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Massachusetts Business Loans: Financing For Bay State Small Businesses

Massachusetts  Business Loans

The bay state, initially known for its agriculture, fishing and trade—has transformed into a manufacturing center, and currently into services. Individuals can now state Massachusetts as one of the global leaders in biotechnology, engineering, higher education, finance, and maritime trade. It is also home to twelve Fortune 500 companies and is one of the top states for business and innovation. Massachusetts is additionally recognized as the 25th best state in the nation for business as they continue to produce new and traditional companies that play a crucial role in the state’s economy. Therefore, owners and workers interested in industries within the east coast state should be knowledgeable of the business sectors that are currently shaping the environment to thrive and transcend the market.

Quick-jump to the following sections:

The company known as Liberty Mutual remains to be a powerhouse in Massachusetts as it is one of the leading industries in the U.S. As an insurance company, they offer a wide range of products and services all geared towards helping people preserve and protect what they earn, build, and own. It is currently the fourth-largest property and casualty insurer in the United States, and it proves to be one of the leading companies for millennial’s. With their mix of flexibility and structure that Gen Y craves, along with training programs that address any potential preparedness gaps between the classroom and the workplace—Liberty Mutual is an establishment where they can strive. Another business on the fortune 500 lists located in Massachusetts is Raytheon; a primary U.S. defense contractor and the industrial corporation that concentrates on manufacturing weapons and military and commercial electronics. Plus, they are the worlds largest producer of guided missiles. When we look into why Raytheon is successful, their success stems from generating sales in foreign markets, investing in new tech markets, and their workforce policy. Further, Raytheon is one of the most comprehensive, worker-focused enterprises in America and earned a perfect score for eleven straight years on the campaign’s “best place to work” index.

However, military and insurance companies are not the only fields shaping Massachusetts’ business economy. One of the more apparently thriving sectors in the bay state is Thermo Fisher Scientific. It is an American multinational biotechnology product development company ranking as one of the leading companies in the genetic testing and precision laboratory equipment markets. With more than $20 billion in revenue and over 65,000 employees, their mission is to enable their customers to make the world a healthier, cleaner, and safer place. They accomplish this by accelerating life sciences research, solving complex analytical challenges, and improving patient diagnostics. Another top industry in Massachusetts stems from the biotechnology sector known as Biogen. It is an American multinational biotechnology company specializing in the discovery, development, and delivery of therapies for the treatment of conditions such as autoimmune diseases to patients worldwide. With their cutting-edge science and medicine, they continue to develop and deliver worldwide innovative therapies for people living with severe neurological and neurodegenerative diseases while simultaneously contributing to the robust Massachusetts economy.

Next, we have Eversource Energy, a publicly traded Fortune 500 energy company with several regulated subsidiaries offering retail electricity, natural gas service, and water services. It is currently the largest energy provider in New England and is one of the top businesses nesting in the east. Then we have the Boston Scientific Corporation; a worldwide developer, manufacturer, and marketer of medical devices whose products are used in a range of interventional medical specialties, such as interventional radiology, vascular surgery, and gynecology to name a few. They are primarily known for the development of the Taxus Stent, a drug-eluting stent, which is used to open clogged arteries. Moreover, with their full acquisition of Cameron Health in June 2012, they have also become notable for offering a minimally invasive implantable cardioverter-defibrillator (ICD) helping to pace the heart and detect abnormal heart rhythms. Lastly, one of the most prosperous business institutions founded in Massachusetts, State Street Corporation, or only referred to as State Street, is an American worldwide financial services company based in 1792—the second oldest financial institution in the United States. It is one of the largest asset management companies in the world reaching the trillions, representing 11% of the world’s total financial assets. Boston Scientific is imperative to the health of the Global Economy. Thus, when looking at all the businesses considered that make up the majority of Massachusetts wealth, it allows professionals to gain a better perspective about the working classes everyday skills and strengths to make the best out of their developing establishments.

Types of Massachusetts Loans & Working Capital

There are hundreds, if not thousands of financing options available to small and mid-sized Massachusetts small businesses. Regardless of whether the company has good credit or bad credit, the options are plenty, including bank financing, SBA financing, alternative lending, equipment financing and cash advances to name a few. Below we will take a look at the most common business loan options available to Massachusetts firms, and compare them so that Bay State companies can make an informed-choice about what will best meet their needs.

Bank Loans

Bank term loans are the preferred choice of Massachusetts small businesses because they are the most affordable type of commercial loans. Bank loans have the lowest rates and longest term among all commercial financing options. Additionally, bank term loans have the lowest fees among small business financing options.

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

 

Secured Line of Credit

A line of credit is a type of preapproved financing that allows Massachusetts small businesses to access financing whenever they need it. The line of credit allows a Massachusetts small business to draw on funds without having to get further approval from the bank and interest only accrues on the money that’s used – not the overall approval amount. A line of credit is generally only used for short term working capital needs and not long-term uses.

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

 

Unsecured Line of Credit

An unsecured line of credit is similar to a bank line of credit in that it’s a type of financing that allows Massachusetts small businesses to access financing whenever they need it. The main difference between an unsecured line of credit and bank line of credit is that an unsecured line of credit does not need to be collateralized by personal or business assets. Instead, and unsecured line of credit is solely driven off of the business owners personal credit, therefore they need to have very high credit scores in order to qualify.

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

 

SBA Loans

SBA loans are similar to bank term loan in that they are a very affordable type of small business financing for Massachusetts companies. An SBA loan is not a loan provided by the US government, but instead loans that are originated by small banks, large banks, and community lending to Massachusetts small businesses, and the government agreed to cover most of their losses if the small business fails to repay. SBA loans are used for both SBA short term and long term business uses including acquisitions, refinancing and consolidation of business debt, short term and long term working capital, equipment and machinery purchases, among other uses.

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

 

Equipment Financing

There are multiple ways for a Massachusetts small business to finance their company equipment. One way would be to obtain a term loan to purchase the equipment outright, and another option could be to simply lease the business equipment. By using equipment leasing, Massachusetts small businesses are able to acquire vital business equipment without having to pay the full-cost of the equipment upfront. Additionally, the small business will be given an option to purchase equipment at the end of the lease.

Rates 8-20%
Terms 1-10 years
Funding Amounts $10,000-$5,000,000
Collateral Required
Fees Medium costs

 

Alternative Loans

Alternative business loans or a fine financing option for Massachusetts companies that have good credit and good revenue but have been on able to get for approved for conventional or SBA financing from traditional lenders. Alternative business loans are easier to qualify for them traditional bank loans because they require a lower credit score and less profitability. Additionally, alternative business loans for Massachusetts small businesses require less personal and business documentation in order to qualify than conventional loans. On top of that, an alternative business loan takes a matter of days and fund, rather than weeks and months that it takes with the bank.

Rates 8-25%
Terms 1-5 years
Funding Amounts $10,000-$500,000
Collateral Not required
Fees Medium costs

 

Accounts Receivable Financing

Accounts receivable financing is a type of asset based financing that allows Massachusetts small businesses to obtain a line of credit by using their 0 to 90 days accounts receivable as collateral. This is the perfect type of financing for Massachusetts small businesses that are in need of working capital but have a lag in payment from their customers.

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

 

Factoring

Factoring is similar to accounts receivable financing in that it is also another type of asset based financing. The main difference between factoring and A/R line of credit is that the accounts receivable line of credit uses the A/R as collateral. With factoring, the accounts receivable and invoices are sold to a factoring company who then forwards the Massachusetts small business portion of the invoices value until the invoice is fully-paid.

Rates 0.5-2.5%
Terms 1-10 years
Funding Amounts $10,000-$5,000,000
Collateral Required
Fees Medium costs

 

Cash Advance

Merchant cash advances are a type of unsecured financing that involves the sale of a Massachusetts company’s future bank revenue or future merchant credit card sales to a third party in order to obtain a lump sum. While this type of financing is not cheap, it is very easy to obtain in that the credit requirements are very low. On top of that, merchant cash advances fund very quickly, in most cases within 24 hours of submission to the funding company.

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

There are just a sample of the financing options available to Bay State small businesses. In fact, the number of loan vehicles available are in the hundreds if not thousands. With plenty of options may come some confusion. If you are a Massachusetts small business owner in need of financing, and would like some help understanding and locating the best financing options, please reach-out to our funding specialists, and we’ll help you secure the best possible loan for your company.

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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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