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Chicago Business Loans: Windy City Small Business Funding

Chicago Business Financing

Chicago businesses have the luxury of being home to the most balanced economy in the United States. It has a high level of diversification and a vital business center, and on top of that, it was voted to have the greatest number of new or expanded corporate facilities in the United States. Furthermore, the field of science and engineering within Chicago has the third-largest workforce of any metropolitan area in the nation. Manufacturing, printing, and publishing also contribute a great deal to their economy. On top of that, Chicago Illinois has produced 12 Nobel Prize winners all from a background in finance; the Midwest state has the second-largest central business district in the United States. Newer companies are thriving in Chicago too, startup companies like CareerBuilder, Basecamp, Groupon, Orbitz, and NowSecure are all based here. Thus, Chicago has remained a top state for professionals looking to start or grow their business in a wide range of markets.

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There also has never been a better time for eager businessmen and women to launch a startup in Chicago. The current environment is robust with an active network of investors earnest to ensure young tech companies have the funding and mentoring needed to succeed. So in 2018, Chicago has taken notice of up to 50 startup companies that are poised to make a significant impact in the tech world with their innovative ideas and unique talent pushing the industry to new heights and beyond. Some notable companies are The Graide Network, and Intelligent Flying Machines, Inc. The Graide Network seeks to give overworked teachers a break by connecting them with virtual teaching assistants. The “graiders” are either aspiring teachers in college or those who’ve completed a four-year degree and enrolled in teaching programs. The assistants do things such as grading writing assignments and providing students with feedback on strengths and areas that need improvement. Moreover, Intelligent Flying Machines, Inc., keeps track of inventory in a warehouse as they believe it is a time-consuming task that is better suited for robots than humans. Hence, IFM has built drones that are capable of navigating indoor environments and capturing data without the help of a human. There are many more companies continuing to shape the tech industry in Chicago making it a great place for professionals looking to make an impact in a variety of business sectors.

The windy city is also home to fresh and exciting small-businesses that are flourishing and bringing excitement to its business culture. The first being a quirky store going by, The Boring Shop that sells everything you need to be a secret agent. With their fake mustaches and high-tech surveillance equipment for sale, they also provide a non-profit writing and tutoring center for local students. Indeed, a store in a league of its own. Chicago also has a charitable business called Flowers For Dreams—a florist that donates a backpack full of school supplies to a student in need for every bouquet purchased. What’s also cool about this company is that the flowers are sourced organically, grown sustainably, and delivered locally in and around Boston and Chicago. Arrangements are made to order, so no flowers are wasted unnecessarily. In their first year, they Flowers For Dreams was able to donate more than 2,000 backpacks to more than 2,000 students in need. As for bike enthusiast, Heritage Bicycles General Store is a combination of a bike shop and coffee house. They design and build custom-made bikes and sell fantastic bike accessories and bike-themed items, like jewelry made out of bike parts.

Furthermore, Chicago is widely known for its famous hot dogs and thus has many cool hot dog shops, one of them being Hot Doug’s. It’s a sausage superstore that has more than a dozen signature and unique varieties—even one being a meatless hotdog for the vegan and vegetarian customers and a jalapeno rattlesnake sausage. All the dogs can be doctored up with ten different condiments and some spectacular sides too. Another cool company is related to home décor. Bethie B is an online company that specializes in hand-painted and custom-made pillows. They also buy and sell recycled interiors, furnishings, and art.

Moreover, within the hospitality industry, a high-tech alternative boutique hotel named the ACME Hotel Company in Chicago is becoming popular with the locals. It is a hotel that caters to a very hip crowd as they offer tech-savvy hookups like lightning fast Wi-Fi and big screen LED TVs in every room. The rooms are also alt-rock themed from the classic record albums lining the walls of their elevators. Therefore, when observing the type of industries discussed, we can see that Chicago is a professional hub for creative and smart individuals involved in a plethora of businesses.

Types of Chicago Loans

There aren’t a shortage of funding options for Chicago small businesses of every size and credit type. Regardless of whether you’ve a one-person business only open a few months, or a multi-million dollar enterprise there are plenty of funding options for virtually any business use. Below we will take a look at the most common financing options available to Windy City small businesses.

Chicago Term Loans

Term loans are easily the most common financing product used by Chicago small businesses. They reason is simple: conventional term loans are the most useful and cost-effective forms of business financing available. Term loans can be used for nearly any business need, and the low cost and long terms associated helps the Chicago small business service the debt easier than any other form of commercial financing.

Rates 5-15%
Terms 1-30 years
Funding Amounts $50,000-$5,000,000
Collateral Required
Fees Medium costs

 

Chicago Secured Line of Credit

While term loans are the most common financing product used by Windy City small businesses, a line of credit is just as useful, if not more useful than a term loan. Why? Because a line of credit is a pre-approved type of financing that allows Chicago small businesses to access cash whenever they need it without having to obtain further approval to access the funds.

Rates 5-15%
Terms 1-2 years
Funding Amounts $10,000-$5,000,000
Collateral A/R Required
Fees Medium costs

 

Chicago Unsecured Line of Credit

An unsecured line of credit functions almost identically to a secured line of credit (being that they are both preapproved types of financing that allows the small business to draw on funds as needed). But the main difference is that a secured line of credit requires the Chicago small business to provide collateral for the financing, whereas the unsecured line of credit doesn’t require collateral (but does require the business owner to have fantastic credit).

Rates 0% for 12 months
Terms 1-2 years
Funding Amounts $10,000-$500,000
Collateral Not be Required
Fees Medium costs

 

Chicago SBA Loans

SBA loans are commonly used by Chicago small businesses seeking either term loans, lines of credit or both, but have been unable to get approved for these conventional financing products from their bank or credit union. While conventional lenders originate SBA loans, the U.S. government agrees to cover most of these SBA lenders’ losses if the Chicago small businesses default on part or all their loans.

Rates 5-8%
Terms 3-25 years
Funding Amounts $50,000-$5,000,000
Collateral Required
Fees Medium costs

 

Chicago Alternative Loans

An alternative loan is any loan that is not provided by a conventional or SBA lender. Alternative lenders tend to be web-based and have much lower credit and revenue requirements than you’d have with a conventional lender. Additionally, alternative loans don’t require collateral (as both conventional and SBA lenders usually require) but the rates are higher, and terms are shorter than more traditional small business loans.

Rates 10-25%
Terms 1-3 years
Funding Amounts $10,000-$500,000
Collateral Not Required
Fees Medium costs

 

Chicago Equipment Leasing

Why would a Chicago small business choose to lease business equipment rather than purchase the equipment? There are a few reasons, but the most common are upfront costs and life expectancy of the equipment. With a lease you are only required to put-down 10% of the equipment’s costs – as opposed to the full price with a purchase. And rather than being stuck with outdated equipment after a few years, the Chicago small business will have the option to return the equipment, extend the term, or purchase outright.

Rates 7-25%
Terms 1-10 years
Funding Amounts $10,000-$500,000
Collateral Not Required
Fees Medium costs

 

Chicago Asset Based Financing

Asset based lines of credit are collateralized with the business’s assets including accounts receivables, inventory, real estate or future receivables. With that having been said, the most common form of collateral – by far – is A/R. While the A/R is used as collateral for a line of credit, with factoring the invoices are sold rather than collateralized.

Rates 0.5-2.5%
Terms 1-3 years
Funding Amounts $250,000-$10,000,000
Collateral Required
Fees Medium costs

 

Chicago Cash Advance

This is the most common type of financing product used by Chicago small businesses who either have bad credit, need working capital within a day or so, or don’t have the profitability needed for conventional financing. Unlike a loan, a Chicago business cash advance is the sale of the company’s future receivables. By selling these future receivables the company is able to access cash immediately.

Factor rates 1.10 – 1.50
Terms 3-24 months
Funding Amounts $5,000-$2,000,000
Collateral Not required
Fees Low to High costs

Summary

As mentioned above, there are a plethora of funding options available to Chicago small businesses. The key is to learn about all options, and find a lender that will give you the best rates and terms. If you are a Chicago small business looking for financing and need help understanding your options, please reach-out to one of our financing specialists, and we’ll help you get the best loan available.

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About the author
Domonique Cox

Domonique is a Minnesota native that earned her bachelors from The University of Arizona with a degree in English and Film Studies. Though books and writing are not her only interest, you can find her engaging in nutritional sciences, environmentalism, vegan cuisine, filmmaking, old school dancing, tennis, running, sound engineering, and enjoying satirical dark comedies or listening to the poetic lyrics of Bob Dylan. She is now based in Los Angeles as a content writer for GUD Capital where she spends her spare time honing her writing and directing skills. 

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