Small Business Loans for Advertising Agencies

Although the advertising industry grew by 3.3% between 2015 and 2020, your ad agency likely still has funding needs. In fact, the industry’s positive growth rate hides a likely cause of ad agency concern: In 2020, the advertising industry’s revenue declined by 10.2% due to the COVID-19 pandemic.

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The economic uncertainty accompanying the pandemic has curtailed discretionary spending, thus leading to widespread reductions in companies’ advertising budgets – and, in turn, your company’s bottom line. Small business loans for advertising agencies can help bridge your revenue gap, and you can learn more about several types of low-cost funding options below.

Financing Options for Established Advertising Agencies During the COVID-19 Coronavirus Pandemic

As the COVID-19 pandemic accelerated in March 2020, the federal government passed the CARES Act, which launched the Paycheck Protection Program (PPP). This new Small Business Administration (SBA) 7(a) loan program opened new funding routes for advertising agencies and other small businesses looking to stabilize themselves or grow.

Stay updated via the SmartBiz Small Business Blog, where you can also learn more about loan opportunities and forgiveness. You can also learn all about PPP loans via the SmartBiz Loans COVID-19 information center, Small Business Loans & Resources in Times of Coronavirus (COVID-19).

Funding challenges and opportunities for advertising agencies

Some challenges related to funding an advertising agency are shared by companies in other industries. These obstacles include lenders often declining to approve borrowers from sectors with shrinking revenue as a result of the COVID-19 pandemic or who, if your ad agency is a relatively new company, have little business ownership experience.

All that said, other lenders may see reasons to approve borrowers from the advertising industry. Since the COVID-19 pandemic has led to widespread stay-at-home orders, Americans’ use of streaming services from March to July 2020 increased 10% compared to March to July 2019. As such, streaming services may present huge opportunities for digital advertisers to boost their revenues, so lenders may view some ad agencies favorably. To find out for yourself, you can pursue the below types of small business loans for advertising agencies.

Funding options for advertising agencies

Advertising agencies can obtain funding from the SBA or non-government sources. No two small business loans for advertising agencies will have exactly the same approval rates and periods, but the below guidelines should give you an idea of what to expect.

The SBA 7(a) loan program

Low-cost SBA 7(a) loans are almost always the most borrower-friendly small business funding option. Their low rates, long terms, and low monthly payments are extremely favorable for small business owners including advertisers such as yourself. You can use SBA 7(a) loans to:

  • Obtain Working Capital Working capital is a key signifier of your advertising agency’s health. To calculate it, subtract your current liabilities from your current assets or count the cash you have on hand for company use.
    Negative working capital is a sign that it’s time to grow your assets. Use your SBA 7(a) loan to do so through new equipment purchases or by hiring more employees.
  • Consolidate Your Debts – SBA 7(a) debt consolidation loans can go toward refinancing all your current loans, which include daily or weekly payment loans, merchant cash advances,  short-term business loans, or high-interest business loans.
  • Buy Commercial Real Estate – If you plan to open a new location for your advertising agency, you can use your SBA 7(a) loan to purchase owner-occupied commercial real estate. Alternatively, you can use your loan proceeds to refinance your current commercial real estate mortgages.

Advantages of SBA 7(a) loans for advertising agencies

Lending experts widely view SBA 7(a) loans as the “gold standard” for small business funding. The main reasons for SBA 7(a) loans’ esteemed reputation are their:

  • Low rates
  • 10-year terms (25 years for commercial real estate loans)
  • Affordable monthly payments
  • Wide use of funds
  • Lack of prepayment penalties
  • Availability in all 50 states

Requirements for advertising agencies to apply for SBA 7(a) loans

If you meet all the below requirements, you may qualify for SBA 7(a) loans:

  • Your advertising agency must be based in the U.S.
  • You must be a U.S. citizen or lawful permanent resident
  • Your ad agency must be at least two years old
  • You must be at least 21 years old
  • Your personal credit score must be above 650
  • You must not have foreclosures or bankruptcies in the past three years
  • You and your agency must be on-schedule with all government-related loan repayments
  • Your agency must have no tax liens, outstanding charge-offs, or recent settlements

Some lenders may impose additional requirements that others may not. For example, some loan providers ask to see borrowers’ business plans, but SmartBiz Loans does not.


How to apply for an SBA 7(a) loan for advertising agencies

Step 1: Confirm that you and your ad agency meet all the above SBA 7(a) loan requirements. To learn more, read the SmartBiz Loans guide to SBA Loan Requirements for Existing Businesses.

To discover how your business financials stack up for funding, use our easy-to-use online tool. SmartBiz Advisor™ helps you track the financial health of your business and learn how banks typically evaluate your business.* SmartBiz Advisor also recommends ways to help you improve your credit and strengthen the financial health of your business as needed. Read feedback from real SmartBiz Advisor users and sign up here.*

Step 2: Collect all your required paperwork and ask your accountant, bookkeeper, or another financial expert for assistance if needed. To learn more, read the SmartBiz Loans Guide to SBA Loans.

Step 3:  Choose your lender while keeping the following factors in mind:


Find your lender on TrustPilot, Consumer Affairs, and Google to read their customer reviews. These reviews can tell you whether the lender is a proper fit for your ad agency. Verify that you’re reading reviews by actual borrowers, and see if you can find other ad agencies among the reviewers.


Your loan will likely include repayment and interest fees, but it shouldn’t include many additional fees. If it does, you should consider a different lender. You should also ensure that all your loan fees are due during your loan’s lifetime and before your loan’s funding.


Find explicitly stated interest rates and APRs in your loan terms. If you can’t, it may be fair to assume that your lender won’t fully detail your loan terms, leaving you in the dark on what could potentially be a loan that doesn’t meet your needs.

Obvious loan terms

In addition to transparently stated APRs and annual interest rates, your loan’s fine print should be clear as day. Complicated fine print can obscure unfavorable payment schedules and loan costs, so don’t be afraid to ask your lender about possible prepayment penalties, total loan amounts, payment amounts and frequency, and collateral requirements. If your lender gives incomplete or unclear answers, you should choose a different loan provider.


Even the most favorable loan terms can lead to difficulty if your lender is hard to reach. Choose a lender that pairs you with a representative whom you can easily reach by phone or email. This representative should know your company, application, and the advertising industry extremely well.

The SBA 504 loan program

The SBA 504 loan program opens low-cost modernization or expansion funding routes to small businesses. Use your SBA 504 loans to open new locations for your ad agency, grow your team, or upgrade your equipment.

SBA 504 loans may prove especially helpful if your ad agency meets the public policy goals of your local community development corporation (CDC). In this case, your SBA 504 loan and CDC may cover up to 90% of your expansion or modernization costs (up to 40% from your CDC and up to 50% from your SBA 504 loans). You’ll only pay out of pocket for the remaining amount.

The SBA microloan program

If your ad agency qualifies as a very small business (a.k.a. microbusiness) according to the SBA definition, you can likely apply for the SBA Microloan Program. Microloans are at most $50,000, and you can use their proceeds to cover any business costs besides buying commercial real estate and paying debts.

Non-SBA loans and other funding options

SBA loans are often the best bet for ad agency funding, but other options exist if you don’t qualify for SBA loans. However, these alternate funding options typically have higher rates, larger payments, and shorter terms than SBA loans. They include:

Bank term loans

Bank term loans provide small business funding as quickly as SBA loans, and both loan types also allow for working capital investments or debt refinancing. If you pursue bank term loans, ask prospective lenders about your potential prepayment penalties, loan amounts, rates, and repayment terms.

Business lines of credit

Business lines of credit are funding sources of a maximum amount proportional to your credit score, though often less than what you could get through a bank term loan. Additionally, unlike bank loans, business lines of credit don’t stipulate that you use all available funds. In fact, not using your full credit line may be wiser since you don’t pay interest on money you don’t spend.

You can use your business line of credit as many times as you want until you deplete its funds. This isn’t the only reason they may be easier funding options for your ad agency – business lines of credit often lack the collateral requirements of other loan types. Learn more via the SmartBiz Loans blog Small Business Lines of Credit Pros and Cons.

Business lines of credit are like business credit cards in that both are revolving lines of credit, but business credit cards can be reused after you max them out and repay your loans. Additionally, only business credit cards come with the possibility of spending rewards. To learn more about business credit cards, read the SmartBiz Loans blog Finding the Right Credit Card for Your Small Business.

Merchant cash advances

If your ad agency takes credit or debit card payments, you may be eligible for merchant cash advance (MCA) funding. Through MCAs, you can borrow money from a card provider and then repay your loan by funneling a small portion of all card transactions back to the provider. If this model doesn’t work for you, traditional installment-based payment plans are also available.

MCAs are convenient, but their extremely high APRs may dissuade some small businesses from using them. To learn more about MCAs, read the SmartBiz Loans blog What You Need to Know About an MCA.

Advertising Agency Funding Success Story

Jeff Beyer is the owner of Big Rig Media, a digital marketing and traditional advertising company launched in 2000 and based in La Quinta, California. Jeff came to SmartBiz Loans so he could ditch his daily payment loans in favor of an SBA loan with small monthly payments. He used this loan, which SmartBiz Loans obtained for him, and its smaller payments to move the company into SaaS (software as a service) and keep more cash on hand for Big Rig to invest.

“Our platform is being exclusively designed for the outdoor hospitality and reservation industry,” Beyer says. “We’re going to use the funds for new technologies so we can capture more of the market share.”

Why Choose SmartBiz Loans?

Need funding to rebuild your business? Don’t waste time going from bank-to-bank filling out multiple applications. SmartBiz helps you find the best financing for your unique needs whether that’s an SBA loan, Bank Term loan, or other financing.  About 90% of qualified applications we refer to banks are funded and our financial professionals are on hand to answer your questions. Discover if you’re pre-qualified here without impacting your credit scores** and read the SmartBiz 5-star customer service reviews on TrustPilot.

 *The information provided through SmartBiz Advisor, including the Loan Ready Score, is for educational purposes only. SmartBiz Advisor is not a financial or legal advisor as defined under federal or state law. Use of this information is not a replacement for personal, professional advice or assistance regarding your finances or credit history.

**We conduct a soft credit pull that will not affect your credit score. However, in processing your loan application, the lenders with whom we work will request your full credit report from one or more consumer reporting agencies, which is considered a hard credit pull and happens after your application is in the funding process and matched with a lender who is likely to fund your loan.

 What you need to know: The information provided through SmartBiz® University and the articles contained therein are for educational purposes only. Use of this information is not a replacement for personal, professional advice or assistance regarding your finances or credit history.