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Pennsylvania Business Loans: Financing for Keystone State Small Businesses

Pennsylvania Business Funding

Pennsylvania, recognized as the birthplace of independence and the constitution can also be referred to as the Quaker, oil, coal, and or steel state. The leading industries are associated with heavy manufacturing, energy production and petroleum processing that have historically dominated Pennsylvania. Although, now it has become more balanced and other sectors are leading the ranks and employing more people than ever before. Such as industrial machinery and equipment, agriculture, chemicals and allied products, and banking. These industries currently have the highest employment and have experienced substantial growth and demand. Pennsylvania is also known as a very successful state with a total gross state product (GSP) ranking in at 6th in the nation. Therefore, to grasp the business environment in Pennsylvania, individuals should be aware of their competition, along with industries that are thriving to gain insight into their success.

Quick-jump to the following sections:

As with some other states, Agriculture remains to drive their economy, and with Pennsylvania, it is a major industry contributing resources from almost 60,000 farms covering millions of acres of land. They rank first in the United States in Agaricus mushroom production, fourth in apple production, fourth in Christmas tree production, fifth in dairy sales and grape production, and seventh in winemaking. However, contrasting geographic locations within Pennsylvania are historically centered around different forms of agricultural production. For example, fruit production in the Adams County region and potatoes in the Lehigh County region. As for modern agriculture in the Keystone state, these include corn, wheat, barley, soybeans, tobacco, sunflowers, sweet potatoes, and sorghum. However, the leading agricultural industry is Dairy farming in Pennsylvania, and it ranks fourth nationally for both milk production and ice cream production. Thus the financial impact agriculture has had on Philadelphia, includes employment of more than 65,000 people by the food manufacturing industry and close to $2 billion in food product export in 2011 alone, displaying its prominent influence on the economy and business ventures.

Another industry that is important to the Quaker state is manufacturing. The energy processing and steel mills have played an essential role in the state’s economy as they have aided operating the equipment smoothly and efficiently. With the state’s 42,000 existing manufacturers, these businesses are expected to experience significant growth because of the state’s natural gas and energy boom has increased demand for these components. Pennsylvania also ranks among the top six states for the potential to create these jobs. Hence, between these jobs, the most noticeable increased demand is found in industrial maintenance, machine tool operators, and welders. Demand also increased for workers that can program, install, operate and maintain computer-controlled machines and robots. Additionally, Pennsylvania continues to be a U.S. leader in manufacturing—from food and forestry products to equipment and medical devices to plastics and chemicals that all add up to an industry contributing to an $84 billion impact on our economy. The manufacturing industries influence is possible since the state is home to almost 15,000 establishments throughout Pennsylvania employing over 558,000 individuals who earn an average annual wage of nearly 60,000—an average higher than the yearly salary of workers in the United States; displaying a flourishing and profitable business for owners and workers alike.

However, it is as important to discuss not only the businesses that have laid the foundation for industries in Pennsylvania but to also focus on successful emerging companies. Such as AmerisourceBergen, a leading global healthcare solutions company; it made number 11 on the fortune 500 lists in 2017. Their primary purpose is to drive innovative partnerships with pharmacies, health systems, practices and manufacturers to improve the product, access, and efficiency within the healthcare supply chain. They are also the largest global generics purchasing organization. Pennsylvania is additionally home to a more well-known company on the list known as Comcast coming in at number 31 on the Fortune 500. It is known as the number one cable TV and internet provider that is continuing to see robust growth, adding more than 1 million customers in 2014. Lastly, the east coast state is known for the Aramark corporation that is an American food service, facilities, and uniform services provider to clients in fields including healthcare, education, corrections, business, and leisure and is listed as the 27th largest employer on the Fortune 500. Thus as we can see, Pennsylvania is home to a broad range of companies that contribute to its 27th ranking in best states for business and has many factors contributing to its economic influence.

Types of Pennsylvania Loans & Working Capital

Pennsylvania small businesses, just like every other small business, may face the need for financing at some point in time. Having access to affordable financing may help the small business take advantage of an opportunity or take care of a current obligation. Whether the need be long-term financing including acquisitions, refinancing debt and capital purchases, or short-term financing such as working capital, payroll funding, advertising and marketing, there are options available. Below we’ll look at the most common types of loans available to Pennsylvania small businesses.

Pennsylvania Bank Loans

Bank term loans are the preferred type of business financing for Pennsylvania business, as well as small businesses nationwide. Banks simply offer the best rates and terms of all commercial financing lenders. Bank loans are commonly used for purchasing businesses, refinancing and consolidating business debt, working capital, equipment purchases, commercial mortgages and just about any business use.

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

 

Pennsylvania Line of Credit

A bank line of credit is another very affordable type of commercial financing, and is top choice of Pennsylvania small businesses for working capital uses. A line of credit differs from a line in that a term loan is a set amount of money that a bank lends to a business, and the business pays back that amount, plus interest, over a term. A line of credit is an amount of money that is preapproved for a small business to access, but the Pennsylvania small business only pays back the money the draw.

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

 

Pennsylvania SBA Loans

Small business loans administered by the U.S. Small Business Administration is another type of conventional financing with low rates and long terms. The SBA doesn’t lend money to Pennsylvania small businesses but, instead, encourages banks and community lenders to provide financing to the businesses, and the SBA agrees to cover most of the lenders’ losses should the SBA borrowers fail to repay their loan.

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

 

Pennsylvania Asset Based Financing

Asset based financing for Pennsylvania small businesses is a type of financing that monetizes a company’s balance sheet and uses such assets as collateral for financing. Common types of collateral used in asset-based financing include commercial and personal real estate, accounts receivables, inventory, equipment and machinery, as well as other hard assets. This type of financing can be pricey, but it is an option when conventional financing options aren’t available.

Rates 8-25%
Terms 1-3 years
Funding Amounts $50,000-$10,000,000
Collateral Required
Fees Medium costs

 

Pennsylvania Accounts Receivable Financing

Accounts receivable financing for Pennsylvania small businesses is a form of asset-based financing that uses a company’s unpaid invoices as collateral to provide a line of credit. A company’s 0-90 A/R is commonly used as collateral for financing, and such collateral is monitored by the lender and reevaluated every 30-180 days, and adjust the financing facility accordingly.

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

 

Pennsylvania Factoring

Factoring for Pennsylvania small businesses is similar to Accounts receivable financing is that they are both asset-based financing that uses a Pennsylvania small business’s unpaid accounts receivable as basis for financing. The main difference between the two is that with factoring the unpaid invoices are actually sold to the funder, and the funder forwards a majority of the invoice’s value to the Pennsylvania small business (minus a fee) and send the remainder of the invoice’s value to the small business once the invoice is paid.

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

 

Pennsylvania Equipment Financing

There are multiple ways for Pennsylvania small businesses to get business equipment should they need it. The first option would be to take-out a loan using some of the methods detailed in this article. Another option could be to simply lease the business equipment. Equipment leasing is a good option for Pennsylvania businesses who don’t want to pay the full amount for the equipment upfront. Instead, with a lease, only 10% is usually required upfront, and the borrower will lease the equipment for 1-10 years with an option to purchase at the end of the lease term.

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

 

Pennsylvania Alternative Loans

Alternative loans are a good financing option for Pennsylvania small businesses that have good credit and profitability but have been unable to get approved for a conventional or SBA loan. Alternative loans may have higher-rates than traditional loans, but they are much easier to qualify for, and require much less documentation than a conventional loan. Additionally, an alternative Pennsylvania business loan can fund in a week (or less) whereas a conventional loan may take a month or two to fund.

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

 

Pennsylvania Merchant Cash Advance

This type of high-risk financing is generally used by Pennsylvania small businesses that have poor credit, lack profitability, or need funding very fast. A Pennsylvania cash advance isn’t a business loan, but the sale of future business receivables to a funder in exchange for immediate financing. A cash advance funder will purchase either future business bank account receivables or merchant credit card receivables at a discount and collect repayment either daily or weekly using merchant split funding, or Automated Clearing House from the business’s bank account.

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

The funding options available to Pennsylvania small businesses are plentiful. But each of these funding options vary greatly in rates, terms and fees charged. Obtaining the best loan can save you tens of thousands of Dollars over the long-run. If you need help learning and understanding the financing options available to Pennsylvania small businesses, feel free to reach-out to one of our funding specialists, and we’ll help you obtain the best possible loan.

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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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