in helping entrepreneurs build successful companies. But before you send out loan applications, you should understand how to choose a loan that suits your business needs.

Here are some tips that can help you get the funding you need, whether in Denver, Grand Junction, or anywhere else in the state.

1. Know How Much to Borrow and Your Eligibility

When you’re looking to take out a loan, the first question you should answer is, “How much do I need?” Just because you can get approved for more doesn’t mean you should take it.

For example, if you’re borrowing money to finance a renovation, estimate how much the project will cost. Maybe get quotes from contractors and make a list of expenses.

You’ll also want to understand the factors that impact your eligibility for a loan, such as your personal credit history and business profile. With this information — how much you need, what you need it for, and what eligibility criteria you meet — it’s easier to shop around for loans.

2. Gather Any Required Documents

As you prepare to apply for loans, these are the documents lenders typically ask for:

  • Identification documents: Examples are your passport, driver’s license, employer identification number (EIN), and Social Security number (SSN).
  • Business certificates: You may need to present copies of your business licenses, Articles of Organization, or Articles of Incorporation.
  • Personal income tax returns: Have at least the last two years of your personal tax returns.
  • Business income tax returns: Prepare a copy of at least the last two years of your business tax returns.
  • Business financial statements: The lender might ask you for specific documents, such as balance sheets, cash flow statements, and profit & loss (P&L) statements.

3. Prepare a Business Plan

A business plan is a great way to map out your company’s short- and long-term plans. It can also help you be prepared to answer questions a lender may have.

In your business plan, write down your company’s objectives. Talk about your product or service, your team, and your location. Lenders also want to see how you will use the loan funds and how you plan to pay for it. In this case, you could present a calculation of expenses and your projected income.

If you need help crafting a business plan, check out the guides and examples on the U.S. Small Business Administration (SBA) website. The Colorado Small Business Development Center Network — a local arm of SBDC — is another site to visit for resources.

You can also learn about community development activities through the Colorado Office of Economic Development and International Trade (OEDIT).

4. Pick the Right Lender for Your Needs

Research lenders online or go to the financial institution where you have a business account. Make a list of lenders and compare interest rates and fees. Find out who offers competitive rates and flexible repayment terms.

Check the lender’s website and read online reviews to learn about their reputation with other business owners.

Or you can work with Clarify and skip the hassle of going from lender to lender. We offer access to 75+ lenders so that you can get the best rate. Plus, you’ll be partnered with a Clarify adviser who will be with you every step of the way.

5. Submit Your Application and Wait for Funding

With Clarify, applying is a breeze! The online application form takes just two minutes, and you could get approved the same day and get funding in as little as 24 hours.

Types of Colorado Small Business Loans

There are many small business loan options in the market today. That’s why knowing how much you need and what can help narrow down the loan type you apply for.

Here are some of the loans you can get through Clarify Capital.

Short-Term Business Loan

A short-term loan is one of the most popular forms of business financing. Borrowers receive a fixed loan amount repaid with interest over an agreed-on repayment period.

Small business owners can typically access short-term loans with fast funding from online lenders. On the other hand, traditional lenders might be able to offer lower rates to business owners with excellent credit and strong business profiles.

Business Line of Credit

A business line of credit gives borrowers a revolving credit up to the specified loan amount. You can withdraw as needed and only pay interest on the amount you use.

Most business credit lines are unsecured. They can be great for businesses looking for a quick way to get funding to cover working capital or handle emergency expenses.

SBA Loan

The U.S. Small Business Administration (SBA) facilitates SBA loan programs like SBA 7(a), SBA 504 loans, and microloans. The government guarantees SBA loans, meaning if a borrower defaults on a loan, the lender still gets paid up to 85% of the unpaid balance.

Business owners receive funding from an SBA lender, such as a bank, credit union, or nonprofit organization. SBA business loan funds can be used for all financing needs, including buying commercial real estate, equipment purchases, and working capital.

Invoice Factoring

Invoice factoring offers a way for business owners to borrow money by using their unpaid invoices as collateral. You receive cash upfront up to 100% of their total invoice value for a fee. The factoring company then collects from your customers when the invoices are due.

This is great if your company offers long payment terms but needs cash fast. You may also have an easier time getting approved for invoice factoring than other loan options.

Working Capital Loan

Working capital loans are a financing option for operating expenses like rent, salaries, and inventory. Short-term loans, business lines of credit, and invoice financing fall into working capital loans.

Colorado Business Loan FAQs

Preparation is key to getting the funding you need. Ensuring you meet all the requirements also helps you avoid delays and disappointment. Find out more about what you need to prepare below.

What Are the Minimum Requirements for a Small Business Loan?

Each lender will have a different set of criteria, but most lenders start with the following:

  • Time in business: Traditional lenders usually require you to be operational for at least two years. But with Clarify Capital, you can qualify for a loan if you’ve been in business for at least six months.
  • Business revenue: Many lenders base your loan amount on your business’s income. They also want to examine your cash flow to ensure you can afford your monthly payments. You need at least $10,000 in income per month to get approved for small business loans.
  • Credit score: Your credit score reflects your creditworthiness. We recommend that you have a minimum credit score of 550. But Clarify Capital works with all business owners, no matter your credit score. Speak to a representative to explore your options.

Are Small Business Loans Easy to Get?

Many financing options are accessible and available to all types of businesses. Whether you have an existing business or a startup, you’ll be able to find a financing option that works for you.

What’s the Best Loan Option for My Colorado Business?

The best loan option for your Colorado business is the one that suits your needs and situation. For example, if you’re a business offering extended payment terms to customers, invoice financing could be your best solution.

It’s a quick way to get capital, and you’re not taking on additional loans. Instead, you’re getting paid earlier through the factoring company.

Find the Right Colorado Small Business Loan for You With Clarify Capital

At Clarify Capital, we strive to help you get the funding you need. Speak to an adviser today to find the right small business loan. Your adviser will be with you every step of the way. We promise transparency so you won’t be left with vague terms and contracts.

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