Wilmington’s vibrant economy and supportive community make it a fantastic place to grow a business! If you’re thinking about taking your venture to the next level, it’s vital to understand all your financing options so you can ensure sustainable growth. Here’s a guide to some of the most frequently asked questions about business financing. 

What’s the difference between a business loan and a business line of credit? 

A business loan provides a one-time sum that you repay over a fixed term, typically through regular monthly payments. This type of financing often comes with specific guidelines on how the money must be used. 

A business line of credit lets you borrow what you need, when you need it—up to a set limit. You only pay interest on the amount you use. Much like a credit card, a line of credit is a revolving source of funds. Once you repay what you’ve borrowed, those funds become available again. 
 
How does equipment financing work? 
 
Equipment financing allows you to purchase items like machinery, vehicles, or computers by paying over time rather than upfront. The equipment itself serves as collateral, so you usually don’t need to provide additional assets to secure the loan. 
 
What’s an SBA loan? 
 
The U.S. Small Business Administration (SBA) doesn’t issue loans; it guarantees a portion of each loan. This reduces risk for lenders, so they can offer more flexible qualification requirements, lower down payments, and longer repayment terms than for conventional loans. The most popular option is the SBA 7(a) loan, which can be used for both day-to-day expenses and business expansion. You can apply for an SBA loan from a participating credit union, bank, or Certified Development Company. 

What are alternatives to traditional financing? 
 
Although these options may take effort, they can be worth exploring. 

• Grants are available through federal, state, and local government programs, as well as private organizations and foundations.  

• Crowdfunding raises money from a group of supporters, usually in exchange for equity, rewards, or interest. 

• An angel investor provides funding in return for a share of the business.  

What are ways to prepare for submitting a business loan application? 

Lender requirements can vary, but these tips can help you navigate the loan process—with your business’s financial health in mind. 

• Do the math. Know exactly how much funding you need and what you’ll use it for, so you won’t take on too much debt. 

• Gather your documents. Be prepared with key paperwork, such as financial statements, tax returns, bank records, existing loan details, and personal financial information. These give the lender a clear view of your business and help you understand your own financial position. 

• Strengthen your business plan. Include goals, market analysis, strategies, and financial projections. An up-to-date plan is your financial blueprint for growth! 

• Know your collateral. Be realistic about what you can offer as security for the loan without taking on excessive risk. 

• Talk to your lender. A loan officer can clarify what they’re looking for, and you can start building a relationship that may lead to future growth opportunities. 

Where can Wilmington entrepreneurs find resources for business growth? 

SCORE, a nonprofit SBA partner, provides free mentoring and education for small business owners. Connect with the Cape Fear Region chapter at score.org/capefear.  

The Wilmington Chamber of Commerce offers local business growth resources at wilmingtonchamber.org. 

Excite Credit Union’s business lending team members are passionate supporters of Wilmington entrepreneurs, and they’re eager to help you grow your business. Get in touch at excitecu.org/business/borrow/business-lending.