Every type of small business loan, compared honestly
Eighteen ways to borrow, what each actually costs, and the profile that gets approved for each. No product on this page pays us to be here.
Most "types of business loans" pages are a list. This one is a decision. Each product below solves a specific problem, and using the wrong one is the most expensive mistake in small business finance — more expensive than getting a mediocre rate on the right one.
Fastest way to narrow it down
| If your situation is... | Start with |
|---|---|
| Established, patient, borrowing serious money | SBA 7(a) |
| Buying the building you operate from | SBA 504 |
| Cash flow is uneven and recurring | Line of credit |
| Buying a specific machine or vehicle | Equipment financing |
| You invoice other businesses and wait to get paid | Factoring or AR financing |
| You have an order you cannot afford to fill | PO financing |
| Buying an existing business | Acquisition financing |
| No revenue yet | Startup options |
| Credit under 600 | Bad credit options |
| You need money this week | Term loan or factoring before an advance |
SBA-backed programs
Government-guaranteed loans made by ordinary lenders. The cheapest broadly available money for an established small business, at the cost of time and paperwork. Sizes run from $5,000 microloans to $5 million.
SBA 7(a) loan
The workhorse. Up to $5 million, 10 to 25 year terms, the lowest rates most small businesses can realistically get.
Most flexibleSBA 504 loan
Three-part structure for real estate and heavy equipment. Fixed for up to 25 years, and usually the lowest cost of anything you can get.
Cheapest fixed rateSBA Express loan
A streamlined 7(a) capped at $500,000. Lenders decide in-house, so it moves fast — but the SBA only guarantees 50%.
Faster SBASBA microloan
Up to $50,000 through nonprofit intermediaries. The most realistic SBA option for startups and thin credit files.
Small and starting out
Core commercial products
What a bank, credit union, or online lender offers directly. Faster than SBA, priced across an enormous range depending on who writes it.
Business term loan
Lump sum, fixed payments, defined end date. Simple structure — but the cost swings enormously between a bank and an online lender.
The defaultBusiness line of credit
Revolving credit you draw and repay as needed. You pay interest only on what is outstanding.
For uneven cash flowEquipment financing
The equipment secures the loan, so underwriting leans on the asset. Often available when nothing else is.
Asset-backedBusiness credit cards
The most-used and least-analyzed financing in small business. Excellent as a tool, poor as a loan.
First stop
Cash-flow and fast money
Products built around receivables and revenue rather than collateral. Fast, and priced accordingly. Read the cost sections carefully.
Invoice factoring
Sell unpaid invoices for cash now. Underwriting looks at your customers' credit, not yours.
Not a loanMerchant cash advance
Fast, available to almost anyone, and priced in a way that hides the true annual cost. Understand it fully before signing.
Read carefullyWorking capital loan
Money for day-to-day operations. Six different products compete for this job at wildly different prices.
Category, not productRevenue-based financing
Repay a fixed multiple as a percentage of monthly revenue. Popular with e-commerce and SaaS.
Growth capitalInventory and PO financing
Funds the stock itself — either goods you are holding, or goods you need to buy to fill a confirmed order.
Buys the stockReceivables financing
A loan secured by your invoices. Cheaper and quieter than factoring — but harder to qualify for.
Quieter than factoring
Purpose-built financing
Loans structured around a specific transaction: property, an acquisition, a startup, or your own home equity.
Commercial real estate loan
Financing the building your business occupies. SBA 504, SBA 7(a), and conventional all compete here.
PropertyBusiness acquisition loan
Financing to buy an existing business or buy out a partner. SBA 7(a) dominates this space.
Buying a businessStartup business loan
What is actually available before you have revenue history — and what the marketing does not tell you.
Pre-revenueHome equity for business
Usually the cheapest capital available to an owner — and the only kind secured by your house.
Cheapest, riskiest
The cost ladder, roughly
Every product on this site, ordered by what it typically costs. Speed runs almost exactly opposite.
| Product | Typical cost | Typical speed |
|---|---|---|
| SBA 504 (CDC portion) | 6.0% - 7.5% effective, fixed | 45 to 90 days |
| Home equity line | 7.5% - 12.0% APR | 2 to 6 weeks |
| SBA microloan | 8.0% - 13.0% APR | 2 to 8 weeks |
| SBA 7(a) | 10.0% - 14.0% APR | 30 to 90 days |
| SBA Express | 11.0% - 15.0% APR | 2 to 4 weeks |
| Equipment financing | 7.0% - 30.0% APR | 1 to 10 days |
| Bank term loan or line | 9% to 16% APR | 2 to 6 weeks |
| Business credit cards | 18.0% - 29.0% APR | 1 to 10 days |
| Accounts receivable financing | 8% - 30% APR | 2 to 6 weeks to set up |
| Online term loan or line | 20% to 60% APR | 1 to 3 days |
| Invoice factoring | 1% - 5% per 30 days | 3 to 10 days |
| Inventory and PO financing | 1% - 6% per 30 days | 1 to 4 weeks to set up |
| Revenue-based financing | 20% to 120% effective | 1 to 7 days |
| Merchant cash advance | 40% to 350%+ effective | Same day |