Small Business Loans for Human Resources Services

The importance of human resources to a company might suggest it’s an industry that will rarely falter – after all, businesses will always need the payroll, benefits, and personnel management services that HR experts provide.

However, according to a September 2020 report, the HR industry contracted 0.6% between 2015 and 2020, decreasing an HR company’s main customer base. If your HR company has lost clients due to business closures, you may be intimately familiar with this challenge. You’re likely just as familiar with how this challenge decreases your revenue.

Fast SBA Loans • Pre-Qualify in Minutes

The aforementioned September 2020 report also credits economic stimulus programs with keeping the HR industry afloat. Such programs include small business loans for human resources services – below, find out how these low-cost funding options can help your HR company.

Financing Options for Established Human Resources Services During the COVID-19 Coronavirus Pandemic

When Congress and the White House passed the CARES Act in March 2020 to address the COVID-19 emergency, the Paycheck Protection Program (PPP) officially launched. This Small Business Administration (SBA) loan program presents small businesses, including human resources services, with new funding opportunities for stabilization and growth.

Although the first round of PPP applications closed on August 8, 2020, a second round began in January 2021. The Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act (the "Act") approved on December 27, 2020 allows small businesses to use funding from this new round for more needs than in the first round.

To learn more about how you can apply for and use PPP loans, please check our related articles listed below:

For regular updates on loan opportunities and forgiveness please check SmartBiz Loans COVID-19 information center.

Applying for a first or second PPP loan in 2021

The SmartBiz streamlined PPP Loan application can help you fill out your application, upload required documents, and submit them to the bank quickly.**

SmartBiz can help you apply for these funds. We have specialized in SBA loans since 2013 and our network of banks has funded nearly $4 billion in SBA, PPP, and bank term loans.

Whether this is your first or second PPP loan, SmartBiz can help! Businesses with less than 500 employees that are negatively impacted by the pandemic can apply for their first PPP loan.

The program expires on May 31, 2021. No applications will be accepted after that date. Keep an eye on the SmartBiz Small Business Blog for updated information about an extension if approved by congress.

Funding challenges and opportunities for human resources services

Although the HR industry is currently facing several challenges, you might still encounter funding hurdles even if you worked in another sector. For example, younger companies and entrepreneurs lacking prior business ownership experience across all industries may find that lenders remain hesitant to approve newer borrowers and companies. And, of course, within the HR sector, COVID-19 is presenting revenue challenges that lenders may see as reasons why borrowers like yourself may ultimately fail to repay their loans.

It’s not all bad news: The constant business need for HR may indicate to lenders that demand for your services still exists. The rise of remote work creates new opportunities for HR companies to create, launch, and manage those programs for a company. Additionally, several HR trends predicted for 2021 suggest that operational costs, including labor hours and physical office space, may decrease, thus placing fewer obstacles on HR companies’ paths to profit. To see for yourself whether you’ll face a friendly or formidable lending market, you can pursue any of the below small business loans for human resources services.

Funding options for human resources services

To obtain small business funding for your human resources company, you can apply for SBA loans or non-government funding. No two small business loans for human resources services have exactly the same rates and periods, but the below details provide the basics of several loan types.

The SBA 7(a) loan program

Many finance experts consider low-cost SBA 7(a) loans the best funding choice for small businesses due to factors including long terms, low rates, and low monthly payments. Human resources experts like yourself can use SBA 7(a) loans to:

  • Obtain Working Capital Working capital, which may be the clearest indicator of your company’s health, is the difference between your current assets and liabilities. Alternatively, it is the amount of cash your company keeps on hand. Negative working capital indicates a need to grow your assets, and to do so; you can use SBA 7(a) loans to hire new employees or buy new equipment.
  • Consolidate Your Debts – Through SBA 7(a) debt consolidation loans, you can refinance your company’s current short-term business loans, merchant cash advances, daily or weekly payment loans, and high-interest business loans.
  • Buy Commercial Real Estate – You can use SBA 7(a) loans to purchase owner-occupied commercial real estate for a second office space. Alternatively, you can use your loan to refinance your current commercial real estate mortgages.

Advantages of SBA 7(a) loans for human resources services

SBA 7(a) loans are often seen as the small business funding “gold standard” due to their:

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

Requirements for human resources services to apply for SBA 7(a) loans

You and your human resources company must meet the below requirements to qualify for SBA 7(a) loans:

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

Some loan providers may impose additional rules that others lack. For example, whereas some lenders ask for a business plan, SmartBiz Loans does not.


How to apply for an SBA 7(a) loan for human resources services

Step 1: Determine whether you and your company meet the above SBA 7(a) loan requirements. Learn more via 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: Get all your paperwork in order. You may want to seek help from your bookkeeper, accountant, or another financial expert. To learn more about your paperwork requirements, read the SmartBiz Loans Guide to SBA Loans.

Step 3:  Choose your lender based on the below considerations:


A trustworthy lender should pair you with a representative familiar with your application, your company, and the whole world of human resources. You should be able to regularly reach this representative via phone or email.


Read your lender’s TrustPilot, Consumer Affairs, and Google reviews to decide whether the lender fits your needs. Make sure that you’re reading reviews by actual customers, and look for other HR folks among the reviewers – their experiences may be most relevant to yours.


Your loan will likely include repayment fees and interest fees, but it shouldn’t have too many other fees. If you do see excessive extra fees, consider choosing a different lender. Any fees you see should be due before your loan’s funding and during your loan’s lifetime.

Obvious loan terms

Your loan’s fine print should leave you with few questions. If not, you may be dealing with loan costs and payment schedules that introduce additional challenges for you and your company. Even if your loan’s fine print is crystal clear, you should still ask your lender about your possible prepayment penalties, payment frequency and amounts, collateral requirements, and total loan amounts. Unhelpful or vague answers mean it’s time to find a different lender.


Your loan should include a clearly stated interest rate and APR. If not, you may find that your lender will obscure other key loan provisions as well, thus potentially introducing costs and terms that pose additional business challenges.

The SBA 504 loan program

Small businesses such as HR companies can apply for SBA 504 loan program funding to cover their expansion or modernization projects. SBA 504 loans can go toward opening new locations, upgrading equipment, or hiring new employees.

SBA 504 loans can make a notable difference in your expansion or modernization costs if your company aligns with the public policy goals of your local community development corporation (CDC). If it does, your SBA 504 loan can cover as much as 50% of your project costs, and your CDC can cover as much as 40%. You’ll thus have as little as 10% to immediately cover out of pocket.

The SBA microloan program

If your HR company is a very small business (a.k.a. microbusiness) according to the SBA, you can likely apply for the SBA Microloan Program, through which you can obtain SBA microloans of at most $50,000. You can use these loans for all business costs except debt payments and commercial real estate purchases.

Non-SBA loans and other funding options

Although small business funding experts view SBA loans extremely favorably, other options exist if you can’t apply for SBA loans. These options typically have shorter terms, larger payments, and higher rates than their SBA counterparts. They include:

Bank term loans

Bank term loans usually allow for rapid funding access as with SBA loans, thus making them a viable alternative if you cannot obtain SBA loans. You can use bank term loans for the same debt refinancing and working capital purposes as SBA loans, but you may find that bank term loans have less favorable repayment terms and higher rates, loan amounts, and prepayment penalties.

Business lines of credit

Business lines of credit are revolving lines of credit with a maximum proportional to your credit score but likely lower than typical bank term loan amounts. Additionally, unlike bank term loans, business credit lines do not require you to use your entire loan. In fact, not using your entire business credit line is likely smarter, as you’ll only pay interest on credit line funds you actually use.

You can use your business line of credit as often as necessary until it runs out, and you likely won’t have to put up collateral to obtain it. Learn more via the SmartBiz Loans blog Small Business Lines of Credit Pros and Cons.

Business lines of credit are similar to business credit cards, but unlike business credit cards, business credit lines are not reusable after repayment. They also don’t have the spending rewards sometimes found with business credit cards. Learn more via the SmartBiz Loans blog Finding the Right Credit Card for Your Small Business.

Merchant cash advances

If your HR company takes credit or debit cards, you can potentially seek merchant cash advances (MCAs), which are loans that a card provider offers a small business. To repay an MCA, you’ll set aside a small portion of all your card transactions and send these amounts to your lender. If this setup doesn’t work for you, you can ask for traditional installment-based plans instead.

MCAs can be convenient, but they often have extremely high APRs. Visit the SmartBiz Loans blog What You Need to Know About an MCA to find out more.

Human Resources Services Funding Success Story

Molley Ricketts is the owner of Incipio Workforce Solutions, a human resources solutions and contract recruiting company founded in 2015. Molley came to SmartBiz Loans when she needed low-cost small business growth funding. “This loan is a game changer,” Molley says. “The funding facilitated by SmartBiz is going to be huge. I can go back to focusing on growing. We’re planning to hire 4 new employees, all because of the SBA loan.” Molley also used her SBA loan proceeds to redesign the Incipio website and fund a strategically targeted marketing campaign.

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.