All About Small Business Loans and Financing in Michigan
Small Business Loan Opportunities in Michigan
There are several loan options available to businesses in Michigan. Here are some of our top picks:
Genisys Credit Union
Detroit Development Fund
Novo Funding for Michigan Businesses
Novo Funding offers fast, flexible working capital to support underserved Michigan small businesses with their short-term financial needs and long-term ambitions.
Unlike traditional loans, Novo Funding offers a seamless online application that takes under 10 minutes to complete. While some financing processes can take upwards of 30 days, we’ll typically conclude our review within 24 hours, so you can focus on what matters most — running your business.
Once approved, you’ll be able to access up to $75,000 in working capital. Put that capital to work right away for hiring, marketing, inventory, or whatever your business needs. Unlike a loan, your Novo Funding balance continues to be available to you as you complete your monthly repayments.
With Novo Funding, you’ll get:
- Working capital for your small businesses in the form of a Merchant Cash Advance
- A decision in 24 hours
- Instant access to funds once approved
- No limitations on the use of funds
- Straightforward repayment
- Fees only on the funds you use
With a free Novo checking account, you’ll also benefit from:
- Unlimited transactions on your Novo debit card
- Fast, easy, and free ACH transfers
- A virtual debit card
- Smart business finance insights
- Free, unlimited invoices
- Easy check deposits and sends
- Dozens of integrations with the apps you use to manage your business
- Expert customer support
See how much funding your business qualifies for risk-free, and open your new Novo business checking account today. Join 6500+ small business owners in Michigan using Novo.
The Merchant Cash Advance is provided by Novo Funding LLC, PO Box 311092, Miami, FL 33231. Novo is the marketing name for Novo Platform Inc. and its subsidiaries and affiliates. Novo Funding LLC is a wholly owned subsidiary of Novo Platform Inc. Merchant Cash Advance products and services are offered by Novo Funding LLC and not by Middlesex Federal Savings, F.A. The information and materials contained on this website - and the terms and conditions of the access to and use of such information and materials - are subject to change without notice. Not all products and services are available in all geographic areas. Your eligibility for particular products and services is subject to final Novo determination and acceptance.
Other Types of Small Business Financing
Traditional bank loans aren’t the only avenue for small business financing. Here are some other ways to get fast access to working capital:
Merchant Cash Advance
A merchant cash advance (MCA) is a type of debt- and dilution-free, revenue-based financing method. MCAs give your business up-front access to cash for a fee. Once a small business gets approval for an MCA, a lump sum is deposited into their business checking account. The business then makes a monthly repayment for a set amount of time. Merchant cash advances can be used for a wide array of purposes, including upgrading equipment, improving short-term cash flow, covering short-term expenses, recruiting employees, investing in marketing, and more.
With invoice factoring, a business sells its outstanding invoices to a factoring company (or 'factor') at a discount – usually between 1% to 5% of the invoice value. Once the factor purchases these receivables and provides an upfront payment to the business, it then assumes the responsibility of collecting payment from customers. Invoice factoring works best for B2B businesses that invoice their customers.
Line of Credit
A business line of credit allows businesses to borrow money as needed for business-related expenses. Companies can use all or a portion of their revolving line of credit at any time, similar to a credit card. Unlike a traditional loan, lenders only charge interest on the portion of the credit line used, not the total line received. As you borrow from your line, you will repay those funds over time – typically weekly or monthly, depending on your lender.
Crowdfunding is an innovative approach to fundraising that involves requesting small contributions from numerous people, usually via online platforms. It's an accessible alternative to conventional financing routes, making it easier for businesses to gain traction with the collective support of an online community.
Small Business Grants
A grant is a sum of money paid to a business by a governmental agency or a corporation. Small business grants are essentially free money, as they don't require any repayment. However, they can be quite competitive and eligibility requirements are often strict.
Michigan Small Business Loan FAQs
Is it hard for small businesses to get a loan in Michigan?
Getting a loan can be a challenge for small businesses, particularly for startups or those with a less established credit history. Lenders often require proof of profitability, detailed business plans, and personal guarantees from the business owner.
The complex application process, stringent qualification criteria, and potential risk of taking on debt can make getting a small business loan seem daunting. However, there are many resources and programs designed to assist small businesses with securing loans, such as those offered by the Small Business Administration (SBA). There are also various alternative financing options like crowdfunding, microloans, and Novo Funding. With a seamless application process, quick decisioning, and instant access to funds, Novo Funding is a great alternative to a traditional business loan.
What credit score do you need for a small business loan?
The required credit score for a small business loan can vary significantly based on the lender and the type of loan. Traditional banks and credit unions often have strict lending standards, typically looking for credit scores of 680+.
The SBA doesn't set a specific minimum credit score for SBA loans, but many SBA lenders want to see a score of 640+. For online and alternative lenders, it may be possible to secure a loan with a credit score in the mid-500s.
Your credit score is just one of several factors lenders consider. Other factors include your business's financial history, revenue, cash flow, the nature of your business, and the specific loan amount and purpose.
How fast can you get a small business loan in Michigan?
The time it takes to get a small business loan can vary significantly depending on the type of lender and the specific loan.
Traditional banks, which often have more strict application processes and requirements, may take several weeks to a few months to process your loan application.
While SBA loans can offer favorable terms for small businesses, they usually have a lengthy approval process that generally takes 30-90 days.
A benefit of online lending and alternative financing is that they tend to streamline the application and approval processes. The application for Novo Funding, for example, takes 10 minutes to complete, and you get a decision in 24 hours or less.
How much are small business loans usually?
In 2022, the average loan amount for standard SBA 7(a) loans was $999,210. Large national banks loan out an average of $593,000 in business loans, while regional banks loan out an average of $146,000.
Novo Funding offers businesses up to $75,000 in working capital and can be used to cover the cost of anything your business needs to operate.
How do you apply for a small business loan in Michigan?
You can apply for a small business loan in Michigan through local banks, credit unions, the SBA, and online lenders. There are a variety of local resources available to help you navigate your loan application, like the Michigan SBDC.
What are business loans used for?
Business loans can be used for a variety of purposes. Some lenders restrict what a business loan can be used for, while others allow for funds to be put toward a variety of expenses. Here are some common uses:
- Working Capital: Businesses often use loan funds to cover day-to-day expenses such as payroll, rent, utilities, and inventory purchases. This is particularly useful during slow seasons or times of unexpected cash flow interruptions.
- Expansion: If you’re looking to grow your business, whether by opening a new location, entering a new market, or increasing production capacity, a loan can provide the necessary funds.
- Equipment Purchases: Loans can be used to purchase new equipment or upgrade existing machinery.
- Inventory: Before peak seasons, businesses might take out a loan to stock up on inventory to meet expected demand.
- Debt Refinancing: If a business has existing high-interest debt, a loan with better terms and lower interest can be used to refinance that debt, reducing the overall cost.
- Marketing and Advertising: Businesses can use loan funds to invest in marketing or advertising campaigns to increase brand awareness and attract more customers.
- Emergency Expenses: Unexpected costs such as repairs or unanticipated market changes can be covered with a business loan to help maintain normal operations.
What do you need to apply for a small business loan?
To apply for a small business loan, you’ll typically need personal identification, business licenses and registrations, income tax returns, financial statements, a detailed business plan, and bank statements. You’ll also want to know what your credit scores, both personal and business, are before starting the loan application process.
Novo Platform Inc. strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.