There are many reasons to start a small business in Washington. The state ranks highly in terms of access to a talented labor pool, diversity, and economic climate. Washington is home to hundreds of successful startups. If you’re hoping to launch or grow your Washington small business but don’t have the capital to do so, you can apply for small business loans and grants.
Washington state is home to nearly 600,000 small businesses, active in industries ranging from technology and science, to forestry and military contracting. The state government, as well as local nonprofit organizations, want to solidify Washington’s reputation as a startup hub by encouraging small business owners to locate in Washington. In fact, the average Washington entrepreneur receives $76,994 in financing from lenders.
The top seven ways to get a small business loan in Washington state include:
In this guide, we’ll cover these seven local options for getting a small business loan in Washington state. We’ll also cover funding options that are available through the Fundera marketplace to help you achieve your business goals.
There are several ways to obtain a loan for a Washington small business. A limited amount of capital is available through government small business loan programs administered by Washington state. However, the majority of business funding comes from nonprofit, community-based lenders.
Here are the top seven ways to get a small business loan in Washington state:
Craft3 is a nonprofit institution that partners with the state government to extend loans of $25,000 to $3 million to small businesses. To date, Craft3 has provided loans to 1,375 businesses in Washington and Oregon. This lender works with both established small businesses and market-ready startups, but they focus on helping entrepreneurs who either live or work in underserved and low-income communities within the state.
Here is an overview of Craft3’s typical business loan terms:
Craft3 extends loans directly to small business owners through their own funds, and they also lend through the SBA community advantage loan program and USDA business loan program. These are national loan programs in which the federal government partially guarantees business loans. Use Craft3’s online form to determine if you qualify for one of their loans.
When you apply for a small business loan in Washington—or anywhere—one obstacle is that you might need to put down collateral. It can be difficult for resource-strapped small business owners to accumulate enough physical assets, such as real estate or inventory, that can serve as collateral. The Collateral Support Program, run by the Washington Department of Commerce, is here to help in these situations.
You would simply apply for financing with one of the department’s bank or lending partners. If the lender discovers that you lack sufficient collateral, they will review your eligibility for the program. If you are eligible, the department will place cash deposits with your bank or lending institution that will serve as additional collateral on behalf of your business.
The Collateral Support Program also provides bridge loans, which is short-term financing designed to satisfy your company’s capital needs until you’re able to secure low interest rates through a long-term loan product. To get started with the Collateral Support Program, visit a participating lender or ask your current lender if they participate.
The Brownfields Revolving Loan Fund, also run by the Washington Department of Commerce, helps Washington-state businesses that are involved in industrial and environmental cleanup. A brownfield is property that was originally used for business or industrial purposes, but is now too damaged or run-down to serve a useful purpose.
A typical Brownfields loan is around $500,000 or more. Here are the basic eligibility requirements for a Brownfields loan:
The Brownfields loan process can be long and require a lot of documents, so it’s a good idea to apply well in advance of when you need the capital.
Our next lending option is Mercy Corps Northwest, a nonprofit institution that provides microloans to Washington business owners who don’t qualify for traditional financing. They provide up to $20,000 in funding for startups under one year old and up to $50,000 for established businesses.
These are the terms for a Mercy Corps Northwest business loan:
Entrepreneurs who are looking to build up their credit history should also consider contacting Mercy Corps. Credit history is a very important factor in qualifying for financing. Mercy Corps extends small credit-builder loans of up to $2,500 and reports payment activity on these loans to the major credit bureaus. This can help you quickly build and improve your personal credit score. You can fill out an online inquiry form to start the loan application process at Mercy Corps Northwest.
Similar to Mercy Corps Northwest, Ventures is a nonprofit lender that assists Washington-state business owners. They focus on lending to female entrepreneurs, entrepreneurs of color, immigrants, and individuals with low income. Ventures has helped over 2,500 businesses launch, and they provide peer-to-peer loans, microloans, and credit-builder loans.
Ventures microloans come with the following terms:
Many business owners can qualify for a loan with Ventures, but you cannot have an active bankruptcy, a tax lien that’s not a payment plan, or unpaid child support obligations. You also must have all required business licenses, as well as a business checking account.
You can use your Ventures loan funds to purchase equipment, supplies, inventory, marketing materials, or for any other eligible business purpose. To get started, use Ventures’ online contact form or visit their Seattle office.
Next up, Business Impact NW is a nonprofit lender that issues slightly larger business loans, making it a good option for business owners who need more capital than a microlender can provide. They operate both in Washington and Oregon, offering business loans between $5,000 to $350,000.
Since they lend larger loan amounts, Business Impact NW looks more closely at an applicant’s credit history and ability to provide collateral. Their interest rates start at 9.5%. They work both with startups and existing companies.
You’ll need several documents to complete Business Impact NW’s loan application process, including prior tax returns, bank account statements, and information on any existing debt you might have. On top of the financial assistance they provide, Business Impact NW also provides free coaching, mentorship, and business training. Fill out an application to find out if you prequalify.
The Northwest Access Fund provides equipment financing for Washington-state business owners who have disabilities, including seniors with age-related physical limitations. You can apply for a loan to purchase equipment that will allow you to start or run your business. For example, you might need capital to purchase computers or to purchase restaurant equipment.
You can expect the following terms on your Northwest Access Fund equipment loan:
To apply for Northwest Access Fund, you can go online, or call 206-328-5116 to have an application mailed to you.
Applying for a loan with local lenders can be a great way to get capital, but there are also several nationwide lenders who can help. These include both traditional banks and online alternative lenders.
Thanks to alternative lenders, seeking financing for your business requires just a few clicks on your computer. Online lenders generally set easy qualification standards, and they are quick to fund businesses. Sometimes, you can have funds in your bank account on the very same day that you apply. That said, alternative lenders also charge high business loan interest rates, so we recommend checking with a bank or nonprofit first if you have good credit and can wait a few weeks for funding.
Here are some nationwide loan options for Washington-state businesses:
Bank of America (BOA) has a big presence in Washington state and commands nearly a quarter of statewide deposits. This means chances are good that there’s a BOA branch near your business. BOA participates in several SBA loan programs. SBA loans are partially guaranteed by the U.S. government. With low interest rates, large funding amounts, and long repayment terms, SBA loans should be on any entrepreneur’s list of potential funding options.
These are not the only BOA small business loans. BOA also offers conventional term loans, commercial real estate financing, and lines of credit. They even extend unsecured loans that don’t require collateral. Although you can apply for a BOA business loan without a BOA account, only those with a BOA business savings or checking account can apply for a loan online.
To qualify for a bank loan, you need very strong credit. If your credit is struggling, then you might want to try an alternative online lender such as Fundbox. Fundbox is an online financial company that provides lines of credit for small business owners. To qualify for Fundbox, you only need to have three months of operating history under your belt, a credit score of 500 or higher, and $25,000 in annual revenue. Since Fundbox’s qualification standards are pretty liberal, you can apply even as a startup company or a business owner with low credit.
Another big advantage of Fundbox is their lightning-quick application process. To apply for funding, you simply need to connect your business bank account or accounting software to your Fundbox account. You can qualify for between $1,000 to $100,000 in financing, and you repay the funds in 12 to 24 weeks. Funds are in the form of a revolving credit line, so you only pay for what you use, and the funds become available again once you pay back what you’ve drawn.
OnDeck is another alternative online lender to consider. OnDeck 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 a loan are $100,000 in annual revenue, a 600 credit score, and one year in business.
One advantage of OnDeck is that they provide more capital and longer repayment terms than Fundbox. Their loans go up to $500,000, and the repayment terms go up to three years. Keep in mind that alternative lenders like OnDeck and Fundbox charge high interest rates, but for many business owners, the speed and convenience are worth the additional cost. Plus, for certain short-term working capital needs, such as buying inventory, a short-term loan might be the best fit.
Funding Circle combines the speed and convenience of online lending with lower interest rates. Funding Circle offers financing between $25,000 and $500,000 that must be repaid in five years or fewer. The interest rates at Funding Circle start at just 4.99% per year for business owners with good credit. To qualify, you need to have a credit score of at least 620 and two years of business history.
If you fulfill these requirements and are searching for longer-term funding that you can get quickly, Funding Circle should be on your short list of lenders. Once you apply for a loan with Funding Circle, expect to receive the money in your account in as little as one week.
A big part of the funding process is figuring out which Washington business loans and national business loans you want to apply for. The options you’re eligible for will depend on a combination of several factors, including how long your business has been operating, your credit history, and your business revenue history or projections.
Once you narrow down which business loans you want to apply for, you’ll need to prepare a strong loan application to convince lenders they should give you a loan. Documentation requirements vary significantly between loan programs, but in general, you’ll want to focus on three things:
A business plan is one of the most important documents you’ll prepare when applying for a small business loan in Washington state. Although online lenders don’t always ask to see a business plan, it’s very important if you’re planning to apply for a loan with a nonprofit or bank.
The business plan lays out your business concept and contains a detailed summary of your business’s product or service, target customer base, local and national competitors, and financial projections. Lenders often use the business plan to assess how much funding your business is eligible for, as well as your ability to repay funding.
Nonprofit institutions and online lenders might downplay credit history as a factor in the loan application process, but a good credit score never hurts. 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.
To keep on top of your credit, regularly monitor your credit score, fix errors in your credit report, and pay all your existing debt on time. If you have thin credit history, then you can apply with one of the nonprofits mentioned above for a credit-builder loan. It’s possible to make a measurable improvement in your credit score over a few credit cycles, but it doesn’t happen overnight, so keep tabs on your credit history well before you begin your search for financing.
The last item to focus on is business revenues. Even if you have a brand-new business, you should focus on building a market-ready product as soon as possible, so you can start generating sales. A business with revenue represents a serious business in the eyes of lenders, and they’re more likely to trust your ability to pay back the loan. While startup business loans are available, including from many of the nonprofits mentioned above, it’s easier to get a loan for an established revenue-generating business.
Fortunately for Washington-state entrepreneurs, there are multiple ways to get a loan for your business. Several nonprofit lenders operate in Washington state, many of whom focus on traditionally underserved groups of entrepreneurs. Alternatively, you can obtain funding through national banks or online lenders. Make sure you review your options from national, state, and local sources, and then choose the best fit for your company based on your timeline, credit history, budget, and other business factors.