Of course, if you don’t have the working capital to start or expand your existing business, even the best idea can’t succeed. This post will explain why you should consider a business loan in Louisiana, and what types of loans are available.
Why Get a Business Loan in Louisiana?
According to Statista, in 2020, the most prominent industries by GDP in Louisiana were:
Manufacturing
Finance, insurance, real estate, rental, and leasing
Educational, social assistance, and health care services
Professional and business services
Retail
Oil and gas
Manufacturing is by far the most significant contributor to GDP for Louisiana. The primary manufacturing sectors represented in Louisiana are petroleum and coal products and chemical products. However, pharmaceutical and aerospace manufacturing are also growing fast. Also, New Orleans is a popular tourism destination, which provides plenty of unique opportunities for hospitality entrepreneurs.
Types of Louisiana Small Business Loans
Regardless of the industry in Louisiana that interests you, you’ll need business financing. Fortunately, Louisiana offers a wide range of business loans.
1. Traditional Small Business Loans in Louisiana
As with any other state in the US, Louisiana is home to many traditional banks and credit unions. These lenders offer a variety of traditional term loans and lines of credit for established entrepreneurs. While the loan terms are generally favorable, qualifying for a traditional loan in Louisiana is difficult for new entrepreneurs. Unless you have significant financial resources and a track record of good performance, you’ll struggle to obtain a traditional loan. However, traditional business loans are a good option if you have a solid financial standing. A few of the banks with the largest presence in Louisiana include:
Hancock Whitney Bank
Chase Bank
Capital One
Regions Bank
First Horizon Bank
Sabine State Bank
2. Small Business Administration (SBA) Loans in Louisiana
The Small Business Administration has a strong presence in Louisiana. Their New Orleans District office serves 64 counties in Louisiana and provides financial assistance and free business counseling. The SBA loan programs available in Louisiana include:
SBA 7(a) Loans: This is the SBA’s most popular loan program. 7(a) loans are general business loans with a wide range of allowable uses, long loan terms, and relatively large amounts.
Microloans: The SBA guarantees short-term loans of lesser amounts for small businesses through this program.
CDC/504 Loans: This program can be used to pay for financing assets like real estate or equipment.
Like traditional loans, SBA loans provide relatively large loan amounts and affordable rates. However, their drawback is how hard they are to qualify for as a small business owner. SBA loans are available to new entrepreneurs, but so many people want them that the loan application process is very competitive.
3. Alternative Loans in Louisiana
If you’re a newer entrepreneur, your best option for financing in Louisiana may be an alternative loan. Alternative loans include online loans or lines of credit, equipment loans, merchant cash advances, and more. Louisiana business loans are structured like a traditional term loan, with some key differences. Online loans are much easier to qualify and generally quicker to process. However, an online loan will typically be more expensive and for a lesser amount than a traditional loan. Other alternative financing options like equipment loans and merchant cash advances have a different structure. Equipment loans are similar to term loans, except the equipment secures them. Therefore, if you default on an equipment loan, the lending institution is entitled to foreclose on your equipment. It also means you can only use equipment loan funds to purchase equipment. Merchant cash advances (MCA) are yet another category of alternative financing. With an MCA, you receive a cash advance in exchange for a percentage of your future credit or debit card sales. If you consistently make credit or debit card sales, it will be easy to qualify for a cash advance.
Conclusion: Accelerate Your Success with a Louisiana Small Business Loan
Louisiana isn’t an easy place to be a successful entrepreneur, even though it has one of the lowest US business costs. What makes Louisiana difficult for entrepreneurs is its relatively weak economic growth. This reality is why the state ranked 44th on CNBC’s list of America’s Top State for Business in 2021.At the same time, though, ready access to capital and low costs make Louisiana a place with plenty of potential. Exorbitant costs make starting or expanding a business a very capital-intensive proposition in other states. Yet, in Louisiana, you can get up and running with a more reasonable amount of capital. Then, if your business takes off, the potential for strong profit margins is significant.Therefore, your business can thrive if you have a strong idea and can leverage Louisiana’s unique economic character.
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