Find the Best Business Loan Companies in Madison, WI

Types of business loans in Madison

Not all business loans are the same. Some loans are designed specifically to help you pay for equipment and machinery, while others are made to help you buy real estate or fund construction projects. Some of the most common types of business loans in Madison are the following:

• Equipment financing: Equipment financing makes it possible for business owners to purchase heavy machinery, vehicles or industry-specific equipment or technology. This money can be used to repair old equipment or buy new equipment without interrupting the cash flow of your business.
• Merchant cash advances: A merchant cash advance is a way to get quick cash when you need it. Unlike other loans or cash advances, repayment of the advance is based on future sales. So when your business is doing well and credit card sales are up, you’ll be paying more toward the repayment of your cash advance. Merchant cash advances are easier to qualify for with bad credit, but compared with business installment loans, the loan amounts are smaller, the fees are higher and the terms are shorter.
• Startup business loans: There are many ways for Madison entrepreneurs to fund their own businesses. A startup loan is designed specifically to help a new business. Different startup business loans have different requirements for qualification.
• Business lines of credit: A business line of credit allows a business owner to borrow money when they need it, up to a limit, and helps keep expenses organized. Business lines of credit generally have higher limits and lower interest rates than business credit cards.
• SBA loans: SBA loans are backed by the U.S. Small Business Administration. These loans typically have an interest rate between 6% and 10%, and eligibility depends on your credit, how long you’ve been in business and your current debt-to-income ratio.
• Business real estate financing: If your Madison-based business requires a physical location, real estate financing helps with the purchase of an existing property or new construction. Term lengths on commercial real estate loans are between five and 20 years. These loans are used to buy office spaces, retail shopping centers, warehouses or apartment complexes for commercial use.

How to get a business loan in Madison

Getting a business loan to open up a restaurant on State Street near the Capitol will look different from getting a loan to start a dairy farm in Dane County.

The application process varies depending on the type of business loan and the lender, but all lenders will need information about your financial status, business plan and credit history to determine if you qualify. Some documents you will be asked to submit during your application process include:

• Bank statements
• Tax returns
• Business plans
• Financial statements

Consider checking your individual and business credit history for accuracy and ways to improve your credit score before applying for a business loan in Madison. Shop around at multiple lenders to find a loan with the most favorable terms for your situation.

Madison business loan FAQ

Who is eligible for small business loans?

To be eligible for a 7(a) loan from the Small Business Administration — the primary type of small business loan guaranteed by the federal government — a business must operate for profit, do business in the U.S. or a U.S. territory, have owner equity to invest and use other financial resources before asking for assistance.

What is the typical interest rate on a business loan?

Different loans have different interest rates, but the average interest rate for an SBA loan is 6% to 10%. Interest rates for cash advances can be anywhere from 20% to 250%, and traditional bank loans have interest rates from 4% to 13%.

How do business loans work?

Business loans are designed to give entrepreneurs and small business owners the funds they need to cover business-specific expenses. This money can be used toward buying commercial property, supplies or equipment. It can also be used for payroll, inventory or to pay existing debts.

What business development resources exist in Madison?

For assistance with business planning, marketing workshops, online and in-person classes, networking events and financing, Madison business owners should check out the following resources:

• Greater Madison Chamber of Commerce, which facilitates networking and training events and provides opportunities for businesses to connect with the community
• The Madison chapter of SCORE, which offers free mentoring and education for small business owners, and workshops on marketing, working remotely and finance
• Wisconsin Small Business Development Center, which provides consulting, education, referrals and networking connections, and a variety of tools and resources to help growing businesses
• WWBIC, which offers classes geared toward starting, managing, and growing a business for female business owners