Business is looking up in the state of Illinois. Illinois has a rising startup scene and is home to over one million small businesses in a variety of industries. If you’re hoping to launch or expand a small business in the Prairie State, but don’t have the capital to do so, you can apply for Illinois small business loans and grants.
Having sufficient capital can make all the difference in helping your company scale and reach the next level. A recent survey of Illinois small business owners showed that most are optimistic about the future both in terms of revenue growth and expansion opportunities. And, the average Illinois entrepreneur receives $77,361 in financing from lenders. Options range from traditional bank loans to nonprofit lenders and online lenders.
In this guide, we’ll cover the top six options for Illinois small business loans:
In addition to covering these local funding options, we’ll also cover a few local small business grant opportunities. To wrap up, we’ll cover some small business loans that are available nationwide that could be a great fit for your company.
At the state and local levels, the best way to obtain Illinois small business loans is through nonprofit, community-based lenders and regional banks. Several organizations offer small business loans to Illinois businesses, but qualification requirements, funding amounts, and the way in which you can use the funds vary among lenders.
Here are the top six ways to get Illinois small business loans:
ADME, which stands for Advancing the Development of Minority Entrepreneurship, is part of the Illinois Department of Commerce and Economic Opportunity. The purpose of this program is to support high-potential businesses owned by minorities, women, veterans, and people with disabilities. Participants in the program receive mentorship, business training, and access to funding.
Only 15 business owners are selected for the program each year. To qualify, you must meet these basic requirements:
In order to provide funding assistance, ADME teams up with local microlenders and financial institutions. The state buys up to half of the business loan. The state portion of the loan has a 2% fixed rate and offers up to $400,000 in financing. Keep tabs on the state’s website for information about ADME workshops, which will give you an overview of the loan process.
Our next Illinois small business loan opportunity comes from Advantage Illinois, a state business loan program that grew out of the federal State Small Business Credit Initiative (SSBCI). Through this program, each state received some federal money to expand lending to small business owners. Advantage Illinois partners with local financial institutions that lend to small businesses.
If a small business applicant is deemed too risky by a lender, Advantage Illinois will buy a portion of a loan or line of credit to remove some of the risk from the lender. This can be key to improving loan prospects for a small business owner who doesn’t have sufficient equity, collateral, or credit.
To get started, you should apply for financing with a participating lender, who will then contact Advantage Illinois. You meet the basic eligibility criteria if you have 750 or fewer employees.
For entrepreneurs who want to finance the purchase of real estate, equipment, or other hard assets, Growth Corp is a good Illinois small business loan opportunity. This lender is a nonprofit and the largest provider of SBA 504 loans in Chicago. SBA 504 loans are one of many SBA loan programs administered by the U.S. Small Business Administration (SBA). The SBA partners with local lenders and certified development companies (CDCs) like Growth Corp to assist businesses with funding for commercial real estate and equipment.
A CDC like Growth Corp can provide up to $5.5 million in funding through an SBA 504 loan. To qualify, you must have strong credit, and the project you’re funding must help to create jobs within the local community or advance other public policy goals. SBA 504 loans come with a 10% down payment, fixed interest rates, and long repayment terms.
Another nonprofit small business lender that offers SBA 504 loans and SBA community advantage loans is SomerCor. They are one of the largest SBA lenders in the midwest and in Illinois were recognized by the SBA as a “Community Advantage Lender of the Year.” SBA community advantage loans are more general purpose than 504 loans, and can be used for working capital, equipment, commercial real estate, and other business uses. These low-interest loans are geared toward business owners in underserved communities, such as inner cities and rural areas.
Community advantage loans range from $5,000 to $250,000 and are open to businesses that meet the following requirements:
You need good credit to qualify at SomerCor, but community advantage lenders are mission-based with the goal of aiding underserved communities, so they can be a little more flexible on credit history. Similarly, you can typically qualify without a down payment or collateral.
Another option for getting Illinois small business loans is to try a traditional financial institution. The First Bank of Highland Park is family-owned and one of the largest banks in Chicago. They were ranked number one in the Chicago metro area in terms of dollar value of loans to small businesses.
First Bank of Highland Park extends a variety of small business loans:
Qualifying for bank loans is always challenging. Bank lenders typically look for applicants with excellent credit, collateral, and a history of business revenue. That said, community banking institutions like First Bank generally are more flexible on these requirements compared to national banks because they know their local communities well and the businesses that are operating there.
Yet another traditional financial institution where you can get Illinois small business loans is Byline Bank. Byline Bank is headquartered in Chicago. They extend SBA loans, USDA loans, equipment financing, and commercial real estate loans.
One advantage of Byline Bank is that they are an SBA Preferred Lender. Preferred Lender status means that the bank can process the SBA loans along a faster timeline and have the authority to make approval decisions without heavy oversight from the SBA. Byline Bank is a good option if you have an established business that you’re looking to grow. Participation in the USDA loan program also makes this is a good option for Illinois businesses located in rural communities.
Getting a small business loan can be challenging, particularly if you have a new business or a struggling credit history. Another way to get business capital is by applying for small business grants. Unlike loans, which must be paid back with interest, grants are like free money for your business. Grants are competitive and can also be difficult to qualify for, but it’s worth applying to a few if you meet the eligibility criteria.
Here are a couple of the best Illinois small business grants:
The Chicago Foundation for Women (CFW) provides seed money grants to nonprofit businesses and projects that benefit women and girls. The grants range from as little as $15,000 to as much $150,000. The following types of businesses are eligible for a grant:
There are two grantmaking cycles, in spring and fall, with several grant recipients selected each cycle. In the spring cycle, CFW funds projects related to the freedom from violence and health goals. In the fall cycle, they fund projects related to economic security.
The Illinois SARE program is a good grant option for businesses that are involved in projects that explore environmentally responsible food systems or agricultural production. The organization typically selects multiple grant recipients each year.
There are four primary SARE grant programs:
All of the grants are competitive, and applications are evaluated based on which best meet SARE’s three Ps of sustainability: profit over the long term; protection of the nation’s land, air and water; and people (quality of life for farmers, ranchers, and their communities).
Applying for local Illinois small business loans and grants can be a great way to get capital, but there are also nationwide lenders who can help. These include national banks with branches in Illinois and online alternative lenders.
Online alternative lenders make it easy and fast to obtain financing for your business. You can apply online, find out whether you’re approved in hours, and get funding in your bank account in just a day or two. Plus, online lenders generally set easy borrower eligibility standards. That means you can get funding even if you have bad credit, no collateral, or a relatively new business. On the flip side, alternative lenders also charge high business loan interest rates, so we recommend opting for a bank or nonprofit lender if you have good credit and can wait a few weeks for funding.
Here are some nationwide loan options for Illinois small businesses:
Huntington National Bank is one of the largest banking institutions in the midwest. There are a variety of Huntington Bank business loans, including business term loans, real estate loans, lines of credit, SBA loans, and more. They also offer dental and veterinary practice loans for business owners in the medical industry.
Huntington’s business line of credit is especially strong. A business line of credit is a great product to use when unexpected business emergencies come up or when you know you’ll regularly need to draw on a credit line for recurring expenses, such as inventory purchases. You only pay interest on the money you draw from the credit line. At Huntington, you can get interest-only payment options and monthly payment options for your line of credit, both of which can help you conserve on cash flow. You can also make easy withdrawals at a branch, online, or by phone.
Qualifying for a bank loan requires strong credit. If your credit is struggling, give an alternative online lender like Fundbox a try. Fundbox is an online financial company that provides small business lines of credit. To qualify, you just need to have three months of business history, a credit score of 500 or higher, and $25,000 or more in annual revenue. Given Fundbox’s qualification standards, even startups or those with bad credit can qualify.
Fundbox also has a very quick application and funding process. You simply need to connect your business bank account or accounting software to your Fundbox account. If approved, you’ll receive between $1,000 to $100,000 in financing, which must be repaid in 12 to 24 weeks. Fundbox credit lines are revolving, so the funds become available again once you pay back what you’ve drawn.
OnDeck is another alternative online lender that provides both lines of credit and short-term business loans. Similar to Fundbox, OnDeck has a fast and easy application process and relatively easy qualification standards. The minimum requirements to qualify for an OnDeck loan are $100,000 in annual revenue, a 600 credit score, and one year in business.
Compared to Fundbox, OnDeck provides more capital and longer repayment terms. Their loans go up to $500,000, and the repayment terms go up to three years. Remember that alternative lenders like OnDeck and Fundbox charge high interest rates. However, for many business owners, the speed and convenience are worth the additional cost. Plus, short-term financing might be the best fit for certain business needs, such as buying inventory.
Funding Circle brings the speed and convenience of online lending together with lower interest rates. You can borrow between $25,000 and $500,000 with Funding Circle. They have repayment terms of five years or fewer. The interest rates at Funding Circle start at 4.99% per year for business owners with good credit—as low as or even lower than what a bank would charge. To qualify for Funding Circle, you must have a credit score of at least 620 and two years in business.
If you fulfill these requirements and are searching for longer-term funding that you can get more quickly than with a bank, Funding Circle should be on your short list. Once you apply for a loan with Funding Circle, you should receive the money in your account in as little as one week.
Determining which Illinois small business loans and national business loans you want to apply for can be a challenge. Ultimately, the best options for you will depend on a combination of several factors, including how long your business has been operating, your credit history, and your business revenue.
Once you narrow down which business loans you want to apply for, you’ll need to prepare a strong loan application to convince lenders to give you a loan. Documentation requirements vary significantly between loan programs, but in general, you’ll want to focus on three factors of your loan application:
A business plan is one of the most important documents you’ll prepare when applying for Illinois small business loans. Online lenders typically don’t always ask to see a business plan, but you’ll likely have to submit one if you’re planning to apply for a loan with a nonprofit or a bank.
In the business plan, you lay out your business concept and provide a detailed summary of your business’s product or service, customer base, local and national competitors, and financials. The financials section, in which you must provide projections of revenue, expenses, and profits, are particularly important for new businesses. Lenders will use these projections to assess how much funding your business is eligible for and your ability to repay a loan.
Community lending institutions and online lenders are more flexible about credit history than banks, but a good credit score helps no matter which type of lender you’re applying for a loan with. The better your credit score is, the more loan programs you’ll be eligible for, the more financing you’ll qualify for, and the lower interest rates you’ll pay.
The best way to keep your credit in top shape is to regularly monitor your score, fix mistakes in your credit report, and pay all existing loans and credit card bills on time. It usually takes a few credit cycles to see a change in your credit score, even when you exercise good habits like timely payments, so start keeping tabs on your credit history before you begin your search for financing.
Even if you have a brand-new business, it isn’t too late to start focusing on business revenue. Building a market-ready product or service as soon as possible will help you quickly start generating sales. If you have revenue, your menu of small business loan options opens up considerably. While startup business loans are available, it’s much easier to get a loan for an established revenue-generating business.
Illinois entrepreneurs have a plethora of ways to get small business loans, grants, and other resources for their Illinois businesses. When opening or growing a small business, capital is important, but so is advice. Many nonprofits and community institutions also provide business mentorship and training. Make sure you take advantage of all the resources available to you in your journey as a small business owner.