Small Business Loans in Maine

There’s no shortage of small business loans available for entrepreneurs in Maine. Whether you’re looking for a short-term loan contract or a long-term one, you’ll be able to find the right small business loan Maine for your growing company in Maine. 

We’ve outlined the different types of small business loans available to SMEs in Maine. 

SBA Loans

SBA loans are government-backed loans that offer large loan amounts at very affordable rates. One thing worth emphasizing about the loan is that the Small Business Administration doesn’t extend the credit to business owners, instead, they guarantee a portion of the loan (up to 80%), and their participating lenders will underwrite the small business loans Topsham, Me to small business owners. 

Since the government is involved, the eligibility criteria for SBA loans might be stricter than its non-government-backed counterparts. Lenders will likely require business owners to have a credit score of at least 680, solid financials, and at least two years of business history.

Equipment Financing

Equipment financing provides businesses with the funds to purchase or lease equipment necessary for business operations. Because equipment can be expensive, most companies may not be able to afford to buy it outright using their cash reserves. Businesses can use the proceeds to buy any equipment, including restaurant ovens, IT equipment, HVAC, and heavy equipment like cranes, bulldozers, and more. 

Equipment financing is also easier to qualify for compared to other alternative financing options. Since the equipment itself will serve as the collateral, lenders won’t focus on credit scores and business financials when determining a business’ eligibility. However, if you’re looking to finance 100% of the equipment’s total value, applying with a good credit score can boost your chances of approval. 

Business Line of Credit

Business lines of credit give business owners access to a set amount of capital that entrepreneurs can tap into when needed. They then pay only the amount they took out, plus interest. Unlike other types of traditional loans, business lines of credit don’t require you to use the entire small business loan Maine amount provided.

Business lines of credit are also revolving credit, meaning business owners can draw capital from it, pay what they owe, and tap into the credit line again in the future. In that way, the financing becomes an excellent financing solution if you’re looking to create a safety net if you need to cover any unforeseen or emergency expenses. 

Asset-Based Loan

As the name implies, asset-based loans rely heavily on the asset used as collateral. While typical business loans look at the business’ credit and financial history to determine eligibility, with asset-based loans, the primary consideration will be the type of collateral you can offer. 

Business owners can pledge any asset as collateral. But it’s worth noting that not all assets will be treated the same. With that, more valuable assets tend to afford businesses with higher loan amounts and lower rates. Companies usually use assets like real estate, equipment, accounts receivables, inventory, intellectual properties, and marketable securities as collateral for asset-based loans. 

Inventory Financing

A lot of capital gets tied up in inventory. With inventory financing, you can use their inventory as collateral to get the additional capital. That means that in the event of a default, the lenders can seize the inventory and use it as payment for the small business loan Maine balance. 

In most cases, businesses use the financing to buy additional inventory. But the proceeds can also be used towards other business initiatives like marketing, payroll, bridging cash flow gaps, and more. 

Invoice Financing

Too much capital can be tied up to unpaid customer invoices. Instead of waiting for the customers to settle their dues, businesses can finance their invoices through a third-party financing company through invoice financing. The lender then advances the cash. They may also take over the payment chasing and collection. 

Once the customers have paid their invoices, the financing company will take the money they advanced, plus the fees. The remaining balance will then be wired back to the business’ account. 

Business Term Loans

Business term loans are a traditional type of business loan where companies receive a lump sum of money upfront. They then pay the small business loan Maine in fixed daily, weekly, or monthly installments, depending on the term loan length. 

Term loans usually have the lowest interest rate among the different types of business financing, especially if the banks underwrite the loan. Long-term loans, specifically, can have an interest rate as low as 3%, and the small business loan Maine repayment term can go up to 20 years.