Small-Business Loans in Ohio: How to Get Funding

Small businesses in Ohio represent 99.6% of all businesses in the state. The same group employs 2.2 million people, which accounts for almost half of the state’s workforce.

If you’re planning to start a business or have an existing company in Ohio, read on to find out more about small-business loan options available to you. When you achieve your business goals, you also contribute to your state’s economy. Clarify Capital is here to help you do both.

When a Loan Makes Sense for Your Ohio Small Business

Running a small business requires delivering the goods and services you promise. You also need to stay competitive while maintaining profitability. And sometimes, you need additional capital to achieve all of this.

With financing, you can serve your customers better. You can offer more products or hire more employees. It can also mean expanding your physical location to accommodate demand.

Ultimately, better customer service and meeting demands can mean more profit for your business and the ability to grow faster.

Ohio Small-Business Loan Options to Consider

If you’re looking for business financing in the state of Ohio, there are plenty of options to get the funding you need. We explain some loan options below to help you determine what might work best for your company.

SBA Loans

Small-business owners can access SBA loan programs through the U.S. Small Business Administration (SBA). The federal government agency doesn’t issue the loans but guarantees them up to 85% with the lender. This means if a borrower defaults on a loan, the SBA will pay the lender the guaranteed amount.

SBA 7 (a) loans and microloans offer great options for small-business owners looking for financing with low interest rates and longer loan terms. You can apply for business funding to cover working capital, and there are real estate loans as well.

Expect a rigorous application process when applying for an SBA loan, since the funding comes from banks, credit unions, and nonprofit organizations. Eligibility requirements tend to be more strict, and the overall process can take longer than other financing options.

Check the Small Business Development Centers of Ohio (SBDC) for workshops and training on starting a small business. You can find one near you, whether you’re in Cincinnati, Columbus, or Cleveland. They also offer assistance in crafting business plans and financial projections, which SBA lenders may ask you to provide.

Short-Term Business Loans

Short-term business loans are one of the most popular types of business financing offered by lenders and financial institutions. When you take out a short-term loan, you receive the loan amount as a lump sum. Lenders impose a predetermined interest rate on the loan. The loan amount plus interest is paid back through regular monthly payments based on the term length.

As the name suggests, the repayment terms for the loans are short, ranging anywhere from six months to two years.

Most short-term loans are unsecured, so you don’t have to put up collateral to secure the loan. It’s a great solution for entrepreneurs looking for a flexible option to fund their capital needs.

Working Capital Loans

Working capital loans refer to types of credit that give businesses capital to cover daily operating expenses and current obligations. Business expenses can include rent, utilities, short-term debts, and salaries and wages. Small-business owners can access working capital loans through different forms of financing, such as short-term loans, business lines of credit, invoice factoring, and merchant cash advances.

Small businesses can experience cash flow gaps for several reasons, including late customer payments, emergencies, and seasonal slumps. During these times, working capital loans offer funding solutions so you can keep operating.

These types of loans can also help you take advantage of growth opportunities. For instance, additional capital can allow your business to stock up on inventory to prepare for seasonal peaks.

Merchant Cash Advance

A merchant cash advance (MCA) provides capital to businesses in exchange for a percentage of their future income. As the name suggests, an MCA isn’t technically a loan but an advance. With this type of financing, you receive cash upfront to repay through daily or weekly sales deductions.

An MCA is a great alternative for business owners who might not meet the eligibility criteria for other types of financing. It’s an unsecured loan, which means you don’t have to secure it with personal or business assets. Additionally, lenders base the loan amount on your company’s income and ability to pay, so there are no personal credit requirements. On top of that, since payments are taken out as a percentage of sales, there’s no pressure to remit a set daily or weekly amount.

Business Line of Credit

A business line of credit is a type of financing that allows businesses to borrow money as needs arise (up to a set credit amount). Similar to credit cards, you’re only charged interest for the amount you use. Moreover, credit lines are typically revolving. This means you can withdraw money, repay the balance, and borrow again as long as the account is open.

The main benefit of a business line of credit is the flexibility it offers. With a credit line, you only take money out when you need it; short-term loans provide cash upfront that you have to start paying back almost immediately.

A business line of credit is a great loan option for those who want the peace of mind of having access to cash in case they need it.

How to Get an Ohio Small-Business Loan

The requirements and the overall process of applying for small-business loans vary per lender. However, most lenders ask for basic requirements and documents. Here’s what you need to know and prepare to get an Ohio small-business loan.

1. Determine How Much Financing You Need

It’s important to know why you want to borrow money for your business. You should have a specific project or expense in mind. Then, create a detailed list of how you’ll use the borrowed capital.

It’s important to borrow enough capital to execute your plan, but not too much that you can’t afford to repay it. On the other hand, ask for too little and you might end up with an unfinished project (with the extra burden of a loan you can’t repay).

2. Consider Your Eligibility for a Loan in Ohio

Whether applying for a loan or not, you should always keep an eye on your personal credit score. This three-digit number reflects your credit history and is the first thing lenders look at when considering your creditworthiness.

Loan providers also make decisions based on your company’s monthly revenue and the length of time you’ve been operational. Lenders use these criteria to assess their risk of lending to you. So, the longer your business has been operational, the better. A strong and consistent cash flow reassures lenders that you can afford to repay your loan.

3. Gather the Required Loan Application Information

In terms of documents, have the following handy:

  • Identification proofs, such as a driver’s license, passport, federal tax ID, or employer identification number (EIN)
  • Copy of your business license
  • Recent bank statements
  • Personal and business tax returns
  • Business financial statements, such as profit and loss (P&L) statements, cash flow statements, and balance sheets

4. Apply for an Ohio Business Loan With Clarify Capital

To apply for a loan with Clarify, start by filling out our online application form. It takes just two minutes.

Next, Clarify will match you with a dedicated advisor to guide you through the process. Your dedicated advisor can also help you choose the right loan option based on your business needs and the requirements you can meet.

5. Secure the Best Ohio Business Loan for Your Business

At Clarify, we understand business owners don’t have time to waste. That’s why we strive to keep the application process simple, convenient, and transparent.

When you work with us, there’s no wondering how your application is going. You’ll receive a quick decision and, in many cases, get funding within 24 hours.

Ohio Business Loan FAQs

Find out the answers to some questions and give your Ohio business the best chance of loan approval.

Can New Businesses Get Loans?

Yes, new businesses and startups can get funding depending on the lender they approach.

Most traditional banks only approve loans for businesses that have been operational for at least two years. But online lenders have more relaxed requirements. At Clarify, for example, we require that your business be operational for at least six months.

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

When you apply for small-business loans through Clarify, we recommend a minimum personal credit score of 550. We accept applications from business owners with all types of credit. If you don’t think you qualify, speak to a Clarify advisor to discuss your options.

What Is the Easiest Small-Business Loan to Get Approved For?

Most business loans are easy to qualify for as long as you meet a specific lender’s criteria. These include business lines of credit, short-term loans, and working capital loans.

There’s a loan for every situation and credit profile — what you need to find is a lender that will work with you.

Clarify Capital Is Here to Help Your Ohio business Grow

Take your business to the next level with Clarify Capital. Whether you have an existing business or are planning to start a company in Ohio, get the funding you need.

When you work with us, you have access to 75+ lenders. You save time looking for the right lender, and we help you get the best rates.

Fill out the online application form or call to speak to a Clarify advisor today.

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