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Small Business Loans in Kentucky (2021 Update)

As in any state, Kentucky offers some unique opportunities and pitfalls when it comes to small businesses and a key driver of business growth: small business loans. Along with equity financing, business loans are a key variable in entrepreneurial success. The prospect of attracting such loans in Kentucky depends on an entrepreneur’s assessment of Kentucky’s loan approval rate and the local business environment.

Interpretation of Relative Loan FrequencySmall Business Loans in Kentucky

With only about 18.51 SBA-guaranteed loans per 100,000 people, Kentucky ranks near the bottom of the rankings when it comes to loan dispersal. Though it may seem a bit dire, this statistic is not necessarily an obstacle. For reference, the highest SBA-approved loan rates were in Utah, Idaho, Vermont and New Hampshire. Those states have their appeal, but they are hardly entrepreneurial flash points on a national scale. California, with its world-famous technology base near San Francisco, only has 32.19 loans per 100,000 people; famously business-friendly Texas features a loan rate of just 25.16.

Strengths to Highlight When Applying for Loans

A business plan that matches the business climate is very important in convincing lenders and customers to invest in an entrepreneurial venture. Business plans should take advantage of Kentucky business environment features such as low costs and state-sponsored incentives for business growth. Properly leveraged and scaled, such localized competitive advantages can catapult a business to very impressive growth rates. Additionally, Kentucky’s location is a unique asset if an entrepreneur has extensive distribution or travel in mind. The state’s location puts it within relative proximity to much of the heavily populated East Coast, as well as the Ohio River Valley, Great Lakes, Midwest, and Southeast regions. Admittedly, mountain and Pacific states are a stretch for any Kentucky-based distribution businesses. Though, to be fair, aside from West Coast and a few Rocky Mountain population centers such as Phoenix and Denver, the Great Plains and Rockies parts of the country are sparsely populated, so more expensive customer-generated shipping costs or missed opportunity would be proportionately smaller.

Banks in Kentucky That Offer Small Business Loans

For your small business loan needs, you can never go wrong with these banks in the state:

Paducah Bank

With bank locations in Paducah and Louisville, Paducah Bank is slowly making its existence as a full-service bank known in the entire state.

Magnolia Bank

A product of $15 thousand investment by 28 locals, Magnolia Bank came to life on 20 July 1919. Since 1981, it has continued to grow at such a quick rate that it even acquired Citizens Union Bank in 2016.

Peoples Exchange Bank

Peoples Exchange Bank remains to be one of the most stable banks in Kentucky today. Since its opening in 1912, it has delivered people-centric banking experience while also withstanding economic turbulence that the state suffered through.

United Community Bank

Dedicated to helping communities in West Kentucky thrive, United Community Bank uses proven banking solutions (adapted to modern times) to help individuals and businesses get the financial help they need.

Montecillo Banking Company

Founded in 1895, Montecillo Banking Company is focused on community banking – helping people and businesses in local communities with ample support and banking products targeted to their needs.

Wilson and Muir Bank and Trust Corporation

The first bank in Nelson County, Wilson and Muir Bank and Trust Corporation has been around since 1863 and has withstood the test of time.

Top Cities in Kentucky and Their Lenders

Kentucky is probably the most recognizable Midwestern city in the nation. The area owes its history to its fertile farming lands – it has long been an agricultural hotspot for the nation. But like most of the Midwest, Kentucky also has a large amount of manufacturing in-state. While the American manufacturing industry has declined, there are still plenty of manufacturing and assembly plants in the state. Kentucky is quite rural, so there aren’t many major cities to choose from if you want to start a business.

This being said, there are still plenty of metropolitan areas for you to choose from if you want to start a new business. In this article, we will take a look at the top cities in the state to give you a better idea of where to start a new business. We also provide recommendations for small business lenders that are good to work with.

Louisville, Kentucky

Louisville is famous for lending its name to America’s most famous baseball bat – the Louisville Slugger. But there’s much more to the city than its connection to the sport of baseball. Louisville has an extremely diversified economy – it plays home to a number of large industries. Because it is a global transportation hub for airmail, Louisville is a great place to start a business that needs transportation capabilities. Below are our favorite small business lenders in the area:

Commonwealth Bank and Trust

Commonwealth Bank and Trust is a regional bank that has a large office in Louisville, Kentucky. They work with local businesses across a broad range of industries. They are well known for providing business owners with fast responses to business loan applications. They provide business lines of credit, SBA loans, business credit cards, equipment loans, traditional term loans, and more!

Eclipse Bank

Eclipse Bank is a mid-sized regional bank with a large local office in Louisville. They are especially known for providing small businesses with loans to help them grow their current business operations. They also have traditional business banking services available.

Lexington, Kentucky

Lexington is most famous for being one of the hotspots for racehorse breeding in the country. It plays a significant role in the racing and agriculture industry. It’s a good spot to start a business that caters to either of these industries. Out top picks for lenders in the area are listed below:

Bank of Blue Grass & Trust Co.

Bank of Blue Grass & Trust Co. is our favorite lender in the Lexington, Kentucky area. They provide local business owners with full-service banking and lending. It can be hard to find a business lender with a solid understanding of Lexington, but Bank of Blue Grass & Trust Co. does a great job! They also provide SBA loans to their clients.

Select Commercial

If you’re looking for a partner in Lexington to help you obtain financing for commercial or business property, there’s no better choice than Select Commercial. This large lender has a local office in Lexington that it uses to help local business owners obtain financing for real estate or property investment. They’re experts in their industry!

Bowling Green, Kentucky

Bowling Green is a technology and manufacturing hotspot in Kentucky. It’s also a very affordable place to live. The top lender in the Bowling Green area is provided below:

Hancock Bank

Hancock Bank is a small, regional lender with a large presence in Bowling Green, Kentucky. Despite being small in size, the lender has an established client base in the Bowling Green area. If you want a business bank that can help you take your local business to the next level, this is our top pick.

Owensboro, Kentucky

Owensboro is a small city in Kentucky that owes its success to healthcare industry and food processing industry. The top lender in Owensboro is listed below:


BB&T is a large national lender that has a great reputation in the Owensboro area. The bank has offices across the country. If you are working in Owensboro and want a powerful financial company behind your funding, this is most definitely the best option you have at your fingertips. We highly recommend BB&T.

Frankfort, Kentucky

Frankfort is not close to being the largest city in Kentucky, but it is the state capital. The area is one of the most scenic and historical areas of the state. The retail industry in the city is thriving. If you’re going to start a business in Frankfort, use the lender below:

Commonwealth Credit Union

Commonwealth Credit Union has been mentioned previously on this list, but the lender also has a large presence in the state capital – Frankfort. We highly recommend becoming a member of this credit union – they have over 80,000 members in Kentucky alone. They provide some of the best business loan rates on the market and they also offer great banking services.


Though Kentucky certainly has its strengths for any type of entrepreneurship, business owners would be best served to focus their efforts on projects that can leverage the state’s advantageous location, government-funded incentive programs, and smaller local business expenses.


Remember, some of these companies or banks are very specialized and may only handle SBA loans or a business line of credit. Ask them about any special programs for minorities or women. Also ask for information about business grants for startups if that interest you. If you bad credit don't worry as there still may be other alternative lenders willing to work with you.