Loan resources for Otter Tail County businesses

Access to capital can make the difference between a business idea staying on paper and becoming a successful business. For new and existing business owners, financing may be needed to purchase equipment, acquire or improve property, build inventory, provide working capital, refinance eligible debt, or support expansion.

The U.S. Small Business Administration (SBA) offers several loan programs that can make it easier for small businesses to access financing through participating banks and other lenders. SBA loans aren’t free money or grants. They are loans that your business must repay. The difference is that the SBA guarantees part of the loan, which can give lenders more flexibility when working with small businesses.

The SBA 7(a) Loan Program is the SBA’s primary and most flexible loan program. Funds from a 7(a) loan can be used for a variety of business purposes, including:

• Starting or purchasing a business
• Buying equipment, inventory, or supplies
• Providing working capital
• Purchasing or improving real estate
• Expanding an existing business
• Refinancing eligible business debt

If you’re starting a business or own a business and have projects in mind that you do not want to use all of your available cash for, an SBA 7(a) loan may be worth discussing with your banker.

The SBA 504 Loan Program is designed primarily for businesses making larger investments in long-term assets. This can make it especially useful for businesses planning significant investments in their facilities or equipment. 504 financing can support projects such as:

• Buying land or a commercial building
• Renovating or improving existing facilities
• Purchasing long-term machinery and equipment
• Expanding a business’s physical operations

The program typically involves a partnership between a participating lender, a Certified Development Company (CDC), and the business. This structure can help businesses finance major projects while preserving working capital for day-to-day operations.

An SBA loan can be another option when traditional financing doesn’t quite fit a business’s needs. The SBA guarantee can help participating lenders work with small businesses that may have less collateral, a shorter business history, or other factors that make conventional financing more difficult. The best way to find out if an SBA loan could work for your business is to tell your banker what you are trying to accomplish, and ask whether an SBA-backed loan could be a good fit.

There is also an opportunity for more local banks to participate in SBA lending. Becoming an SBA lender can give financial institutions another tool to serve local entrepreneurs and businesses while keeping investment and economic activity in the community.

Find a summary of business loan resources through Otter Tail County on the Business & Development Resources page of our website.