What Business Loan Can You Get For Your Business

When you're ready to grow your business, the right financing can make all the difference. The challenge isn't finding money - it's finding the right type of loan that matches your business needs, credit situation, and timeline.

From traditional bank loans with rock-bottom rates to lightning-fast online lenders, each financing option serves different business situations. Understanding these differences can save you thousands in interest and help you avoid cash flow problems down the road.

Traditional Bank Business Loans

Getting funding from banks means jumping through hoops, but the rewards can be worth it. Banks offer the lowest interest rates and biggest loan amounts - if you qualify.

Term Loans: The Classic Choice

Traditional bank term loans are the gold standard for established businesses. You'll get interest rates between 7-15% APR, which beats most other options by miles. Loan amounts range from $25,000 to $5 million, giving you serious buying power.

The catch? Banks want to see perfect credit (680+ score), solid financials, and detailed documentation. Think tax returns, bank statements, and a business plan that'd make your MBA professor proud. The approval process takes 30-90 days, so don't expect quick cash.

Banks love established businesses with strong financials. You'll need at least two years of tax returns, solid cash flow, and collateral for larger amounts. The upside? These loans offer the lowest rates and longest terms if you qualify.

Best for: Established businesses with excellent credit who need large amounts for expansion, real estate purchases, or major equipment buys. If you've got time to wait and paperwork to spare, traditional bank loans can save you thousands in interest compared to alternative lenders.

Business Lines of Credit

A business line of credit works like a credit card for your company. You get approved for a credit limit ($10,000 to $500,000), but only pay interest on what you actually use. Interest rates run 7-25% APR.

Cash flow flexibility matters more than perfect credit scores for most growing businesses. Business lines of credit work like giant credit cards - you get approved for a limit, use what you need, and only pay interest on what you borrow.

How Business Lines of Credit Work
You'll get approved for a credit limit between $10,000 and $500,000. Draw funds as needed through online transfers, checks, or a business debit card. Interest rates typically range from 7-25% APR, depending on your credit profile and the lender.

The beauty? You're not stuck with fixed monthly payments like traditional loans. Pay interest only on your outstanding balance. Many businesses use lines of credit for inventory purchases, seasonal cash flow gaps, or unexpected opportunities.

Best Uses for Business Credit Lines

• Managing seasonal revenue fluctuations
• Purchasing inventory before busy periods
• Covering payroll during slow months
• Taking advantage of supplier discounts for early payment
• Emergency repairs or equipment replacement

Requirements and Approval Process
Most lenders want to see at least $50,000 in annual revenue and a personal credit score above 650. You'll need business bank statements, tax returns, and financial statements. Traditional banks typically take 2-4 weeks for approval, while online lenders can approve applications within days.

SuperMoney's business financing comparison can help you compare rates and terms from multiple lenders quickly.

Secured vs. Unsecured Lines of Credit
Unsecured lines don't require collateral but come with higher interest rates and stricter credit requirements. Secured lines use business assets or cash deposits as collateral, offering lower rates and higher credit limits.

This option shines for managing cash flow hiccups and seasonal dips. Need $15,000 for inventory in December? Draw it down, pay it back in January. No need to take a full loan for temporary needs.

Why Banks Win on Cost

Traditional banks offer the cheapest money you'll find. Their rates beat online lenders, merchant cash advances, and pretty much every alternative. Plus, building a relationship with a bank opens doors for future financing, business banking services, and financial advice.

The downside? Banks are picky. They want established businesses with clean credit and strong cash flow. Startups and businesses with credit issues often get rejected faster than a bad pickup line.

SBA (Small Business Administration) Loans

SBA loans offer some of the best terms available for business financing because they're backed by the government. This reduces risk for lenders, which means better rates and terms for you.

SBA 7(a) Loans

The SBA 7(a) program is the most popular government-backed loan option. Interest rates typically range from 11.5-17% APR - significantly lower than most alternatives. You can borrow up to $5 million for almost any business purpose.

These loans work for working capital, equipment purchases, real estate, or debt refinancing. The government guarantees up to 85% of the loan amount, so banks are more willing to lend. Repayment terms stretch up to 25 years for real estate purchases.

Interest Rates and Terms
SBA 7(a) loans typically offer rates between 11.5-17% APR - significantly lower than most alternative lenders. The government backing reduces risk for banks, so they pass those savings to you. Loan amounts can reach up to $5 million, with repayment terms stretching up to 25 years for real estate purchases and 10 years for working capital.

What Makes SBA 7(a) Special
Unlike traditional bank loans, SBA 7(a) loans require lower down payments - sometimes as little as 10% for real estate. You can use the funds for almost anything business-related: working capital, equipment, real estate, debt refinancing, or even acquiring another business. The government guarantee (up to 85% of the loan amount) means banks are more willing to lend to newer businesses or those with less-than-perfect credit.

Qualification Requirements
You'll need a personal credit score of at least 640, though 680+ gives you better rates. Your business should show consistent revenue and the ability to repay the loan. The SBA also requires that you've invested your own money in the business and that it operates for profit in the United States.

Application Process Reality Check
SBA 7(a) loans take 30-90 days to approve - much longer than online lenders but worth the wait for the rates. You'll need extensive documentation including tax returns, financial statements, and a detailed business plan. Many entrepreneurs work with SBA-preferred lenders who can streamline the process.

The catch? You'll need good credit (usually 640+) and strong financials. The application process takes 30-90 days and requires extensive documentation. But the savings can be massive - we're talking thousands less in interest compared to business financing from other sources.

SBA Microloans

Perfect for smaller funding needs up to $50,000. These loans target startups and very small businesses that might not qualify for traditional bank loans. Credit requirements are more flexible than standard SBA 7(a) loans.

SBA microloans are perfect for startups and very small businesses that need smaller amounts of funding. These loans max out at $50,000, making them ideal for entrepreneurs just getting started.

The best part? Credit requirements are way more flexible than traditional bank loans. You don't need perfect credit to qualify. Most lenders want to see a credit score of 580 or higher, but some will work with lower scores if your business plan is solid.

What makes SBA microloans special is the support that comes with them. Many microlenders offer business mentoring and training alongside the funding. This guidance can be worth thousands in consulting fees.

The application process is simpler than larger SBA loans too. You'll still need basic financial documents, but the paperwork burden is much lighter. Most decisions come within 30-45 days.

Repayment terms max out at 6 years, and many microloan providers offer business mentoring alongside funding. The average microloan is around $13,000 - ideal for inventory, equipment, or working capital.

Interest rates vary by lender but typically fall between 8-13% APR. Not as cheap as SBA 7(a) loans, but still competitive for smaller amounts. Plus, you'll often get approved faster than traditional SBA loans.

For entrepreneurs who can't qualify for traditional business financing or need smaller amounts, microloans bridge that gap perfectly. They're designed to help businesses that banks typically overlook.

The downside? You'll outgrow them quickly. If you need more than $50,000, you'll have to look at other SBA loan programs or traditional bank loans. But for getting started, microloans are hard to beat.

SBA Express Loans

Need SBA benefits but faster? Express loans offer up to $500,000 with approval decisions within 36 hours. The government only guarantees 50% instead of 85%, so rates are slightly higher than regular SBA 7(a) loans.

These work well for established businesses that need quick access to capital. You'll still get better terms than most conventional loans, just with less paperwork and faster processing.

Alternative Online Lenders

Quick funding matters when opportunities knock. Online lenders fill this gap with lightning-fast approvals and flexible requirements.

Short-Term Business Loans

Online platforms approve business loans in 24-72 hours versus weeks at traditional banks. You'll pay more - rates range from 15-35% APR - but speed costs money. Loan amounts typically span $5,000 to $500,000 with repayment terms of 3 months to 2 years.

Quick approval process (24-72 hours) makes online lenders perfect for urgent business needs. Higher interest rates (15-35% APR) are the trade-off for speed and flexibility. Loan amounts from $5,000 to $500,000 work for most small business situations.

How Short-Term Business Loans Work

Online lenders focus on your business's cash flow rather than perfect credit scores. Most require a minimum credit score of 550-600, which is much lower than traditional banks. You'll typically need at least $50,000 in annual revenue and 6-12 months in business.

The application process is mostly digital. Upload your bank statements, business documents, and basic financial info. Many lenders use automated underwriting systems that analyze your data within hours, not weeks.

Popular Online Lenders to Consider

Kabbage (now part of American Express) offers lines of credit up to $250,000 with same-day funding. Their platform connects directly to your business accounts for real-time cash flow analysis.

OnDeck specializes in term loans from $5,000 to $250,000 with 3-36 month terms. They're known for transparent pricing and fast decisions for established businesses.

BlueVine provides both term loans and lines of credit with competitive rates for online lenders. They offer invoice factoring too, making them a one-stop shop for cash flow solutions.

When Short-Term Loans Make Sense

Emergency equipment repairs, seasonal inventory purchases, or bridging cash flow gaps are ideal uses. The higher cost makes sense if you can generate returns quickly or avoid bigger problems.

These lenders accept lower credit scores (often 550+) and require less paperwork. Perfect for urgent equipment repairs, inventory purchases, or seasonal cash flow gaps. The trade-off? Higher interest rates and shorter repayment windows that can strain cash flow.

Merchant Cash Advances

Need cash but have inconsistent revenue? Merchant cash advances provide upfront capital based on your future credit card sales. You'll receive a lump sum and repay through daily or weekly automatic deductions from your card processing.

Merchant cash advances work differently than traditional business loans. You get money upfront based on your future credit card sales. Then the lender takes a percentage of your daily card transactions until you pay back the advance plus fees.

Here's how it works: If you get a $50,000 advance with a 1.3 factor rate, you'll pay back $65,000 total. The lender might take 10-15% of your daily credit card sales until that amount is reached.

The biggest advantage? You don't have fixed monthly payments. If your sales drop, your payments automatically drop too. This makes cash flow management easier for seasonal businesses or those with unpredictable revenue.

Best for businesses that:

• Process significant credit card sales daily
• Need quick access to working capital
• Have fluctuating monthly revenue
• Can't qualify for traditional bank financing
• Want repayment tied to actual sales performance

Factor rates typically range from 1.1 to 1.5 times the advance amount - meaning you'll pay back $11,000-$15,000 for every $10,000 received. No fixed payment schedule means slower sales months = smaller payments. However, this flexibility comes at a premium cost.

Most merchant cash advance providers require at least $10,000 in monthly credit card sales and look at your processing history rather than traditional credit scores. This makes them accessible even for newer businesses with limited credit history.

If you're considering this option, compare it with business financing alternatives to ensure you're getting the best deal for your situation.

Revenue-Based Financing

This newer option ties repayments to your monthly revenue. Instead of fixed payments, you pay a percentage of sales until reaching the agreed total. Rates vary but expect to pay 2-10% of monthly revenue.

Revenue-based financing gets funding based on your monthly sales numbers. You pay back a percentage of revenue each month instead of fixed payments.

This works great for businesses with ups and downs in sales. When you sell more, you pay more. When sales drop, payments drop too.

How Revenue-Based Financing Works:

• Lenders analyze your monthly revenue history
• You receive funding (typically 2-12x monthly revenue)
• Repay 2-10% of monthly sales until loan is satisfied
• No fixed payment schedule or set monthly amount
• Funding amounts range from $10,000 to $2 million

The cost is higher than traditional loans. You'll typically pay back 1.2 to 1.6 times what you borrowed. But there's no personal guarantee required and approval is faster than bank loans.

Best Candidates for Revenue-Based Financing:

• SaaS companies with recurring revenue
• E-commerce businesses with seasonal fluctuations
• Service businesses with variable monthly income
• Companies with strong revenue but limited assets for collateral

Revenue-based financing works well for businesses with seasonal fluctuations or growth spurts. During slow months, payments shrink automatically. During busy periods, you pay more but can handle it. The downside? Total repayment often exceeds traditional loan costs, and strong sales months mean higher payments.

Revenue-based financing works well for growth capital, marketing spend, or inventory purchases. It's not ideal for equipment purchases where equipment financing offers better rates.

Most revenue-based lenders require at least $10,000 in monthly revenue and 12 months of operating history. They'll connect to your bank accounts and payment processors to verify sales data.

For businesses needing flexible repayment terms, revenue-based financing beats traditional business loan options. Just make sure the total cost fits your profit margins before signing up.

For business financing comparisons and to explore multiple lender options, online platforms can help you evaluate rates and terms across different providers quickly.

Specialized Financing Options

Equipment Financing

Equipment financing is perfect for businesses that need machinery, vehicles, or tech gear. The equipment itself backs the loan, making approval easier even with fair credit.

Equipment financing offers one of the smartest ways to fund business growth without draining your cash reserves. This loan type uses the equipment itself as collateral, making approval easier and rates more competitive than unsecured business loans.

How Equipment Financing Works

Equipment financing lets you borrow money specifically to purchase business assets like machinery, vehicles, computers, or medical equipment. The equipment serves as collateral for the loan, which reduces the lender's risk and typically results in better terms for you.

Most lenders will finance 80-100% of the equipment's purchase price. You'll make monthly payments over a term that usually matches the equipment's useful life - typically 2-7 years. If you can't make payments, the lender can repossess the equipment to recover their investment.

Interest Rates and Terms

Equipment financing rates typically range from 6-20% APR, depending on your credit score, business financials, and the type of equipment. New equipment usually qualifies for lower rates than used equipment because it holds value better.

The equipment's expected lifespan determines your repayment term. Heavy machinery might get 7-year terms, while computer equipment might only qualify for 2-3 years. This alignment helps ensure the equipment remains valuable throughout the loan period.

You can finance up to 100% of equipment value with rates from 6-20% APR. Repayment terms usually match how long the equipment will last - so a 5-year truck loan for a 5-year useful life.

Benefits of Equipment Financing

Equipment loans offer several advantages over other business financing options. Since the equipment secures the loan, you'll typically get approved with lower credit scores than unsecured loans require.

You can often finance the full purchase price, preserving your working capital for other business needs. The fixed monthly payments make budgeting easier, and you may qualify for tax benefits since equipment purchases can often be depreciated or deducted.

Equipment Financing vs. Equipment Leasing

Equipment financing means you own the asset once you've paid off the loan. Equipment leasing means you're essentially renting the equipment with an option to buy at the end.

Financing works better if you plan to use the equipment long-term and want to build business assets. Leasing makes sense for equipment that becomes obsolete quickly or if you prefer lower monthly payments and want to upgrade regularly.

The best part? Since the equipment secures the loan, lenders take less risk. That means better rates and faster approvals than unsecured business loans.

Who Qualifies for Equipment Financing

Most equipment lenders require a minimum credit score of 600-650, though some will work with scores as low as 550. You'll typically need to be in business for at least 6 months to 2 years, depending on the lender.

Annual revenue requirements vary but often start around $100,000-$200,000.