Guide to Small Business Loans & Financing Options for Florida Businesses
How bright is the future of the economy in the Sunshine State?
It might come as a surprise if you’re not a Florida resident, but there’s actually more happening than Disney World, retirement homes, and orange groves!
As we’ll explain in great detail just below, Florida is one of the best states in which you can operate a business.
Ready for the full breakdown? Keep reading!
Starting & operating a business in Florida
Ranked #12 on CNBC’s 2019 list of America’s Top States for Business, Florida generated nearly $1.1 trillion in GDP in Q2 of 2019 – amounting to roughly 5.1% of the total U.S. GDP.
Not impressed? Then consider the fact that Florida generates nearly twice as much in GDP as Virginia, which was ranked #1 on CNBC’s list.
Quite the eye-opener, we know! But what is it that makes Florida’s economy so powerful?
There are a number of reasons why Florida is such a great place for you to operate a small business, including:
- A 3% unemployment rate places it at #14 in the country, 0.6% below the national average
- A corporate income tax rate of 4.5%, making it one of only 10 states with top rates at or below 5%
- An overall economic growth rate of 2.9% – just under the national average (but higher than its neighboring state Alabama)
- Below average union presence, with only 6.2% of employees having union membership (compare the national average of 10.3%)
- Being a right-to-work state, meaning unions and employers are banned from creating contracts obligating employees to pay the cost of union representation
- A small business employment rate of 42.2% – employing approximately 3.3 million Floridians
- Roughly 2.5 million small businesses – comprising 99.8% of all Florida-based businesses
The diversity of Florida’s economy is also worth noting, especially when you consider that other states typically have at least one especially strong industry (like the oil industry in Texas). Sources of information provide different answers as to which industries are the strongest in Florida, but we’ve filtered through to give you the following list.
6 highest paying industries in Florida (according to Data USA):
- Tobacco Manufacturing
- Software Publishing
- Transportation
- Financial Services
- Paper & Paper Products
- Oil & Gas Extraction
If you’re currently working in any of those industries, or interested in getting started, there’s still room to grow in Florida. That said, there are a number of other industries in Florida that are particularly strong, including:
- Tourism – “38% of U.S. adults state that Florida is their top tourist destination”
- Agriculture – 45% of total U.S. citrus production comes out of Florida
- Aerospace & Aviation – U.S. Census data shows that Florida’s top export is civilian aircraft, engines, and parts
- International Trade – “40% of all U.S. exports to Latin and South America pass through Florida”
- Life Sciences – Florida is home to “more than 1,100 biotech, pharmaceutical and medical devices companies”
- Construction – In Q4 of 2019, Florida’s construction industry increased its output by approximately 6.3%
For small businesses, though, there may be a few more challenges to overcome before successfully establishing a base of operations in Florida. And for those obstacles, small businesses can often turn to business loans to help them get by. But how do small business loans in Florida work?
How to fund a business in Florida
As is the case with running a business in any state, there are cons that come along with the pros of being a Florida business owner.
The obstacles that small business owners face in Florida include:
- Labor shortage as a result of low unemployment rates
- Competing with big corporations
- Remaining relevant in the face of global outsourcing
- Surviving off-season fluctuations in cash flow
- Developing a strong cyber security strategy
- Etc.
It’s true that there are many potential setbacks that small Floridian businesses may face. Fortunately, there’s also a wide variety of alternative business loans available to Florida business owners. Here’s an overview of the different financing options small businesses in Florida can make use of.
Business loan options in Florida
Before we jump straight into the variety of business loans in Florida, it’s important to highlight that choosing which type of financing is best for your small business depends on many factors. You’ll want to have the following details in mind before applying:
- Which industry do you work in?
- What do you intend on doing with the funds?
- Is your business financially healthy and stable?
- How quickly do you need the money?
- And more
You can also use these resources to improve your loan application approval odds:
How to Apply for a Small Business Loan
After you’ve answered those questions, you’ll want to look over the many different small business loans in Florida. Don’t skip comparing the pros and cons of each sort of funding before you apply.
Among the reasons why business loan applications get rejected is applying for the wrong sort of loan. If you want to strengthen your loan application approval odds, take a few minutes to study up on the differences between the following types of business funding options.
Top 6 types of small business loans in Florida:
1. SBA loans
If your business is able to qualify for small business administration loans in Florida, then you’ll probably want to take one. This is a type of business financing that’s backed by the government, which means lenders will give some of the best terms and rates possible when they provide small business administration loans in Florida.
Top Pro: Low monthly payments
Top Con: Not for startups
Quick Facts about SBA Loans & Requirements:
- Credit Score: 600+
- Time in Business: 3 months minimum
- Loan Amount: Up to $350k
- Time to Funding: 14 days minimum
- Loan Term: Up to 10 years
- Top Lender: SmartBiz
2. Unsecured loans
Unsecured business loans are a type of business funding that doesn’t require any form of security to qualify. If your business is short on valuable assets (or if you simply don’t want to put them in jeopardy), then you should think about applying for an unsecured business loan. Just remember that the rates are usually higher than other types of business funding solutions.
Top Pro: No risk to personal assets
Top Con: Higher interest rates
Quick Facts about Unsecured Loans & Requirements:
- Credit Score: 350+
- Time in Business: 6 months minimum
- Loan Amount: Up to $250k
- Time to Funding: 3 hours minimum
- Loan Term: 6-24 months
- Top Lender: OnDeck
See if I Qualify – Unsecured Loan
3. Lines of credit
A business line of credit works almost the same as a credit card. You can use the funds as needed and up to a predetermined credit limit. As far as flexibility goes, a line of credit is one of the best solutions available. Just be careful not to use a line of credit too loosely, as you can run the risk of getting yourself stuck in a cycle of debt.
Top Pro: Use funds as-needed
Top Con: Penalties for late payments
Quick Facts about Line of Credits & Requirements:
- Credit Score: 300+
- Time in Business: 3 months minimum
- Credit Line: Up to $100k
- Time to Funding: 4 hours minimum
- Interest Rates: As low as 4.66%
- Top Lender: Fundbox
See if I Qualify – Line of Credit
4. Invoice factoring
If your business is in need of a way to effectively deal with slow or even non-paying customers, then invoice factoring is the way to go. Gain fast access to money that’s stuck in unpaid invoices. The lender will provide you with roughly 80% of the value of your unpaid invoices and then pay you the remaining 20% once they’ve successfully collected the payments on your behalf.
Top Pro: Access funds tied up from slow-paying customers
Top Con: Placing customer relationships in the hands of a third party
Quick Facts about Invoice Factoring & Requirements:
- Credit Score: 530+
- Time in Business: 3 months minimum
- Loan Amount: Up to $5 million
- Time to Funding: 3 hours minimum
- Loan Term: 1-13 weeks
- Top Lender: BlueVine
See if I Qualify – Invoice Factoring
5. Equipment financing
There are several industries where small businesses rely very heavily on having properly functioning equipment – restaurants, construction, manufacturing, auto repair, etc. It doesn’t matter you’re looking to purchase or lease equipment (or even repair equipment) – this type of business financing solution can be a huge help. Plus, the equipment serves as its own collateral!
Top Pro: No collateral needed
Top Con: Equipment devalues quickly
Quick Facts about Equipment Financing & Requirements:
- Credit Score: 450+
- Time in Business: 3 months minimum
- Loan Amount: Up to $250k
- Time to Funding: 2 hours minimum
- Loan Term: Up to 5 years
- Top Lender: Everlasting Capital
See if I Qualify – Equipment Financing
6. Merchant cash advance
If you need fast access to business funding, then a merchant cash advance can be the savior in your time of need. It’s important to note that MCAs balance out their quick and easy access of funds with high interest rates, short repayment terms, and frequent payment requirements (weekly or even daily). Additionally, they’re repaid with a percentage of future credit and debit card transactions – so it’s really only relevant if your business has a high volume of those sorts of payments.
Top Pro: Fast access to cash
Top Con: High interest rates
Quick Facts about MCAs & Requirements:
- Credit Score: 500+
- Time in Business: 6 months minimum
- Loan Amount: Up to $150k
- Monthly Revenue: $12k minimum
- Loan Term: 2-10 months
- Top Lender: Uplyft Capital
Business loans for minorities in Florida
The Sunshine State has nearly 1 million minority-owned businesses which make up roughly 37% of all Florida businesses. That’s no small number! And it’s no secret that human bias can play into decision-making processes – so how are business owners supposed to obtain funding in a fair way?
When you consider the fact that 49% of business owners that are in search of a financial boost will go to their bank, and that only 58% will get approved, it raises questions about why there’s such a large gap.
That question is then magnified when you look at the whopping 82% approval rate for small businesses that apply for loans through online lenders. The answer is complex, but one of the main factors for the great difference in approval rates is that online lenders – like those in Become’s online business lending marketplace – use the power of technology to help differentiate qualified applicants from unqualified applicants.
The bottom line: Human bias is largely eliminated through alternative lending options. The result is improved approval rates for all small businesses, including minority-owned businesses.
Local Florida business grants
When it comes to Florida business grants, there are a variety that your small business can apply for. Grants, as opposed to loans, provide funds with no need to repay. Who said there’s no such thing as a free lunch?!
Just remember that there are still qualifications that your small business will need to meet in order to get approved for a Florida business grant. Those criteria can pertain to your business’s size, your intended use for the funds, where your business is located, and so on.
Here are a handful of local Florida business grants for you to consider:
- State Small Business Credit Initiative (SSBCI)
- Must be a Florida business
- Must have less than 500 employees on average
- Must have an identified Partnering Lender providing new private capital
- Microfinance Guarantee Program
- Must be an entrepreneur or small business located in Florida
- Must have no more than 25 employees
- Must have generated an average annual gross revenue of $1.5 million or less per year for the last 2 years
- Florida Opportunity Fund
- Must be an emerging business in Florida (or relocating in Florida)
- Must have perceived long-term growth potential
- Targets Florida’s top industries including Aerospace & Aviation, Clean Energy Technology, Information Technology, Manufacturing, and more
There are many more Florida business grants that your small business may qualify for, so it’s always worth investigating which can fit your needs the best. The bottom line is, if you can qualify for Florida business grants, you have every reason to apply!
Wrapping it up
It’s clear that, with such a strong economy, taking a small business loan in Florida is an investment that’s worth your while. And when you consider the fact that business loans in Florida come in many varieties, there’s bound to be a funding solution for you whatever the reason may be. Get the financial boost you need to keep your Florida-based business running at maximum capacity!
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