Small Business Loans in Virginia: The Top 6 Options

The state of Virginia is home to more than 680,000 small businesses. Virginia gets top ratings for business growth, thanks to the state’s well-educated workforce, world-class universities, and low level of business regulation. If you’re starting or expanding a business in Virginia, you might be interested in obtaining small business loans. 

These are the best options for getting small business loans in Virginia:

1. Virginia Economic Development Loan Fund
2. Virginia SWaM Business Microloan Fund
3. Virginia SSBCI Cash Collateral Program
4. Atlantic Union Bank
5. Virginia Credit Union
6. Virginia Community Capital

Keep reading to learn more about these small business loan programs, as well as grant opportunities and online business loans for Virginia business owners.

Whether you’re starting a new business in Virginia or expanding an existing business, you’ll have a variety of financing options to choose from, each with their own pros and cons. Compared to other states, the government of Virginia takes a very active role in helping businesses get financing. Many of the top local funding options come from state entities. Along with the state government, nonprofits, regional banks, and credit unions also provide small business loans. 

Here are the top six options for small business loans in Virginia:

The Virginia Economic Development Loan Fund (EDLF) is a state-funded direct-loan program for small business owners. The funding comes from the Virginia Small Business Financing Authority (VSBFA), which is the government’s arm for business and economic development. EDLF loans are designed to fill financing gaps that are left after receiving a bank loan. The business owner will actually end up with two loans—one from a participating bank, and one from VSBFA. 

Eligible applicants should meet all of the following requirements:

• Have $10 million or less in annual revenues, a net worth of $2 million or less, or fewer than 250 employees
• Currently operate in Virginia or be in the process of relocating to Virginia
• Be in good standing with the State Corporation Commission or other applicable state and local licensing agencies
• Invest at least a 10% down payment into the project
• Create or retain jobs in Virginia

EDLF loans start at $50,000, and have a maximum repayment term of 10 years. VSBFA will require a personal guarantee from anyone owning 20% or more of the business, and will place a UCC lien on the business’s assets. There’s also a $500 nonrefundable application fee, and a pretty long list of financial documents that you have to include with your application. To start the process, contact VSBFA and find a participating bank lender.

The Virginia SWaM Business Microloan Fund is also run by the VSBFA, but doesn’t require the participation of a bank lender. The purpose of this loan fund is to provide small business owners with smaller loan amounts that might not be appetizing for a bank. SWaM loans can be used for working capital, renovation, and the financing of equipment or machinery. However, the loan cannot be used for construction, refinancing existing debt, or for financing non-owner occupied real estate. 

Eligibility guidelines for SWaM loans are as follows:

• Have $10 million or less in annual revenues, a net worth of $2 million or less, or fewer than 250 employees
• Currently operate in Virginia 
• Be in good standing with the State Corporation Commission or other applicable state and local licensing agencies
• Business must be continuously operating for at least two years

The SWaM microloans go up to $25,000, with a maximum repayment term of four years. You must pay a $100 nonrefundable application fee. Refer to the SWaM Microloan application to request funding and learn what documents to submit with your application.

One reason that many small business owners are unable to qualify for financing is due to lack of sufficient collateral. The amount of collateral needed for a small business loan varies, but banks generally expect you to put up collateral that’s equal to or greater (to account for depreciation) than the dollar amount of the loan. This can be impossible for small businesses that are low on assets.

The State Small Business Credit Initiative (SSBCI) Cash Collateral Program, also run by VSBFA, is there to help. If  you work with a participating bank on a business loan, and the bank says that you lack sufficient collateral, this program can help you make up the shortfall. The maximum amount of cash collateral support that’s available is 40% of the initial loan amount, up to $500,000. The cash support is available through the first five years of a term loan and the first three years of a line of credit. 

In order to take advantage of this program, you’ll first need to find a participating bank. The bank will contact VSBFA if they need cash collateral support to approve your application for financing.

Atlantic Union Bank is next on our list for getting small business loans in Virginia. You should particularly consider this bank, headquartered in Richmond, if you want to apply for an SBA loan, a loan that’s guaranteed by the U.S. Small Business Administration (SBA). SBA loans have low interest rates, long repayment periods, and other terms that are very small business-friendly. 

Atlantic Union Bank was among the most active SBA lenders in Virginia from October 2018 to September 2019, extending almost $15 million worth of loans. In addition to SBA loans, Atlantic Union Bank also provides installment loans, lines of credit, commercial real estate loans, equipment financing, and business credit cards. 

You should know that qualifying for bank funding isn’t easy, especially if your business doesn’t have a track record of success just yet. Normally, you need strong personal credit and a history of business revenues to qualify. That said, if you do qualify, bank interest rates are some of the lowest available. Find an Atlantic Union Bank branch near you to apply for a loan.

If you want to access low interest rates, but haven’t had luck with a local bank, it might be worth trying a credit union. A credit union is a membership-based nonprofit or cooperative organization. They can  take on more risk than banks and tend to offer lower interest rates on loans. Virginia Credit Union is one of the largest credit unions in the state, open to anyone who lives or works in Richmond and surrounding cities. 

Virginia Credit Union offers term loans, commercial mortgages, equipment loans, lines of credit, and business credit cards. Fixed and variable interest rates are available. The first step is to find out if you qualify for membership in the credit union, after which you can contact a local branch to apply.

Virginia Community Capital (VCC) is a nonprofit community development financial institution (CDFI) that provides financing and free advisory services to small business owners throughout the state. They provide financing between $50,000 to $5 million. Among their many loan products are business acquisition loans, debt refinance loans, equipment loans, commercial real estate loans, lines of credit, and SBA loans.

In some ways, VCC is similar to a bank. They will ask for a lot of documentation, including tax returns, financial projections, a business plan, and financial statements, to evaluate your business’s eligibility for financing. However, as a nonprofit, they can also afford to take on more risk than a regular bank. VCC will evaluate each applicant on a case-by-case basis and doesn’t have a minimum credit score requirement.

To get started, fill out their online small business loan questionnaire. A VCC staff member will call you to learn more about your business and explain the documentation requirements. The entire process typically takes 45 days between receiving a complete loan application and closing on the loan.

Small business loans are a great option for securing capital, but they come with fees and interest. As an alternative, consider applying for small business grants that you might be eligible for. Grants are highly competitive, but if you’re successful in receiving one, it’s equivalent to free money for your business.

These are some of the top small business grants in Virginia:

The Virginia Economic Development Incentive Grant is for businesses that are being recruited by multiple localities or states, including Virginia. If your business or project will create at least 200 new full-time jobs in Virginia, then you might be eligible to receive grant funding to relocate your business to Virginia. The size of the grant varies based on the number of jobs created, wage levels, the return-on-investment for the state, and area demographics such as unemployment and poverty rates.

Businesses in the following sectors are eligible for a Small Business Jobs Grant from VSBFA: manufacturing, distribution centers, research and development, B2B information technology, and inbound call centers. To qualify, you must have 50 or fewer employees, average less than $3 million in annual revenue, and create at least five new full-time jobs in Virginia.

The Virginia Investment Performance Grant is awarded to manufacturers and research and development companies that have created advanced technology or leveraged technology to improve productivity or operations. The state Secretary of Commerce and Trade selects the amount of the grant. Eligibility for this grant depends on a large capital investment in property, so it’s best for midsize businesses.

Local small business lenders and grants are great financing tools for Virginia small business owners, but don’t overlook online business loans. Online business lenders cater to business owners nationwide, and they offer simple and fast application processes. They are more expensive than banks and nonprofits lenders but also far less selective, working with a wider range of small businesses. 

Here are the best online business loans for Virginia small businesses:

Fundbox is an online financial technology company that provides a business line of credit of up to $100,000. A business line of credit is good to have on hand for unexpected cash flow issues and for short-term needs, such as buying inventory. To apply, you simply need to create a free Fundbox account, provide some basic business information, and link your accounting software or business bank account with Fundbox. Fundbox will then use your business’s revenue history to decide whether to approve you for funding. 

Qualifying for Fundbox is relatively easy—you need just three months in business, an average of $25,000 in annual revenue, and a personal credit score of 500. Fundbox’s funding timeline is very quick. You can get approved for a line of credit in minutes and have the funds in your bank account the next business day.

Bluevine is an online business lender who also works to quickly get funding to small business owners. Bluevine extends credit lines up to $250,000. Qualifying for Bluevine is slightly harder than Fundbox, but still much easier than a bank or nonprofit. You need at least 24 months in business, $40,000 in monthly business revenue, and a credit score of 625+ to qualify for Bluevine. 

If you meet these requirements, the application process with Bluevine is fast and simple. You will typically know if you’re approved on the same day that you apply, and you can receive the funds in your bank account in a few hours. 

Funding Circle is yet another online business lender, but they provide larger loans of up to $500,000. With Funding Circle, you get a nice combination of speed and affordability. After submitting an online application and documents to support your loan request, it takes about three days for the loan funds to be sent to your bank account. 

Compared to Fundbox and Bluevine, Funding Circle is more selective, only working with businesses that have been operating for at least two years. The business owner must also have a minimum personal credit score of 620. Since Funding Circle is more selective about their borrower profile, their interest rates are lower, closer to what you’d get with a nonprofit lender or a bank.

Receiving financing is a big step for any business. There are several ways you can prepare. Following the steps below will ensure that you’re in the best position to qualify for an affordable loan that will help you reach your business’s goals. 

Here’s how to prepare for your Virginia small business loan:

• Improve Your Credit Score – A good personal credit score will help you qualify for business financing at the best rates. To keep your score high, regularly check your credit report, and pay all existing loan and credit card payments on time.
• Register Your Business – Incorporated businesses and limited liability companies (LLCs) have an easier time qualifying for financing. For help, follow our instructions on forming an LLC in Virginia.
• Prepare a Business Plan – Having a solid business plan can help you qualify for a business loan. Banks, credit unions, nonprofits, and grant organizations will use your business plan to evaluate your company’s financial potential.
• Strengthen Business Revenues – The more sales your business generates, the easier it is to qualify for business financing. From the start, make sure you concentrate on getting your product or service market-ready so that you can quickly begin generating revenue.
• Open a Business Bank Account – All business revenues should go into a dedicated business bank account. Here’s a list of the best banks for small business to help you choose a banking institution.

There are plenty of options for small business loans in Virginia, each with their own pros and cons.  When choosing which loan programs to apply to, consider the basics such as your credit score, time in business, and revenues. However, you should also consider your business’s goals and how you plan to use the loan funds. After all, the best small business loan is the one that helps you create a better product or service and better serve your customers.