In 2016, the public relations industry brought in $13.5 billion in revenue, an amount significantly higher than in previous years. At the time, the industry was predicted to grow to $19.3 billion in annual revenue by 2020. However, like many other types of businesses, publicity agencies nevertheless face funding challenges. This was true before the COVID-19 pandemic, and it will remain true afterward – but low-cost funding for publicity agency growth still abounds.
In fact, the U.S. government has implemented more small business funding opportunities since the pandemic began. Publicity agencies can tap into this funding and plenty of other potential loan sources. Below, learn all about the many available types of small business loans for publicity agencies.
Funding options for publicists
Publicity agencies, like other small businesses, can find affordable small business loans to help as they expand their practice, grow more staff, or bring in new clients. SBA loans are a leading option, though non-government assistance exists as well. As you browse the below funding options, consider differences in approval periods and loan rates among funding types.
The SBA 7(a) loan program
If your publicity agency qualifies for a low-cost SBA 7(a) loan, lending experts will often recommend you choose this option. SBA 7(a) loans have long payment terms, low monthly payments, and low rates, so they can help publicists like yourself save money, bring on new staff, and grow their companies.
Use your SBA 7(a) loan for:
- Working Capital – Working capital is the quantity of cash your agency keeps on hand for day-to-day operations, and it is the business metric most closely related to business success. You can calculate it by subtracting your current liabilities from your current assets. If you get a negative difference, you should use your SBA 7(a) loan to correct that.
All publicity agencies, yours included, should have ample working capital to stay afloat no matter the economy’s condition. With your SBA 7(a) loan, you can obtain working capital through new employee hires and equipment purchases. - Debt Consolidation Loans – With debt consolidation loans, you can refinance your practice’s current loans. These include merchant cash advances, high-interest business loans, daily or weekly payment loans, or short-term business loans.
- Commercial Real Estate – If you need to relocate your agency or open a second location, you can get funding for these pursuits through your SBA 7(a) loan. Your funds can also go toward refinancing any ongoing commercial real estate mortgages.
Advantages of SBA 7(a) loans for publicity agencies
Many lending experts agree that SBA 7(a) loans are the “gold standard.” Small business owners may find their low rates and 10-year terms (or, for commercial real estate loans, 25-year terms) especially favorable for accessing funding. Other SBA 7(a) loan advantages include:
- Affordable monthly payments
- Wide use of funds
- No prepayment penalties
- Availability in all 50 states
Requirements for publicists to apply for SBA 7(a) loans
Below is a list of common SBA 7(a) loan requirements. Before you look at them, know that different lenders will have varying requirements. For example, while some lenders will ask for business plans, others (including SmartBiz Loans) will not.
- Your agency must be based in the U.S.
- Your agency must be at least two years old
- You and your agency must be on-schedule with all government-related loan repayments
- Your agency must have no outstanding tax liens, recent settlements, or charge-offs
- You must be a U.S. citizen or lawful permanent resident
- You must be at least 21 years old
- Your personal credit score must be above 650
- You must have no foreclosures or bankruptcies in the last three years
How to apply for an SBA 7(a) loan for your publicity agency
Step 1: Start by confirming that you meet the above SBA 7(a) loan requirements. Learn more via the SmartBiz Loans page about SBA Loan Requirements for Existing Business to learn more.
Step 2: Collect all your required paperwork. You may also want assistance from your bookkeeper or accountant for this step.
Step 3: Choose your lender based on the following factors:
Availability
Make sure your lender assigns you a representative who is regularly available by phone or email. This representative should be familiar with your company, industry, and loan application.
Transparency
Your lender should never hide any information about your APR, annual interest rate, or other key loan aspects. If you have to push hard to get this information, you should choose a different lender.
Obvious loan terms
If the fine print of your loan agreement is difficult to understand, you should choose another lender. Overly complicated fine print can mask unfavorable payment schedules and loan costs, – instead, you should see a clearly stated total loan amount, prepayment penalties (if applicable), collateral requirements, and required payment frequency and amounts.
Fees
You should have few fees besides interest and repayment. If you encounter several other fees, choose a different lender. Additionally, confirm that all fees are due before loan funding and during your loan’s lifetime.
Strong reputation
Even if your lender checks all the above boxes, you should be certain that other people have had success using them. Read your lender’s reviews on Consumer Affairs, TrustPilot, and Google to see whether other people have enjoyed working with the company you’re considering.
The SBA 504 loan program
The SBA’s 504 loan program provides small businesses with low-cost funding for expansion and modernization. An SBA 504 loan might be useful for your publicity agency if you need to buy commercial real estate, and it’s also helpful if your agency meets the public policy goals of your local community development corporation (CDC). For companies that meet these goals, CDCs often cover up to 40% of project costs, with 504 loans covering as much as 50%. The remaining money comes from your own down payment.
The SBA microloan program
The SBA Microloan Program connects very small businesses, or microbusiness, to loans of at most $50,000. If your agency qualifies, it can use these loans toward any business needs except commercial real estate purchases and debt payments.
Non-SBA loans and other funding options
While SBA loans may be your best publicity agency funding option, they aren’t your only option. However, your other funding options may have higher rates, shorter terms, and larger payments. These other options include:
Bank term loans
If you don’t qualify for SBA loans, you may be able to quickly get funding through bank term loans. These bank term loans are often used for obtaining working capital and refinancing your debts. If you use a bank term loan for publicity agency funding, ask your lender about your loan’s rates, possible loan amounts, prepayment penalties, and repayment terms.
Business lines of credit
Through business lines of credit, your publicity agency gets access to funding of a maximum amount proportional to your credit. This maximum will be less than your funding total from a bank loan, though it may have other advantages.
With business lines of credit, you only pay interest on funds you actually use, and you can borrow money as often as needed until you hit your maximum. Additionally, most business lines of credit are unsecured, meaning they require no collateral. Learn more about business lines of credit at the SmartBiz Loans blog Small Business Lines of Credit Pros and Cons.
Business lines of credit, like business credit cards, are revolving lines of credit. However, credit cards function after you hit your maximum, whereas business lines of credit immediately expire. Additionally, business lines of credit have no spending rewards, which are common among business credit cards.
Merchant cash advances
If you allow your clients to pay for your services through credit and debit cards, you may be eligible for a merchant cash advance (MCA). Through your MCA, you can receive advance funding that you’ll repay by setting aside a portion of your transactions for your card provider. You can also opt for regularly scheduled payments instead.
While convenient, MCAs have one major catch: They often have extremely high APRs. Learn more via the SmartBiz Loans blog What You Need to Know About an MCA.
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.
