How to Secure a Small Business Loan in Maryland

ecuring money to start or grow a company is a top priority for many Maryland business owners. Fortunately, many funding options exist, including loans, grants, and alternative financing. Check out our guide for small business loans in Maryland.

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Small business loans: Maryland

Maryland offers numerous state-led financial lending programs that business owners can take advantage of.

Advantage Maryland (MEDAAF)

Advantage Maryland (MEDAAF) provides loans to companies that support certain state economic initiatives, such as infrastructure, arts and entertainment, and business retention. Businesses located in priority funding areas can seek additional information through their local business development representative.

Maryland Capital Access Program (MD CAP)

The Maryland Capital Access Program (MD CAP) helps business owners obtain a loan when they have difficulty qualifying under a bank's lending criteria. To be eligible, you must apply to an MD CAP participating lender, have less than 50 employees, and qualify as a small business under the Small Business Administration's (SBA) standards. The maximum loan amount is $250,000 and must have a term of ten years or less.

There are a few restrictions on the use of the loan. Passive real estate investment won't qualify, and certain business activities such as gambling, selling liquor, or selling firearms aren't eligible for the loan.

Maryland Small Business Development Financing Authority (MSBDFA)

The Maryland Small Business Development Financing Authority (MSBDFA) prioritizes economically and socially disadvantaged business founders for funding to start or sustain a business. Owners who can't secure traditional financing with reasonable terms can qualify.

You can use MSBDFA funds for approved business purposes, including working capital, materials and supplies, and acquiring machinery or equipment. Qualifying businesses can obtain up to $2,000,000 in loans. [SSBCI Information – Meridian Management Group (mmgcapitalgroup.com)]

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Small business grants: Maryland

Obtaining a grant gives you access to business funding without requiring repayment. However, competition for grants is fierce, and eligibility requirements vary. Here are a few small business grants currently available in Maryland.

ExportMD Program

Small businesses planning an international marketing initiative can apply for the ExportMD Program, which offers grants of up to $5,000. To qualify, a company must be in good standing with the Maryland Department of Assessments and Taxation and meet the SBA small business standards. The international business initiative must begin within six months of the application.

Most businesses use funds from the ExportMD grant to offset international travel costs for sales and marketing purposes. However, recipients can also use them for website development or trade shows.

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Maryland Manufacturing 4.0

The Maryland Manufacturing 4.0 program provides grants to small and medium-sized Maryland companies that invest in advanced technologies, including robotics, artificial intelligence, and big data. Eligible businesses must have between three and 250 full-time employees and be in business for at least three years, among other criteria.

Businesses can receive up to $500,000 from a grant award, which they must use to adopt or develop new technologies. A match requirement varies from 25% to 50% depending on the number of employees in the organization.

Partnership for Workforce Quality (PWQ)

The Partnership for Workforce Quality (PWQ) grant provides funding to small and medium-sized technology and manufacturing companies with the aim of improving their competitive position. Organizations that receive the grant can use it to reskill their existing workforce and improve employee productivity.

To qualify, the organization must have at least ten full-time workers. At least 60% of the grant's funds go to companies with 150 or fewer employees. Business owners interested in learning more about the program can contact their local regional commerce representative.

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Other financing alternatives

While Maryland offers multiple state-led loans and grants, you can also consider other financing alternatives.

Merchant cash advance

A merchant cash advance is one of the easiest business financing options to qualify for and usually doesn't require a lengthy loan application or credit check. A merchant cash advance funder provides funding based on your prior sales history, and you repay them according to a set schedule. You'll pay a factor fee for the service, which the lender includes in your repayment schedule. [What is a Merchant Cash Advance? | Bankrate]

Novo offers simple and affordable merchant cash advances for up to $75,000. Qualifying companies can access funds instantly; the application takes less than 10 minutes to complete.

Self-funding

Many small business owners rely on their own savings and assets to start and grow their organizations. With self-funding, you don't need to worry about meeting a bank or investor's lending criteria and have complete control over the money you use. However, keep clear and concise records, especially if you use a business structure that includes personal liability protections. [How to Get Funding For a Small Business | Novo]

Equipment financing and leasing

Purchasing equipment and machinery is critical for many businesses, including restaurants, manufacturers, and office-based organizations. Some distributors offer direct equipment financing and leasing, which allows you to obtain what you need from the manufacturer or lessor.

In an equipment loan, the machinery is collateral, and interest rates will vary. If you lease equipment, your contract may include a purchase option at the end of the term. Sometimes, owners find equipment financing cheaper than a traditional bank loan. [How to Get Funding For a Small Business | Novo]

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How to get a small business loan in Maryland

All lenders have their own requirements, but they will request certain documentation from you before reviewing a loan application. Some examples of documents you may need to provide include the following:

• Business plan
• Recent financial statements
• Future financial projections
• Senior leadership team profiles
• Industry analysis
• Personal credit score

Be sure you understand the bank's terms and interest rates for any loans you apply for, and be open to shopping around. Some lenders will offer better loan terms than others. [How to Get Funding For a Small Business | Novo]

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Finding a small business loan in Maryland is possible

Maryland offers a wealth of financing opportunities to small businesses that need loans to buy equipment or machinery or support their working capital needs. Consider the options available through Advantage Maryland, MD CAP, and MSBDFA, and apply if you qualify. You can also consider alternative financing options, such as merchant cash advances or equipment financing.

Before applying for funding, read the eligibility criteria carefully and prepare your application, including any documentation. If you need help, seek assistance from a trusted CPA.

Novo Platform Inc. strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.

Merchant Cash Advance products and services are offered by Novo Funding LLC (“Novo Funding”), a wholly owned subsidiary of Novo. Merchant Cash Advances require a Novo checking account.

Novo is a fintech, not a bank. Banking services provided by Middlesex Federal Savings, F.A.: Member FDIC.