In the state of Pennsylvania (PA), small businesses, entrepreneurs, and startups employ half of the state’s workers, and in 2015 they created almost 24,000 new jobs.
Another perk of owning a business in Pennsylvania are the various options for financing.
With private or government small business grants, different types of small business loans, and investors geared toward helping businesses, there are many ways for you to fund your small business in Pennsylvania.
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Small Business Loans in Pennsylvania
One option for business owners in the Keystone State is a small business loan. Several banks offer small business loans in PA and lines of credit, and they each have their own criteria and eligibility requirements.
First Commonwealth Bank
Headquartered in the Pennsylvania city of Indiana, this bank offers a number of credit products for small business owners. Term loan options include construction loans, financing for heavy equipment, working capital, or even asset-based funding for seasonal or cyclical sales.
First Commonwealth also serves as a preferred lender for the federal Small Business Administration (SBA), which means their personnel is well-versed in the type of lending that businesses need. Funding amounts are variable and based on the creditworthiness of the borrower.
Somerset Trust Company
This lender offers business financing for a variety of ventures—including agricultural lending, commercial real estate, and asset-based financing. It also has short-term loans that can support working capital needs or bridge financial gaps during temporary circumstances.
Farmers and Merchants Trust Company
This lender offers a wide variety of loans to businesses in the commonwealth. Term loans for fixed-asset purchasing, construction and development, and letters of credit are all possible. Commercial real estate loans are also available for terms of up to 20 years.
Penn Community Bank
This bank offers small business financing starting at $5,000, with flexible-term loans and a 15-minute approval process. It guarantees funding for approved borrowers within less than a week. The PennEdge product is designed for working capital, expansion, or other business needs. Penn Community doesn’t require business owners to own real estate in order to qualify for a small business loan in PA.
Small Business Grants in Pennsylvania
There are hundreds of small business grants in Pennsylvania available to business owners. Each grant has a specific list of eligibility criteria, an application process, and a separate due date for the application package.
Some small business grants in PA are awarded to veteran or minority business owners; others are designed for a specific type of business. Some are offered by government agencies, others by faith-based charities, or other types of nonprofits.
Rural Business Development Grant
Is one government program designed to help Pennsylvania business owners in rural areas. Rural authorities can apply for the grant in order to help a local business with less than 50 employees and less than $1 million in gross revenue. A printable fact sheet with more information is available.
Business in Our Sites
The Business in Our Sites grant offers funding to businesses needing to make a new site shovel-ready. Amounts go up to $4 million and can only be used for places zoned for development. More information is available here.
Ben Franklin Technology Partners Challenge Grant
The Ben Franklin Technology Partners Challenge Grant looks to provide grant funding to businesses that advance alternative and clean energy. Funds can be used for capital, business expertise, or technology commercialization. More information can be found here.
Global Access Program
The Global Access Program, or GAP, offers grants to help small and mid-sized Pennsylvania businesses increase their export sales. It provides up to $5,000 per award period to reimburse export promotion activities. More information on GAP can be found here.
Pennsylvania First Grant
The Pennsylvania First grant is for businesses that need machinery/equipment, land acquisition, demolition, and more, and are trying to expand job creation within the state by making an investment within the Commonwealth. The application and more information can be found here.
For women business owners who need financing, the Amber Grant is a great way to get $1,000. The award is given at the end of each month, and monthly winners are put in the running for a $10,000 grant at the end of the year. More information can be found here.
Business Owners Idea Café Small Business Grant
The Business Owners Idea Café Small Business Grant offers $1,000 cash to any existing business or startup with an innovative idea. Competition starts each winter, and more information can be found at the Idea Café website.
Know Your Worth Grant
The Know Your Worth Grant is a $10,000 award given to women business owners who need to either expand an existing business or want to start one with fewer than five employees. Applicants must be in areas where other funding is difficult or unavailable. More information can be found here.
Small Business Investors in Pennsylvania
If you would rather have an investor put money into your business than borrow money against it yourself, you have options as well. There are a few groups in Pennsylvania that specifically seek to fund businesses within the state.
BlueTree Allied Angels
This group is looking for regional startups to provide seed capital to. While they typically don’t fund technology risks due to scalability or feasibility issues, they do offer investments into companies with headquarters in western Pennsylvania, east Ohio, or northern West Virginia.
The product needs to have huge market potential and susceptibility to rapid growth, and the company must also have visible cash flow, profit/loss analysis, and less than $5 million of pre-money valuation. Investments range from $200,000 to $3 million; BlueTree Allied’s website offers much more information.
Delaware Crossing Investor Group
This angel investor firm has 40 members and a combined 800 years of experience in startup investing and business consulting, DCIG offers not only venture capital funding but mentoring and domain expertise as well.
The PA Angel Network is another resource for entrepreneurs looking for angel investors. The network lists many different investor groups, all with their own criteria and target business type.
Getting Your Business Ready for Financing
Before you approach an agency, lender, or investor with a request for funding, you need to have your business looking its best. That means having your paperwork in order, and having a solid plan, for starters.
You’ll need at least the following before approaching any third party for funding:
- Profit and loss statements, if it’s an existing business
- Business plan; this should be detailed, itemized, and well-constructed, not a vague vision.
- Solid credit history; if you’re a sole proprietor, you’ll need a good personal credit history, or your business needs good credit on its own merit.
- A specific, actionable plan for the money you’re asking for. You’ll need to be able to answer questions about why you need the funds, where they’ll be spent, and what you expect to accomplish with the funding.
- An actionable plan for paying the funds back, if applicable. Where will you get the money to make those payments if you can’t afford to operate or start up now?
- Established business banking, and financials that are in order, organized, and can be reviewed by those who wish to see them before granting funding.
If you have those things in order, you’ll be more likely to be approved for funding.
What Kind of Financing Do You Need?
Deciding on where to turn for your financing depends on the type of business, what your expected revenue is, and even where you are in the business startup process. If you’re already in business and ready to expand, for instance, you probably would steer clear of angel investors, who often want a controlling interest in your venture in return for the money they’re putting in. Business expansions are better funded by a small business loan for that reason.
If you’re a new entrepreneur, however, you might do best with an angel investor, who can also help with mentoring and navigating the business world as you get accustomed to running your own business.
Wherever you are in the process, there’s a funding option for you as a Pennsylvania business owner—and your state is invested in helping you succeed.
Interested in a personal loan to bootstrap your small business? Check out our guide to the personal loans in Pennsylvania.