Small businesses are often referred to as the backbone of the economy, and that certainly rings true in Louisiana.
Small businesses in Louisiana account for 97.3 percent of all companies operating in the state, according to the US Small Business Administration Office of Advocacy. More than 427,000 small businesses are registered in Louisiana, providing nearly 1 million jobs. Furthermore, over the last several years, the number of Louisiana small business has grown 1.6 percent, adding an estimated 16,400 jobs across numerous industries.
While the economic environment for small businesses in Louisiana is strong, small business owners face several challenges in trying to run a profitable, sustainable company. Small businesses financing in Louisiana is common, whether it is to cover working capital needs, expand locations or products, or to purchase inventory or new equipment.
There are several small business financing options in Louisiana, each with its own set of advantages and disadvantages. Below is a quick guide to small business loans, grants, and investments for Louisiana small businesses, as well as details on how to secure each type.
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Louisiana Small Business Loans
The most common source of small business financing is fixed-term business loans issued through a bank or credit union in the state. Both banks and credit unions offer Louisiana small business loans at more affordable interest rates and manageable repayment terms for businesses that have strong revenue, an established time in business, and organized and accurate financial statements.
However, small businesses should be aware of the differences between banks and credit unions.
President and CEO of the Louisiana Credit Union League Bob Gallman explains that the biggest hurdle for many entrepreneurs and small business owners is getting their feet off the ground financially.
“Securing approval for a small business loan is often difficult, but credit unions offer ways for businesses to easily and efficiently obtain the financing they need,” he said. This is because credit unions are relationship-driven, not profit-driven, and each loan is reviewed on a case-by-case basis. Credit unions behave like cooperatives in that their members are actually part owners, so credit unions’ top priority is meeting its members’ needs.
In some cases, credit unions consider other factors like member history when reviewing a Louisiana small business loan application. Additionally, many credit unions offer fewer fees and lower interest rates compared to profit-driven banks.
Several financial institutions offer small business loans in Louisiana, including the following:
Pelican State Credit Union
Pelican State Credit Union in Louisiana has been serving community residents for more than 60 years. The financial institution operates branch locations across the state, providing access to financial products and services to more than 50,000 members.
The credit union provides small business loans to qualified businesses, including start-up companies, for several financing needs. Commercial real estate purchases, construction loans, business acquisition and expansion financing, as well as small business loans for working capital and inventory needs may all be financed through Pelican State Credit Union.
The credit union reviews small business loan applications individually, but all applicants must be members of the credit union to be eligible.
Gulf Coast Bank & Trust Company
Founded in 1883, Gulf Coast Bank & Trust is one of the oldest financial institutions in Louisiana.
The bank offers many different financial products and services to its customers, including small business lending solutions. Companies in Louisiana may qualify for an SBA Express loan for up to $350,000, a term loan between $350,000 and $5 million, or a business line of credit. Each small business loan offered by Gulf Coast Bank & Trust has a repayment term and interest rate based on the credit qualifications of the company applying.
Small business loans may be requested through the online application form or by visiting a Gulf Coast Bank & Trust branch location.
Louisiana Federal Credit Union
Another credit union option for small business loans is Louisiana Federal Credit Union, currently serving business members in LaPlace, Gramercy, Hammond, and Norco.
The credit union offers several small business loan solutions, including secured and unsecured lines of credit, installment business loans, commercial real estate loans, commercial vehicle loans, construction loans, and renovation loans. The credit union has helped more than 500 small businesses since its establishment.
It reviews new applications on a case-by-case basis. Interest rates and repayment terms are dependent upon the financial strength of the business applying and the amount of the loan.
First National Bank of Louisiana
The First National Bank of Louisiana is another small business loan solution for Louisiana companies. The financial institution was first established in 1920, and since that time, it has become a well-known bank among Louisiana residents. Small businesses have the opportunity to qualify for SBA loans, as well as business lines of credit, business credit cards, commercial real estate loans, and traditional term loans.
Companies interested in securing a small business loan with First National Bank of Louisiana must contact a business lending specialist by phone or visit a branch location in person to apply.
Propeller Social Venture Fund
Propeller, a nonprofit organization focused on social innovation, offers loans from its $1 million Social Venture Fund. It provides loans between $20,000 and $100,000 to entrepreneurs of color and entrepreneurs who are working to create social change in the New Orleans area. The fund prioritizes businesses tackling inequities in food, water, health, and education.
Repayment terms for the loans range from two to seven years. The loans may be used to purchase commercial real estate, for working capital, to cover renovation and operations costs, and to buy furniture, fixtures, and equipment.
A company can apply by contacting Propeller at [email protected] to discuss the project that needs funding and set up a time to meet with a representative to go over the application.
Small Business Grants in Louisiana
In addition to leveraging Louisiana small business loans, some companies may be eligible for grant funding. Louisiana small business grants are different from credit union or bank loans in that the funds received do not need to be repaid. However, nearly all small business grants have specific requirements to keep the funding. Grants are available through several state organizations as well as private institutions to help small businesses in Louisiana fund operations and projects.
Foundation for Louisiana Grants
Charitable organization Foundation for Louisiana provides several grants to eligible small businesses operating in the state. The organization’s mission is to help fund programs and initiatives that focus on building and sustaining resilient communities throughout Louisiana.
Small businesses working on projects that involve community economic development, grassroots civic engagement, policy initiatives, and disaster relief and response may qualify for a grant from the Foundation.
Applications are submitted directly through the organization each year, and amounts vary depending on the project.
Small Business Investors in Louisiana
Outside investors are yet another way for small businesses to secure financing for a myriad of needs. Investors typically come in the form of private equity, venture capital, or angel investor funds.
These financing arrangements are more complex than small business loans and grants, and they are repaid over time through equity in the business. In some cases, investors take an active management role in the company to ensure their financial contribution is protected against loss.
Here are three reputable investors for small businesses in Louisiana:
The Louisiana-based capital investment firm, Sisung Group, provides venture capital to small businesses in need of financing for growth and future profitability. The firm is a licensed Louisiana Capital Company and Business and Industrial Development Corporation that focuses on working with entrepreneurs in the early stages of their business.
Sisung Group offers equity and debt capital to high-growth businesses in the state to help with the expenses of organization, market planning, and consulting. Each small business that applies for venture capital with Sisung is evaluated based on its management team, time in business, the uniqueness of its product or service, and future liquidity of the company.
With offices in New Orleans, New York, and Salt Lake City, LongueVue Capitalhas ample experience in helping high-growth potential small businesses secure and maximize venture capital.
The investment firm identifies opportunities with Louisiana small businesses that lead to a substantial return on investment and a profitable exit. LongueVue Capital is not industry-specific in its investments, but instead focuses on small businesses that have a scalable business model, have fundamental growth opportunities, strong cash flow, and an entrepreneurial management team. The firm offers financing for several business needs, including acquisition funding, restructuring opportunities, and the transition of family-owned businesses.
Stonehenge Capital has offices throughout the United States, but its Baton Rouge office focuses on Louisiana small businesses that have a strong potential for exponential growth in the future.
The venture capitalist firm offers private equity, mezzanine debt, and venture capital financing to small businesses that show leadership in their industry with an experienced management team and a focus on innovation. The firm takes a flexible and creative financing approach with business, customizing the funding agreement and partnership efforts from the start.
Small businesses can contact Stonehenge directly for application requirements and funding requests.