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BusinessTypes of Small Business Loans in Colorado And How to Get One.

Types of Small Business Loans in Colorado And How to Get One.


Small businesses loans are important for a healthy and functioning economy.

They employ millions of Americans and spur new ideas and innovations. To do that, most of them at some point will require a small business loan.

 In this article, I will discuss why small businesses need loans here in Colorado and the prerequisites for different small business loans.

Specifically small businesses in Colorado.

Starting a small business in Colorado is rewarding and risky. According to the Bureau of Labor Stats in Colorado, 20% of small businesses fail before year two. That number increases to 50% by year six. The number one reason businesses fail is Money. Specifically the lack of cash flow to keep the business running in hard times. That could explain why the percentage of workers in America, Colorado employed by small businesses has been steadily falling from 51% in 93 to just over 45% in 2019.

Small business loans help those small businesses compete against the big fish with deep pockets. The average small business loan is just over $630,000 with an average interest rate of between 6 and 8%. The Small Business Administration, which lends federally backed loans to small businesses, loaned more than 63,000 businesses loans in 2019.

Types of loans in Colorado and what you need to get one.

a)      Business line of credit.

A business line of credit is essentially a fund that you can repeatedly borrow from as long as you pay it off and don’t go over the limit, which is usually between a thousand and two hundred and fifty thousand.


Most lenders require businesses to show 

i) six months in business

ii) Twenty five thousand dollars in annual revenue

iii) Personal and business tax returns,

iv) Bank account information,

v) Business financial statements like profit and loss or balance sheet

vi) A business plan 

vii) Credit score above 500 although some lenders do not have a minimum score.

b)  Short-term loans.

Like the name implies, a short-term loan gives businesses access to cash that they pay off in a short time frame, three months to three years.


Loan lenders require a business tax ID number, personal and business credit scores, a business bank amount, three months of bank statements, annual revenues, and the amount of time that the business has been in operation.

c)   Business term loan. 

The term loan is a lump sum of money given to a business all at once that the business repays over time with interest.


When considering businesses for long term loans, lenders usually require businesses to provide personal business income tax returns, a balance sheet or income statement, personal and business bank statements, a photo of your driver’s license, relevant commercial leases and or business licenses, articles of incorporation, if applicable.

 A resume or proof of business experience. Financial projections, if the company hasn’t been around very long. A business plan and collateral.

d)  Equipment financing.

For businesses with poor credit or who just need some extra capital to replace or purchase new equipment, there is equipment financing.


A lender that does these kinds of loans, requires their applicants to prove $50,000 a year in revenue, at least 12 months in business, and a credit score of 650 or higher. Because these loans are used to purchase equipment which can double as collateral, they often have fewer requirements than other types of small business loans. These requirements are fluid and vary by lender.

e)  Accounts receivable loans.

Accounts receivable loans allow businesses to borrow against their unpaid invoices to get emergency cash flow. The lender then takes the money from the vendors directly to pay off the loan.

Because the money is coming from the vendors and not the business, a business needs vendors with good payment history.


  1. Be a B2B or B2G business that invoices customers operating in Colorado.
  2. Be in business at least six months.
  3. Have Creditworthy customers.
  4. Have outstanding receivables.
  5. Submit outstanding invoices.
  6. Provide a driver’s license for the United States,
  7. Bank statements, and avoided business checks.

f)   SBA loan.

 To get an SBA loan. A business must be a for-profit business, do business in the United States, be physically located in the United States, have the owner invested equity in the business, go through all other potential funding options before requesting an SBA loan, have a sound business purpose, and prove that they can repay the loan.


Of course all of these loans are made through big lenders like banks and the government. You can also attempt to get a business loan through more direct agreements with venture capitalists, family members, or friends. For that all you need is a legal document like a loan agreement.

You can find a template for a loan agreement form here.

For more information about loans you may read this article here.


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