Whether you’re hoping to start or grow your business, don’t overlook state-specific funding opportunities as you consider your financing options. In addition to bank loans, some of the best North Carolina small business loans come from credit unions, CDFIs, and nonprofits that cater specifically to entrepreneurs located in the Tar Heel state.
While almost any business owner in North Carolina can be eligible for a loan from the five sources ahead, most tend to focus on fostering economic development in low-income communities or those with fewer resources. So if you’ve had difficulty securing financing from a bank, then these funds or institutions may be an especially good fit for you. That said, bank loans remain some of the most coveted loans out there, so we would be remiss not to mention one of the best banks for small business owners seeking financing in North Carolina.
Without further ado, here are five of the best resources for small business funding in North Carolina.
The Carolina Small Business Development Fund is a nonprofit and CDFI whose mission is to foster economic development in underfunded communities throughout North Carolina. One way they further that mission is by providing capital to both new and existing businesses based in North Carolina—specifically those businesses that have struggled to secure financing from traditional lending institutions.
CSBDF offers three specialized funding programs, including a recovery fund dedicated to businesses that have been affected by natural disasters, such as hurricanes or wildfires; one for businesses affected by the COVID-19 pandemic; and a loan program specifically for entrepreneurs based in Mecklenburg County. They also offer grant aid programs.
But their core loan product, the Carolina Small Business Development Loan, is a flexible loan that can be used toward any business-related purpose, and it’s suitable for any eligible business (which excludes businesses in some industries, unfortunately). This loan offers either term loans or lines of credit, depending on the business’s needs, with loan amounts extending up to $250,000. Interest rates land between 8% and 12%, and terms last between five and seven years. Microloans of up to $50,000 are also available.
Credit unions are another great resource for business owners who have struggled to secure bank loans: Since they’re not-for-profit (unlike banks) they can typically offer accessible financing at low interest rates and with fewer collateral requirements. North Carolina entrepreneurs in particular should check out Self-Help Credit Union, which is based in Durham and provides financing to small businesses and nonprofits across the state.
Their roster of available financing is impressive: commercial loans, SBA 504 loans, New Markets Tax Credit loans, and commercial real estate loans are all on offer. Specialized loans are also available for certain industries and purposes, like loans for owners, developers, and investors in multifamily housing units; loans to promote sustainable business practices; and funding for child care businesses. All loans are $15,000 or more, depending on your needs and eligibility.
In evaluating a business’s eligibility, this credit union will evaluate factors like your financial health, creditworthiness, cash flow, collateral (though some loans don’t require collateral), and industry experience—much as you’d expect from a bank, though credit unions can be slightly more forgiving in their standards. You can learn more about Self-Help’s eligibility requirements and how to apply for financing on their website.
Another CDFI for your consideration is North Carolina Community Development Initiative. Similar to the Carolina Small Business Development Fund, NCCDI acts as an intermediary lender and investor (as well as a business advisor and advocate) whose mission it is to cultivate economic growth in underserved communities.
NCCDI offers a couple of loan products for small businesses. Among those loans, they offer a disaster relief fund for small businesses that have been affected by natural disasters (as CSBDF does), including Hurricane Matthew, wildfires, and tropical storms Julia and Hermine. Another is Enterprise Financing, a catch-all loan product that provides underserved businesses with the working capital they need to grow.
NCCDI doesn’t offer specific information about their loans, including amounts and loan terms. The best way to find out more is to fill out their online applicant information form, after which a representative will contact you.
If your business is located in one of North Carolina’s 80 rural counties, NC Rural Center may be able to provide the financial assistance you’re looking for, in addition to the guidance, support, and other resources you need to get off the ground (if you’re a brand-new business owner) or expand (if you own an existing business).
NC Rural Center currently offers three lending programs, which focus especially on individuals with low-to-moderate incomes and businesses that operate in communities with relatively scarce resources. Also note that NC Rural Center acts as a facilitator for these loans, and the funds proper are garnished by partner lenders located across the country’s rural areas. (Partner lenders include both banks and investment funds.) The exception is Thread Capital, a nonprofit subsidiary of NC Rural Center that provides loans up to $50,000 directly to participating small business owners.
Bank loans aren’t always the most accessible option for small business owners, but if your business is positioned for one, it’s well worth applying. And for North Carolina-based businesses in particular, we’d recommend looking into a small business loan from Wells Fargo, which we named one of the best banks in North Carolina for small business owners specifically for their loan options (in addition to other great products, like a suite of small business bank accounts and business credit cards). And with 306 branches located across North Carolina, you’re likely to find a location near your home or business.
As we noted in our review, Wells Fargo offers virtually every type of lending product a small business owner could need (10, to be exact). But one of their more interesting offerings is their unsecured term loan. Unlike most bank loans, this loan doesn’t require specific collateral, which makes this one relatively more accessible. Otherwise, it’s a fairly typical term loan: Amounts range from $10,000 to $100,000, terms last between one and five years, and interest rates are fixed, starting at 6.25%. They offer an unsecured line of credit product, as well.
It’s also worth noting that Wells Fargo is one of the country’s leading SBA 7(a) lenders: As of September 2020, Wells Fargo approved 1,872 applicants for these highly coveted, government-backed loans, which puts them squarely in the top three most active SBA lenders. If you’re curious about Wells Fargo loans, eligibility requirements, and the application process, consider giving them a call or making an in-person appointment with a bank representative.
The financial institutions and community initiatives we listed above represent just a few of the funding opportunities for small business owners in North Carolina—but you’re certainly not limited to these five.
Regardless of where your business is located, loans from online lenders are an excellent option. As online lenders typically have less stringent eligibility requirements, they’re particularly helpful for newer businesses without the financial track record most banks (and even credit unions) need in order to extend credit. Beyond that, business owners in need of quick access to cash should consider an online loan. Depending on which lender and loan product you work with, you may have access to your approved loan funds immediately.
Meredith Wood is the founding editor of the Fundera Ledger and a vice president at Fundera.
Meredith launched the Fundera Ledger in 2014. She has specialized in financial advice for small business owners for almost a decade. Meredith is frequently sought out for her expertise in small business lending and financial management.