Maryland Loans and Credit for Small Businesses
Most entrepreneurs need some financial help to get their business started. As your business grows, you also may need a loan to cover the costs of improvements, expansion, or equipment.
Whether you’re planning to start a business or have owned your business for years, there are plenty of state and federal organizations that may be able to offer you a loan with a low interest rate. First, though, make sure you understand your business credit rating.
About Business Credit Ratings
When you start a business, commercial data analyst Dun & Bradstreet may issue you a DUNS Number, which is a unique 9-digit code that identifies an individual business around the world. You should make sure, however, that the number has been issued for your business, and you can do that via Dun & Bradstreet’s CreditSignal or DUNSfile applications.
The DUNS Number is not an indication of your credit score.
It’s just a personal marker, much like your Social Security number. To establish credit, you’ll need to have some type of payment or credit history from at least three vendors, lenders, or suppliers. That information – such as whether you historically pay your invoices on time – becomes part of your Paydex Score, which is the credit rating that’s attached to your DUNS Number.
To move the process along faster, you can ask your vendors, lenders, and suppliers to report your payment history to Paydex. As more positive information is added to your record, your Paydex Score increases, putting you in a good position for getting low interest rates on loans, business credit cards, and lines of credit.
Federally Funded Loans
The U.S. Small Business Administration’s Maryland District Office awarded 631 small business loans totaling $236.8 million in fiscal year 2015. Loan types include:
- The 7(a) Loan Program. These loans are for small businesses that demonstrate financial need and have exhausted other resources – such as personal savings or state grants – before applying for a loan.
- Microloan Program. Microloans in amounts up to $50,000 may be used to cover the costs of startup, expansion, equipment, furniture and fixtures, working capital, inventory and supplies.
- Disaster Loans. Low-interest disaster loans of up to $2 million may be used to cover the cost of repairs and financial losses related to a disaster. Repayment periods may be up to 30 years, at an interest rate of 4 to 8 percent.
Other SBA loan types may be used for equipment purchases and upgrades, land and real estate acquisition, and renovation or improvement of internal and external facilities.
The state of Maryland offers low-interest rate loans for businesses in priority funding areas, which include Frederick and Baltimore City. Other types of loans include:
- Military Personnel and Veteran-Owned Small Business Loan Program
The state offers no-interest loans for businesses owned by service members or veterans, and for small businesses that employ service members or veterans.
- Small Minority- and Women-Owned Business Account – VLT Fund
The state allocates 1.5 percent of proceeds from Video Lottery Terminals to fund small businesses owned by minorities and women. Preference is given to businesses near the state’s six casinos, with the remaining 50 percent of funds distributed statewide.
- Maryland Agricultural & Resource-Based Industry Development Corporation
MARBIDCO administers agricultural and fishery loans, which are funded by the state and federal government. Its Maryland Vineyard Planting Loan Fund, in amounts of $10,000 to $100,000, accounts for the fact that commercial crops take time to produce. As such, the repayment period is 10 years.
Lusk Law, LLC, specializes in assisting business owners as they plan for the future. Your accountant can provide input on the best uses for loans and credit lines, and we can help you plan for the coming years – at startup, or at any point during the lifecycle of your business. Our experienced attorneys have provided legal counsel and representation to business owners in Frederick County, Baltimore County, Baltimore City, Carroll County, Washington County, and Anne Arundel County, and other counties in Maryland. Please call us at 443-535-9715 or fill out our contact form if you have any questions about this topic.
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