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Pennsylvania has nearly one million small businesses throughout the state. More than half of all entrepreneurs run their companies themselves without the help of staff or employees. It is estimated that 25,000 new businesses will be created each year alone in Pennsylvania. One in every other business owner in Pennsylvania requires a loan to get their ideas into action or to keep their enterprises afloat. Business loans are an ideal option for individuals who need to obtain a large lump sum of money that will be used for varying company expenditures.

Why You Might Need a Loan

Most business owners use a loan to expand or relocate their company. If your office or shop is too small to meet your current demands, relocation is the best recourse to improve potential revenue. Without enough money, it can be difficult to turn your entrepreneurial dreams into a reality. Others use their loans to save their companies from total collapse, but this can be risky if your business is on the brink of closure. If you should lose your company while having an active loan attached, the lender will take assets and property away from you before it is lost to pay back the loan.

How to Create a Perfect Loan Plan

The perfect loan plan is one that is solid, thorough and knowledgeably calculated. If you are taking out a loan of $20,000, you should know where all of that cash will be spent. Don’t deviate from your plan just because an emergency situation comes up or you have outstanding debts. For instance, if you owe your employees or vendors money but want the loan to be used for renovation work, don’t use it all to pay off your creditors.

You should also have a clear objective for the specific amount of cash you need. Taking out more than you need will only result in a larger repayment plan that is difficult to afford long-term. Don’t jump to apply for a loan before you know how much you’ll require and what the money is going to be used for. This will prevent future financial problems and possible debt issues resulting from unpaid loan installments.

Finding the Best Rate in Pennsylvania

The typical business loan in Pennsylvania has an interest rate of anywhere from 5.5 percent to 8.5 percent. It is immoral for any lender to charge more than the highest interest amount, so be wary of these numbers before applying. Your credit score will obviously be a deciding factor when it comes to loan approval, but business loans are different in that your company and its assets are also an important component. Owners and signers with bad credit and risky businesses may be denied their loan entirely or receive the highest interest rate possible in their state.

Comparison shopping will be your best bet when finding the ideal interest rate. Just because one lender is charging a high interest rate according to your risk factors does not mean that every bank will do the same. You can get totally different options by going to several banks and receiving different quotes. Most banks offer free consultations for their business loans, so don’t be afraid to sit down with a lender to learn more and talk about your choices.

Looking for a Reputable Bank and Applying for the Loan

Almost every bank in Pennsylvania offering business loans is reputable and legally-based, so there should be no worry of whether or not you’re using a professional institution. However, you need to be wary of banks that offer new customer rewards and programs. These rewards typically only last the first year after signing onto a loan agreement and you’ll be left with high interest rates and hidden fees once the grace period is over.

Applying for your average bank loan takes a bit of time and requires a lot of paperwork, but you should receive a response concerning your application within 45 to 60 days. The lender will need to run a credit history on any signer of the loan and receive paperwork regarding business capital. They’ll need documentation of bills, receipts, expenditures, outstanding debts and income. These records will allow them to make a decision on your loan application, so it is vital that you provide them with all of this information to get the best result.

Banks in Pennsylvania Offering Business Loans

Below is a list of some of the top banks in Pennsylvania offering small business loans. You can visit their local branch or website to learn more about their company and rates.

  • Elderton State Bank
  • Mercer County Bank
  • Valley Green Bank
  • Asian Bank
  • First-Trust Savings Bank
  • The Luzerne Bank