State Farm Small Business Loans

State Farm is an insurance group of companies that operates nationwide and is headquartered in Bloomington, Chicago, Illinois. Despite being an insurance company, State Farm also offers small business loans and other types of loans.

State Farm is also linked with the SBA’s Paycheck Protection Program (PPP). Below we have discussed what PPP is and the amount of loan State Farm offers.

Paycheck Protection Program (PPP)

On 27 December 2020, a stimulus was passed by Congress to aid businesses. As a result, PPP loan applications were available till 31 March 2021, and all types of borrowers were also eligible for the loan.


The PPP loan is the component of CARES, and the SBA administers them. The sole purpose of the loan is to keep the staff of small businesses employed during this raging pandemic.

Under the PPP loan program, the loan amount is 2.5 times higher than the trailing twelve-month monthly average payroll costs of ten million dollars.

Loan Forgiveness

Loans are only considered forgivable if the businesses/borrowers meet the retention criteria and have used the funds for payroll, expenses, and mortgage costs, during the 8 to 24 week disbursement period. In that case, the loan interest rate will be 1%. Some PPP loans mature in two years while others mature in five years, and they require no personal guarantee and collateral.

Interim Guidance and Revision

Since the loan was announced, several guidelines, interim laws, and rules have been published to clarify the loan program. As a result, the application process for the loan was streamlined, the certificate for liability was explained, and borrowers/businesses that were eligible were defined and recognized.

Round 1: Result

The initial PPP loan bill was authorized for 349 billion dollars; the loan program started in April 2020 but depleted in just two weeks. Later in the month, Congress announced a loan amount of 310 billion dollars, taking the total loan amount to 659 billion dollars. The deadline for loan application was initially 30 June 2020 but was extended to 8 August 2020. On 8th August last year, the program came to an end.

PPP Loan Program Round 2

On 21 December 2020, Congress announced a PPP loan of 284 billion dollars and changed the original PPP program.

Expansion of eligibility and benefits

The new changes targeted the hardest-hit sectors, such as the accommodation sector (hotels, restaurants), who were eligible for a loan that was 3.5 times their monthly payroll. In addition, round 2 of the PPP Loan program also recognized additional borrowers:

Revision of Loan Forgiveness Criteria

In Round 2 of the PPP loan program, the criteria for forgiveness were also revised. Under the new changes, the businesses/borrowers spent 60 % instead of 75 % of the loan on their business needs (payroll expenses, mortgage costs, rent).

State Farm PPP Loan

Loan Usage

Non-profit organizations and other companies that often receive PPP loans have their loans forgiven. This ensures that those organizations do not lay off their employees.

Types of Loans offered by State Farm

1. PPP Loan

2. Vehicle Loan

A vehicle loan allows you to buy your desired car and pay off the payments through monthly installments for a set tenure instead of having to pay off the full loan at once.

3. Lines of Credit

A line of credit is a flexible type of loan that a bank often offers. This loan has a fixed amount that the borrower can access at any given time. This loan can be paid overtime or at once.

State Farm Interests, Fees, and Loan Options

5. Paycheck Protection Program

6. Vehicle loan (Depends on the credit score)

7. Lines of Credit

What Lending Criteria does State Farm Have?

Below is the basic lending criteria that all the banks follow:

Credit Score

Credit is the most important component of all types of businesses, whether they are small or large. Lenders will always analyze the business's credit score and then decide whether it can pay the loan or not. Therefore, the best way to maintain a healthy credit score is to pay your dues on time.

Credit scores can also be easily obtained from several agencies such as Equifax, Dun & Bradstreet, and Experian. Another way of maintaining a positive credit score is to have a low debt-to-income ratio. Lenders will not invest in businesses that don't have a good credit score.

Annual Revenue

Another important factor that the lenders will review is the annual revenue of the business. Most lenders will only lend to those businesses that have been profitable for the last two years or more. Businesses need to make sure that all the financial statements are accurate and up to date.

Lenders will also look at specific details such as the current account (current assets divided by liabilities) and ask for copies of bank statements and transactions. However, businesses will only be eligible for a loan if their cash flow is growing.

Business Plan

A minority of lenders might not ask for a business plan, but most of them do, and businesses need to come with a clear and concise proposal. Usually, lenders require the business plan to know the purpose of the loan and discuss the business's stability.

One of the main components of business plans is the resumes of managers and staff. However, despite having a clear business proposal, the lenders will still ask for proof of the staff's ability and relevant credentials and experience.


Collateral is an essential requirement, and most lenders will not provide a business loan if it cannot give collateral. Collateral can be anything like equipment or property. The collateral will also decrease the risk for the lender as it will have an asset in hand, so if the company fails to pay the loan, the collateral can be paid to fund the damages.

The owner of the company needs to provide a personal guarantee and will also need to submit some essential documents:

Time in Business

Most banks are hesitant to lend loans to new companies that have been active for just a few months. Lenders cannot trust small businesses or startups that have just entered the market because they don't have a proper credit score and the cash flow is usually unstable. Banks will most likely lend to businesses that have been active for more than two years.

Eligibility Criteria for Paycheck Protection Program

Following borrowers qualify for loan forgiveness during the 8 to 24 period of loan disbursement:

State Farm Application

Following is the application procedure of all the banks that borrowers have to follow:

Before you apply for a loan, ensure that all your documentation is up to date. Also, organize all the documents properly, and if some essential documents are missing, contact the relevant authorities. Collect all the financial information about your business and pay all the dues as soon as possible.

For more information, please log onto the website of HSBC USA. Click here. For details regarding SBA loans, click here.

Summary of State Farm Loan Options

State Farm is not a bank, and it is an insurance agency that offers loans through lenders. We have identified three basic loans that State Farm offers, and they are listed below:

The vehicle loan interest rate depends on the business's credit score; the healthier the score, the lower the interest. Interest rates for PPP loans and lines of credit are consistent. As always, before choosing the loan, discuss it with the lender, assess all the details and requirements, and then make your decision.