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Washington state is a great place to start or own a business. Despite higher-than-average rent and labor costs, it still ranks as a fantastic place to be a business owner.
In fact, in 2017, Washington was ranked as the top state for business in the U.S. by CNBC. According to the CNBC rankings, the state landed at the top of the list due to its strong economy, which grew 3.7 percent in 2016 (nearly 2.5 times the national rate) and its lack of income and corporate income tax.
In addition, the largest concentration of science, technology, engineering and math (STEM) workers live in Washington. Unsurprisingly, Washington is behind only California in the number of patents filed in 2016.
Given this favorable environment, many Washingtonians may be considering either starting a new business or expanding their current business.
The question often becomes where to look for small business financing in Washington state. Fortunately, there are a variety of options available, such as loans, grants, and investors for small businesses in Washington.
Read on to learn more about some financing options specifically for Washington state entrepreneurs.
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Small Business Loans in Washington
Small business loans are a good option for established businesses with a steady income flow or for entrepreneurs with excellent credit. Approval and interest rates for a small business loan are based on the creditworthiness of the applicant, so they may not be the best choice for all small businesses.
However, for those companies and start-ups that meet the criteria of specific lenders, the following are some Washington small business loan lenders for small businesses:
- Seattle Metropolitan Credit Union
- Ameritrust CDC
- Banner Bank
- Boeing Employees Credit Union
- Washington Federal
>> Read more: Personal Loans in Washington State
Seattle Metropolitan Credit Union
Since 1934, Seattle Metropolitan Credit Union has provided financial services to customers in Washington state. In addition to personal financing, Seattle Metropolitan Credit Union offers commercial lending, including small business loans. Its range of loans includes equipment loans, real estate secured loans, and business term loans.
Seattle Metropolitan Credit Union’s equipment loans can be used to purchase any type of equipment that a small business may need, from heavy machinery to office furniture to new computer systems. These loans are offered in terms of up to 84 months, with both fixed and variable interest rates available. With an equipment loan, Seattle Metropolitan Credit Union allows the purchase of either new or used equipment.
There are two types of real estate secured loans available: multi-family property loans and commercial real estate loans. For multi-family property loans, borrowers can finance up to 80 percent of the property value. For both types of real estate loans, both fixed and variable rate loans are available.
Finally, for any small business loan needs that are not covered by equipment or real estate loans, Seattle Metropolitan Credit Union offers business term loans. These loans offer predictable monthly payments, with both fixed and variable interest loans available.
The amount of Seattle Metropolitan Credit Union loans depends on various factors, such as the purpose of the loan, the business’ credit history, previous credit limits, the business’ income and gross sales, and any collateral used to secure the loan.
One of the benefits of borrowing through Seattle Metropolitan Credit Union is that there are no pre-payment penalties on any of its small business loans. If a company is able to repay its loan ahead of schedule, it won’t be charged extra for doing so. In addition, the Seattle Metropolitan Credit Union offers competitive rates and a simple application process. Interested borrowers can apply by visiting a Seattle Metropolitan Credit Union branch or calling the bank directly.
To qualify for a small business loan through Seattle Metropolitan Credit Union, the bank will review a number of factors. These include personal and business credit history, guarantor strength, cash flow coverage, loan to value, and the unique characteristics of the loan. A business must have been established for more than 2 years and demonstrate an ability to repay the loan in order to be approved for a loan.
Ameritrust CDC has served Washington state since 1993, offering low cost, fixed rate loans to small businesses in a partnership with the United States Small Business Administration (SBA).
The company is able to offer these loans through the SBA’s 504 Loan Program which allows small businesses to obtain financing for the purchase or construction of commercial real estate and equipment. As a CDC, or Certified Development Company, Ameritrust CDC is licensed by the SBA to process, approve, close and service these small business loans.
Ameritrust CDC offers commercial real estate financing to purchase or build a new building, remodel an existing building or purchase equipment. Loans can be used to acquire vacant land or an existing building, to construct a new building, or to renovate or add onto an existing building. They can also be used to purchase marine facilities, including fishing vessels and commercial boars, or for the purchase of capital equipment, including heavy machinery. Ameritrust CDC loans may also be used for tenant improvements on leased facilities or land.
Finally, these loans may be used for associated costs, such as title and insurance, appraisals, furniture and fixtures. The maximum loan size is $5 million or $5.5 million for manufacturers or for small businesses that can demonstrate a 10 percent energy cost savings for new construction or renovation.
All loans are fixed rate, long-term loans. Because these loans are offered through a partnership with the SBA, they often have more favorable terms than other types of small business loans.
To be eligible for an Ameritrust CDC loan, a small business applicant must be an operating for profit business located in the United States. Each owner with a 20 percent or greater ownership interest must give a personal guarantee. In addition, the business must have a tangible net worth of $15 million or less, and an average net income after federal income taxes of $5 million or less.
The business must also meet the job creation goals of the SBA, which is currently one job created for every $65,000 loaned. There are also strict occupancy requirements for the purchase or renovation of commercial spaces. The business owners must inject some equity into the project, based on the type of project and the length of time the business has been in operation (maximum of 20 percent for business in operation for two years or less for single-purpose properties).
To apply, small business owners can download forms via Ameritrust CDC’s website. There are a number of forms that must be completed and information that must be submitted to qualify for a loan through the program. Business owners interested in the program can contact Ameritrust CDC directly with questions.
For 125 years, Banner Bank has served Washingtonians. Founded in Walla Walla in 1890, Banner Bank offers both personal and business banking services, with 13 loan offices located in the Pacific Northwest region.
Banner Bank offers 7 different types of small business loans: equipment and term loans, SBA lending, agricultural loans, lines of credit, mergers and acquisition, QuickStep loans, and owner-occupied real estate financing.
Equipment and term loans are available for businesses that need to purchase capital equipment. They are available in terms of up to 7 years, with both fixed and variable interest rate options.
SBA loans are offered through a partnership with the Small Business Administration and can be used to buy equipment, buy inventory, move locations, develop real estate, or for other purposes. They are available in amounts up to $5 million, as either fixed or variable interest rate loans, depending on the type of loan. The loans may be 7, 10 years for equipment or 25 years for real estate loans.
Agricultural loans can be used to purchase equipment. They are variable rate loans, generally offered for one year terms, although they may be offered for longer terms based on the specific needs of the borrower.
Lines of credit allow businesses to finance operating expenses. They are typically offered with a variable interest rate tied to the Prime rate, and mature in one year.
Mergers and acquisitions loans can be used to purchase another company or buy out a partner in an existing business. They are available as either fixed or variable rate loans, typically in 7 year terms.
QuickStep loans and lines of credit are available in amounts from $5,000 to $500,000, or from $50,000 to $1 million for owner-occupied commercial real estate loans. They are secured by business assets, and can be fixed or variable interest rate loans or lines of credit. Lines of credit generally have a 3-year term, while business loans have a 5 year term. Owner-occupied commercial real estate loans have terms of up to 20 years.
Owner-occupied real estate financing is used to refinance and improve commercial property in amounts of up to $10 million. The loans typically have a 10-year term and can be either fixed or variable rate.
Banner Bank offers flexible options to help meet the needs of small business owners, such as longer terms for agricultural loans to meet seasonal needs. They also give their customers personal service, with a relationship manager handling each loan, working face-to-face with small business owners.
Eligibility for these loans depends on a number of factors, including the length of time that a business has been in operation, the creditworthiness of the business and the owners, and the business’ income. Applications are handled directly through Banner Bank.
Boeing Employees Credit Union
Boeing Employees Credit Union (BECU) was founded in 1935 by 18 Boeing employees. Today, BECU offers everyday banking services, personal loans and mortgages, and business banking. BECU has 4 different types of loans: business line of credit, business term loans, business vehicle loans, and commercial real estate loans.
Business lines of credit give you cash when you need it to operate your business, in amounts ranging from $2,500 to $100,000. BECU business lines of credit offers variable interest rates with overdraft protection, and both secured and unsecured options. Interest rates range from 6.50 to 10.75 percent.
Term loans are available for up to 80 percent of loan-to-value and in terms of up to 84 months. There are no origination fees, and BECU business loans have fixed rates ranging from 5.14 to 12.94 percent. Loans are available in amounts ranging from $10,000 to $250,000.
Business vehicle loans are available for both new and used vehicles, for up to 100 percent of the value of the vehicle. The fixed rate loans have interest rate that range from 3.74 to 11.24 percent, with terms of up to 72 months.
Finally, commercial real estate loans can be taken out in amounts from $100,000 to $15 million. The specific terms of these loans will vary based on the type of loan, and may include a fixed or variable rate loan with a 3, 5, 7, 10 or 25-year term.
One of the primary benefits of working with BECU is that they offer a streamlined application process and quick approval of loans. They also charge few fees, with no prepayment penalties on their small business loans.
Criteria for loan eligibility depends on the type of loan but will generally include a review of the credit history of the business and owners, as well as the income and tax statements of the business, and other factors, such as the length of time that the business has been in operation.
Application forms for a BECU business loan are available through their website. After the application has been completed and the appropriate paperwork has been gathered, you can make an appointment via the website to meet with a BECU loan officer.
Since 1917, Washington Federal has offered financial services to customers in Washington. Today it offers checking and savings accounts, mortgages, credit and debit cards, and commercial banking to clients throughout the state. It offers 3 types of loans for small businesses: business lines of credit, commercial real estate loans, and business term loans.
Washington Federal’s business lines of credit are available in amounts of up to $50,000 (unsecured). Quick decisions are available in amounts of up to $10,000 with limited documentation. For commercial real estate financing, Washington Federal offers multiple options to purchase or refinance commercial properties. Finally, business term loans are available with terms ranging from 1 to 7 years.
The main advantage of obtaining a small business loan through Washington Federal is that they offer flexible terms that are designed to meet the needs of small businesses, whether that is to purchase a bigger commercial space, gain cash to cover operating expenses, or to finance an expansion. Eligibility for small business loans and lines of credit is determined based on creditworthiness, the business’ history and income, as well as other factors. Applications can be submitted directly to a Washington Federal loan officer.
Small Business Grants in Washington
For artists working in Washington, Artist Trust offers grants that can assist in launching and sustaining a successful small business. This nonprofit organization was founded in 1986 as a way for artists and art loves to support artists. Over the past 32 years, Artist Trust has given out more than $10 million in Washington State artists through funding, training, and resources.
Artist Trust offers a number of grants directly to artists working in all disciplines. These grants range in value, but are intended to support the artist in his or her work. Each grant has specific criteria, such as a grant for $10,000 for a female-identified visual artist aged 60 or older who has dedicated 25 or more years to creating art. Other grants are awarded to artists who are nominated by panels of artists and art professionals. Because these funds are small business grants, the recipients do not have to repay these amounts.
Small Business Investors in Washington
Angel investors are generally wealthy individuals or groups of people who invest money or otherwise provide financing in small businesses or start-up companies. Angel investors are typically good options for new businesses or those without a strong credit history.
Here are some Washington state small business investment options:
Alliance of Angels
Alliance of Angels was founded in 1997 by a group of investors. Since that time, it has become the largest and most active group of angel investors in the region. Every year, Alliance of Angels invests over $10 million into more than 20 companies. There are currently 140 investors in Alliance of Angels.
In addition to providing funding, Alliance of Angels is committed to providing advice to entrepreneurs. Its investors consist of senior business leaders from major corporations, who use their experience and relationships to help the small businesses that they choose. They only invest in companies in the Pacific Northwest.
Ideally, companies should be referred by someone that they know, but they also accept applications via ProSeeder. Their goal is to provide a decision within 6 weeks. Companies that meet their investment criteria will be invited to a screening meeting to explore how they can work with Alliance of Angels. Funding may be provided in a variety of amounts, depending on the need of the company.
Bellingham Angel Investors
Founded in 2005, Bellingham Angel Investors consists of a maximum of 50 investors who seek opportunities in the Pacific Northwest and British Columbia. They have invested in numerous successful ventures, with a focus on Whatcom, Skagit, and Island counties.
Applications can be made directly through the Bellingham Angel Investors website. It will require submitting basic information, documentation about the company, a business plan, financial data, and other key documents.
Zino Society is a group of angel investors, entrepreneurs and connectors that work to assist investors and businesses in finding success through investing, consulting and mentoring. Zino Society utilizes an Accelerator program, which allows start-up companies to work with sponsoring partners to accelerate their presentation for capitalization.
In an average year, Zino Society prepares more than 100 early stage companies, hosts 11 investment forums, and facilitates the Zino Annual Angel Investment Fund.
Companies can apply to funding using the ProSeeder platform. They will then be required to have a preliminary interview with Zino Society’s vice president. If they meet investment criteria, they will be invited to present before the society’s coaching and advisory board members.
While obtaining financing for a small business can be challenging, Washington has a great economic climate for entrepreneurs. With a variety of options, there are a multitude of ways to get started on your plans to start or expand your business.
Author: Jeff Gitlen