Small Business Loans & SBA Loans in Kentucky

Kentucky, the Bluegrass State famous for its thoroughbred horse racing, also has a broad economy driven by hundreds of small businesses. Supporting the startups and growth of these small businesses are numerous community banks, nonprofit financial organizations, and credit unions that are providing the loans these businesses need. 


Types of Kentucky Small Business Loans

The established group of lenders in Kentucky know how to put together short-term and long-term financing options for small businesses in the Bluegrass State, especially those engaged in manufacturing, automotive-related Industries, aerospace, and agriculture.

SBA Loans

Many small businesses take advantage of loans guaranteed by the U.S. Small Business Administration because of their lower rates and flexible repayment terms. Lenders like to make SBA guaranteed loans because it reduces their risk. SBA offers both short- and long-term financing. 

Line of Credit

Businesses that need short-term financing should consider a revolving line of credit (LOC). When you have an LOC set up with your local bank or financial institution, you can draw down the funds you need when you need the money, and you only have to pay interest on the amount of the drawdown. The loan advances get repaid when your cash flow cycle turns positive.

Term Loan

Term loans are designed to finance the acquisition of fixed assets. You would want a term loan if you were purchasing property, opening a new location, or acquiring another business. Repayments are made in installments over several years. 

Equipment Finance

Purchasing a new piece of equipment or replacing outdated machinery can get expensive and require a significant amount of cash. Rather than laying out all the money up front, you can use  equipment financing options, which could be either a loan or a lease. With equipment financing, you’ll only have to make a little or no down payment, and repayment terms will be spread over several years. 

Accounts Receivable Financing

When selling to their customers on credit terms, small businesses will sometimes need the cash before their customers pay their invoices. In these situations, an accounts receivable financing arrangement will solve the problem. Lenders can use your receivables as collateral and make an immediate advance up to a certain percentage against the face value of the invoices. You’ll receive the balance of your invoice when your customer pays. 

Kentucky Small Business Loan Options

Businesses that need funds to expand will find plenty of commercial banks, credit union, and nonprofit organizations in Kentucky that are willing to make loans to small businesses. 

Kentucky Economic Development Finance Authority offers financing to purchase or update equipment for small businesses engaged in manufacturing, agribusiness, or services and technology

Metropolitan Business Development Corporation provides loans to businesses located in Jefferson County for expansion, additions to working capital, equipment purchases, and commercial property improvements. 

LiftFund uses funds donated by interested individuals and businesses to finance small business owners who want to expand and create new jobs that improve the economies of their communities.

Capital Access Corporation is a leading provider in the state of Kentucky for SBA 504 loans that can be used to purchase commercial properties or equipment.

Community Trust Bank offers multiple small business loan products, including SBA 7(a) and SBA 504 loans.

Republic Bank & Trust Company offers many different loan products to small business owners in Kentucky, including lines of credit and SBA loans.

Stock Yards Bank & Trust Company provides a number of services to its customers, including several business loan options. Small business owners can apply for various types of business financing options, including SBA loans.

Commonwealth Credit Union offers loan products like commercial equipment loans, commercial lines of credit, and commercial real estate loans to businesses in Kentucky.

Huntington National Bank is the number one SBA lender in northern Kentucky based on the amount of SBA 7(a) loans it has offered to businesses in the area. It also offers other loan products like term loans and business lines of credit.

How to apply for a small business loan

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Fill out the 15-minute online application.

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Receive matches.

See which credit cards you qualify for before choosing the one that best suits your business needs and offers the cash rewards you’re looking for.

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Get funded.

Once you choose a card, you can get approved in as little as 7-10 days.

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FAQ about Small Business Loans in Kentucky

Small business owners in the Bluegrass State have a wide choice of other resources to go to for networking and advice. For example, the SBA maintains an office in Louisville that small business owners can contact when applying for SBA loans or seeking business advice. SCORE is a nonprofit organization staffed by volunteer business executives who provide advice and mentoring to small business owners who want to expand their operations.

The Kentucky Small Business Development Center, which is located in Lexington, provides seminars, training, and connections for small business owners to find financing.

  

You can search for grants available for businesses in Kentucky at GrantWatch.com. For federal grants to Kentucky businesses, go to Grants.gov. Women entrepreneurs will want to check the requirements for grants at AmberGrants.

 

To improve your chances of qualifying for a loan, find out the exact requirements that your lender is asking for. Typically, a lender will require your application to clearly state the purpose of the loan, the collateral being offered, and how your business will be able to produce the cash flow needed to pay the loan back. You will also need to present the last several years of income statements and balance sheets.

The type of loan you request depends on how you intend to use the money. If you’re looking to purchase long-term fixed assets, you’ll want to apply for a term loan or a loan that allows you to purchase commercial property. Short-term financial needs to make up temporary deficits in cash flow will need a short-term loan or a revolving line of credit.

In addition to putting up initial equity capital, businesses will need to borrow money from time to time to fund increases in working capital and purchases of fixed assets. Taking on debt in a small business increases the profitability of the business and improves the return on owner’s equity. 

An SBA preferred lender is a lender that’s been approved by the Small Business Administration to administer SBA loans without additional approvals from the SBA. Typically these lenders have years of experience and can approve SBA loans faster than non-preferred lenders.

SBA loans are backed by the government and offer lower interest rates than other types of small business loans. They typically require a minimum time in business of two years and a credit score of 650+.

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