Best Small Business Loans: SBA Loans, Term Loans, Lines of Credit, Private Lending, and More

Choosing the right small business loan can shape your cash flow for years.

The best loan is not always the one with the fastest approval or the biggest advertised amount. It is the one that matches your business model, repayment ability, timeline, and purpose for borrowing.

A restaurant buying equipment has different financing needs than a consulting firm covering payroll, a contractor waiting on invoices, or an LLC owner buying commercial property. That is why this guide breaks down the major types of small business loans, what they cost, how fast they fund, who qualifies, and when each option makes sense.

If you are still preparing your application, start with our guide on how to get a business loan.

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Quick Comparison: Best Small Business Loan Types

Loan type	Typical amount	Funding speed	Typical cost	Best for
SBA 7(a) loan	Up to $5 million	30–90 days	Prime rate plus lender spread	General business funding, acquisitions, working capital
SBA 504 loan	Often up to $5.5 million	45–90 days	Long-term fixed rates on SBA portion	Commercial real estate and major equipment
SBA microloan	Up to $50,000	30–60 days	Often around 8%–13%	Startups and very small businesses
Bank term loan	$25,000–$500,000+	2–6 weeks	Often 7%–15%	Established businesses with strong credit
Online term loan	$5,000–$500,000	1–7 days	Often 12%–45% APR	Fast funding and less-than-perfect credit
Business line of credit	$10,000–$250,000+	1–5 days	Often 8%–30% APR	Working capital and seasonal cash flow
Equipment financing	Up to 100% of equipment value	1–7 days	Often 6%–20%	Vehicles, machinery, tools, and equipment
Invoice financing	80%–95% of invoice value	1–3 days	Often 1%–5% monthly fee	B2B businesses waiting on unpaid invoices
Private money lending	Varies widely	7–30 days	Often 10%–18%+	Bridge financing and non-bankable deals

Rates and timelines vary by lender, credit profile, revenue, collateral, and market conditions. Always compare total repayment cost, not just the advertised rate.

1. SBA Loans

SBA loans are often the best small business loans for qualified borrowers because they offer long repayment terms, competitive rates, and larger loan amounts.

The Small Business Administration does not usually lend directly. Instead, it guarantees part of the loan, which reduces risk for banks and approved lenders.

That guarantee helps small businesses access financing that might otherwise be difficult to qualify for.

Best for

SBA loans are best for:

Established small businesses with strong financials
Owners who can wait several weeks for funding
Businesses seeking lower rates and longer repayment terms
Working capital, acquisitions, refinancing, equipment, or real estate
Borrowers who can provide detailed financial documents

If you need money tomorrow, an SBA loan is probably not the right fit. If you want affordable long-term financing, it should be near the top of your list.

SBA 7(a) Loans

The SBA 7(a) loan is the most flexible SBA loan program.

You can use it for working capital, buying equipment, refinancing eligible business debt, purchasing inventory, buying real estate, or acquiring another business.

Typical loan amount: Up to $5 million
Typical funding speed: 30–90 days
Typical repayment term: Up to 10 years for working capital; up to 25 years for real estate
Typical rate range: Usually tied to the prime rate plus an approved lender spread
Collateral: Often required for larger loans
Personal guarantee: Usually required

Common qualification requirements

To qualify for an SBA 7(a) loan, lenders usually look for:

A for-profit business operating in the U.S.
Good personal credit, often 680+
Strong business revenue and cash flow
Clean business financial statements
Business and personal tax returns
A clear use of funds
Owner investment in the business
Ability to repay the loan

Ideal use cases

SBA 7(a) loans are ideal for:

Expanding a business
Buying another business
Refinancing eligible debt
Purchasing inventory
Hiring staff
Funding working capital
Buying owner-occupied commercial real estate

For real estate-specific borrowing, see our guide to commercial real estate loans.

SBA 504 Loans

SBA 504 loans are designed for major fixed assets, especially commercial real estate and large equipment purchases.

These loans usually combine financing from a bank or credit union with financing from a Certified Development Company.

Typical loan amount: Often up to $5.5 million for the SBA-backed portion
Typical funding speed: 45–90 days
Typical repayment term: 10, 20, or 25 years
Typical rate range: Long-term fixed rates on the SBA-backed portion
Collateral: Usually the property or equipment being financed
Personal guarantee: Usually required

Common qualification requirements

Lenders usually look for:

Strong credit
Stable business revenue
Owner-occupied real estate or qualifying equipment
Down payment, often around 10%
Business financial statements
Debt service coverage
Eligible business size and use of funds

Ideal use cases

SBA 504 loans are best for:

Buying an office building
Purchasing a warehouse
Buying a manufacturing facility
Financing major equipment
Expanding into a larger physical location

If your main goal is buying property for your business, compare this option with conventional commercial real estate loans.

SBA Microloans

SBA microloans are smaller loans made through nonprofit intermediary lenders.

They can be more accessible for startups, newer businesses, and entrepreneurs who need a smaller amount of capital.

Typical loan amount: Up to $50,000
Typical funding speed: 30–60 days
Typical repayment term: Up to 6 years
Typical rate range: Often around 8%–13%
Collateral: May be required
Personal guarantee: Usually required

Common qualification requirements

Microloan lenders may consider:

Business plan
Personal credit
Character and repayment ability
Collateral, depending on lender
Startup or operating budget
Training or coaching participation

Ideal use cases

SBA microloans are useful for:

Startup costs
Inventory
Supplies
Furniture
Fixtures
Working capital
Small equipment purchases

If you are forming a business before applying, review how to start an LLC and what an EIN is. Most lenders will want your business structure and tax ID in place.

2. Bank Term Loans

A term loan gives you a lump sum upfront, which you repay over a set period with fixed or variable payments.

Traditional bank term loans usually offer lower rates than online lenders, but they are harder to qualify for.

Typical loan amount: $25,000–$500,000+
Typical funding speed: 2–6 weeks
Typical repayment term: 1–10 years
Typical rate range: Often 7%–15%
Collateral: Often required
Personal guarantee: Common

Common qualification requirements

Banks often want to see:

2+ years in business
Strong personal credit, often 680+
Consistent revenue
Profitability or strong cash flow
Business tax returns
Personal tax returns
Balance sheet and profit-and-loss statement
Business bank statements
Collateral for larger loans

Ideal use cases

Bank term loans are a good fit for:

Business expansion
Hiring
Renovations
Buying inventory
Refinancing higher-cost debt
Large one-time investments

Pros

Lower rates than many online options
Predictable repayment schedule
Good for established businesses
Can support larger funding needs

Cons

Slower approval process
More paperwork
Harder for startups to qualify
Collateral may be required

If you are comparing secured and unsecured options, see our guide to the best unsecured business loans.

3. Online Term Loans

Online term loans are faster and more flexible than bank loans, but they usually cost more.

These loans are popular with business owners who need capital quickly or do not meet traditional bank requirements.

Typical loan amount: $5,000–$500,000
Typical funding speed: 1–7 days
Typical repayment term: 6 months–5 years
Typical rate range: Often 12%–45% APR
Collateral: Sometimes required
Personal guarantee: Common

Common qualification requirements

Online lenders may accept:

6+ months in business
Monthly revenue of $8,000+
Credit score of 600+
Business bank statements
Connected business bank account
Basic business information

Some online lenders approve borrowers with weaker credit, but the tradeoff is usually a higher rate.

Ideal use cases

Online term loans can work for:

Fast inventory purchases
Marketing campaigns
Short-term working capital
Emergency expenses
Smaller expansion projects
Bridge funding

Pros

Fast application
Quick funding
Less paperwork than banks
More accessible for average credit

Cons

Higher rates
Shorter repayment terms
More frequent payments
Can strain cash flow if not managed carefully

Before accepting an online loan, compare it with a business credit card or line of credit if your funding need is smaller and recurring.

4. Business Lines of Credit

A business line of credit gives you access to a set credit limit. You draw funds when needed and pay interest only on the amount you use.

This makes it one of the most flexible forms of small business financing.

Typical credit limit: $10,000–$250,000+
Typical funding speed: 1–5 days after approval
Typical repayment term: Revolving or 6–24 month draw periods
Typical rate range: Often 8%–30% APR
Collateral: May be secured or unsecured
Personal guarantee: Common

Common qualification requirements

Lenders may look for:

6+ months to 2+ years in business
Annual revenue of $50,000+
Personal credit score of 600+
Positive cash flow
Business bank statements
Low existing debt burden

Ideal use cases

A business line of credit is best for:

Seasonal cash flow gaps
Payroll timing issues
Inventory purchases
Emergency expenses
Covering receivables delays
Short-term working capital

Pros

Flexible access to funds
Only pay interest on what you use
Useful for recurring needs
Can help manage uneven cash flow

Cons

Rates can be variable
Credit limits may be lower than term loans
Easy to overuse
Some lenders charge draw fees or maintenance fees

A line of credit works best when paired with clean financial systems. Consider using a strong business checking account and small business accounting software to track draws, repayments, and cash flow.

5. Equipment Financing

Equipment financing helps you buy vehicles, machinery, computers, tools, restaurant equipment, medical equipment, or other assets your business needs to operate.

The equipment itself usually serves as collateral.

Typical loan amount: Up to 100% of equipment value
Typical funding speed: 1–7 days
Typical repayment term: 2–7 years
Typical rate range: Often 6%–20%
Collateral: The equipment being financed
Personal guarantee: Often required

Common qualification requirements

Lenders usually ask for:

Equipment quote or invoice
Business bank statements
Personal credit score, often 620+
Business revenue history
Down payment, sometimes 0%–20%
Proof the equipment supports business operations

Ideal use cases

Equipment financing is best for:

Work vehicles
Restaurant equipment
Construction equipment
Manufacturing machinery
Medical or dental equipment
Computers and technology
Commercial appliances

Pros

Easier to qualify for than unsecured loans
Equipment acts as collateral
Preserves cash
Payments can often match useful life of asset

Cons

Equipment may become outdated
Down payment may be required
You can lose the equipment if you default
Not useful for general working capital

Equipment financing is strongest when the equipment directly increases revenue, lowers costs, or helps fulfill existing demand.

6. Invoice Financing and Invoice Factoring

Invoice financing helps businesses access cash tied up in unpaid invoices.

If your customers take 30, 60, or 90 days to pay, this can improve cash flow without waiting for invoice due dates.

This option is mainly for B2B and B2G businesses, not consumer-facing businesses.

Invoice Financing

With invoice financing, you borrow against unpaid invoices. You still collect payment from your customers.

Typical advance: 80%–95% of invoice value
Typical funding speed: 1–3 days after setup
Typical cost: Often 1%–3% per month
Collateral: Invoices
Best for: Businesses that want to keep customer relationships private

Invoice Factoring

With invoice factoring, you sell invoices to a factoring company. The factoring company usually collects directly from your customers.

Typical advance: 80%–95% of invoice value
Typical funding speed: 1–3 days
Typical cost: Often 1%–5% per month
Collateral: Invoices
Best for: Businesses that need fast cash and are comfortable with third-party collections

Common qualification requirements

Invoice financing companies may consider:

B2B or government invoices
Creditworthy customers
Minimum monthly invoice volume
Clean invoice records
No major tax liens or legal disputes
Customer payment history

Ideal use cases

Invoice financing is best for:

Staffing agencies
Contractors
Manufacturers
Wholesalers
Logistics companies
Professional services firms
Businesses with long payment cycles

Pros

Fast access to cash
Easier approval if customers are creditworthy
Useful for growing businesses
Can smooth cash flow without taking a traditional loan

Cons

Fees can add up
Factoring may affect customer relationships
Not useful for B2C businesses
Requires reliable invoices

Invoice financing is a cash flow tool, not a fix for unprofitable operations. Use it when customers are slow to pay, not when sales are too weak to support the business.

7. Private Money Lending

Private money lending is financing from individuals, investor groups, or private lending firms rather than banks or traditional lenders.

It is sometimes called private lending or hard money lending, especially when real estate is involved.

For small businesses, private money lending can be a viable option when speed, collateral, or deal flexibility matters more than getting the lowest possible rate.

What Is Private Money Lending?

Private money lenders make loans using their own capital or investor capital.

Unlike banks, they may focus more on the value of the deal, available collateral, business cash flow, and exit strategy than on rigid underwriting rules.

Private loans are negotiated directly, so terms can vary widely.

Typical loan amount: $50,000–$2 million+
Typical funding speed: 7–30 days
Typical repayment term: 6 months–5 years
Typical rate range: Often 10%–18%+, depending on risk
Collateral: Usually required
Personal guarantee: Often required

When to Use Private Money Lending

Private money may make sense when:

You need faster funding than a bank can provide
You have a time-sensitive opportunity
You are buying or improving commercial property
You need bridge financing
Your deal does not fit bank requirements
You have strong collateral but weaker credit
You are waiting for longer-term financing to close

For example, a business owner purchasing a property may use private money to close quickly, then refinance later into a lower-cost commercial real estate loan.

Pros of Private Money Lending

Faster than most bank loans
More flexible underwriting
Can work for unusual deals
Collateral value may matter more than credit score
Useful for bridge financing
Terms can sometimes be negotiated directly

Cons of Private Money Lending

Higher rates than banks
Shorter repayment terms
Collateral is often required
Balloon payments may apply
Legal documents can be more complex
Less standardized than bank lending

How to Find Private Lenders

You can find private lenders through:

Commercial mortgage brokers
Business loan brokers
Real estate investor groups
Local business networks
Attorneys and accountants
Private lending firms
Peer-to-peer lending platforms
Referrals from other business owners

How to Protect Yourself

Before accepting private money:

Get all terms in writing.
Understand the full repayment schedule.
Ask about origination fees, extension fees, and prepayment penalties.
Confirm whether a balloon payment is required.
Have an attorney review the documents.
Verify the lender’s reputation.
Make sure you have a realistic exit plan.

Private money lending can be useful, but it should not be treated casually. The flexibility is valuable, but only if the repayment plan is clear.

8. Business Credit Cards

Business credit cards are not traditional loans, but they can be useful for smaller expenses, short-term working capital, and rewards.

They are best for purchases you can pay off quickly.

Typical credit limit: Varies by credit profile and income
Typical funding speed: Instant to a few days after approval
Typical rate range: Often 18%–30%+ APR if you carry a balance
Collateral: Usually none
Personal guarantee: Usually required

Best for

Business credit cards are best for:

Travel
Software subscriptions
Office supplies
Online advertising
Small recurring expenses
Short-term purchases paid off monthly

Pros

Easy access to revolving credit
Rewards and cash back
Useful for separating business expenses
May offer intro 0% APR periods

Cons

High interest if you carry a balance
Lower limits than many loans
Can hurt personal credit if mismanaged
Not ideal for long-term financing

Compare options in our guide to the best business credit cards.

How to Choose the Best Small Business Loan

The best small business loan depends on your goal.

If you need…	Consider…
Lowest-cost long-term financing	SBA loan
Commercial property financing	SBA 504 or commercial real estate loan
Fast working capital	Online term loan or line of credit
Ongoing cash flow support	Business line of credit
Equipment or vehicles	Equipment financing
Cash while waiting on invoices	Invoice financing or factoring
No collateral option	Unsecured business loan
Bridge financing or flexible underwriting	Private money lending
Smaller recurring purchases	Business credit card

Before applying, ask yourself:

How much money do I need?
What will the money be used for?
How quickly do I need funding?
Can my cash flow support repayment?
Do I have collateral?
What is my personal credit score?
How long has my business been operating?
Do I need one-time funding or ongoing access to capital?

If you want a step-by-step application plan, read how to get a business loan.

Qualification Requirements by Loan Type

Loan type	Credit score	Time in business	Revenue	Collateral
SBA loan	Often 680+	Usually 2+ years preferred	Strong cash flow	Often required
Bank term loan	Often 680+	2+ years	Strong revenue	Often required
Online term loan	Often 600+	6+ months	Moderate revenue	Sometimes
Line of credit	Often 600+	6–24 months	Steady revenue	Sometimes
Equipment financing	Often 620+	Varies	Enough to repay	Equipment
Invoice financing	Varies	Varies	Invoice volume	Invoices
Private money	Varies	Varies	Case by case	Usually required
Business credit card	Good personal credit preferred	Not always required	Personal/business income	Usually none

These are general ranges. Each lender has its own standards.

Warning: Be Careful With Expensive Short-Term Financing

Some small business financing products look helpful because they fund quickly. But speed can come at a very high cost.

The biggest risks are merchant cash advances, high-cost short-term loans, daily repayment loans, and stacked debt.

Merchant Cash Advances

A merchant cash advance gives you cash upfront in exchange for a portion of future sales.

It is often marketed as fast and flexible, but it can be extremely expensive.

Instead of an interest rate, MCAs often use a factor rate. For example, if you borrow $50,000 with a 1.4 factor rate, you must repay $70,000.

That may not sound terrible until you calculate the effective APR, especially if repayment happens over a few months.

Risks of merchant cash advances

Effective APR can exceed 50%, 100%, or more
Daily or weekly withdrawals can hurt cash flow
Payments may continue even during slow sales periods
Contracts can be aggressive
Refinancing may be difficult
Stacking multiple advances can quickly become unmanageable

Daily and Weekly Repayment Loans

Some online loans require daily or weekly payments.

This can work for businesses with predictable daily revenue, but it can create serious pressure for businesses with uneven cash flow.

If repayment withdrawals hit during a slow week, you may be forced to borrow again just to stay current.

Do Not Assume You Can Refinance Later

Some business owners take expensive financing assuming they will refinance into an SBA loan or bank loan later.

That is risky.

Banks and SBA lenders may not refinance certain high-cost debt, especially if the original loan structure is considered risky or predatory. Lenders also care whether the new loan actually improves your business’s financial position.

Do not take expensive short-term financing unless you can repay it from normal business cash flow.

How to Protect Yourself

Before accepting any short-term financing:

Convert the cost to APR.
Ask for the total repayment amount.
Check payment frequency.
Review prepayment rules.
Avoid stacking multiple loans.
Watch for confession of judgment clauses.
Talk to a CPA or attorney before signing.
Make sure repayment does not consume too much monthly revenue.

Fast money can be useful in rare cases. But if the payments weaken your business, it is not good financing.

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Frequently Asked Questions

What is the best loan for a small business?

The best small business loan depends on your needs. SBA loans are usually best for low-cost long-term financing. Lines of credit are best for ongoing working capital. Equipment financing is best for machinery or vehicles. Invoice financing is best for B2B companies waiting on customer payments.

What is the easiest small business loan to get?

Online term loans, business lines of credit, and equipment financing are often easier to qualify for than bank loans. Invoice financing can also be accessible if your customers have strong credit.

What credit score do I need for a small business loan?

Many banks and SBA lenders prefer credit scores around 680 or higher. Online lenders may accept scores around 600. Equipment lenders may approve borrowers around 620. Invoice financing depends more on your customers’ credit than yours.

How fast can I get a small business loan?

Online lenders may fund in 1–7 days. Invoice financing can fund in 1–3 days. Private money lending may take 7–30 days. SBA and bank loans often take 30–90 days.

Can I get a business loan with no collateral?

Yes, some lenders offer unsecured business loans and lines of credit. However, unsecured loans usually have higher rates and often still require a personal guarantee.

Are SBA loans hard to get?

SBA loans are harder to get than many online loans because they require strong documentation, good credit, and proof of repayment ability. However, they are often worth the effort because rates and terms are usually better.

Is private money lending good for small businesses?

Private money lending can be useful when you need speed, have strong collateral, or do not fit traditional bank requirements. It is usually more expensive than bank financing, so it works best as short-term or bridge financing with a clear repayment plan.

Should I use a merchant cash advance?

Most small businesses should be cautious with merchant cash advances. They are fast, but the effective cost can be extremely high. Daily or weekly payments can also strain cash flow.

What documents do I need for a small business loan?

Common documents include business bank statements, tax returns, profit-and-loss statements, balance sheets, business formation documents, debt schedule, owner ID, and a clear explanation of how you will use the funds.

Can a startup get a small business loan?

Yes, but options are more limited. Startups may consider SBA microloans, business credit cards, equipment financing, personal credit-based financing, or private money if there is collateral. A strong business plan and clean personal credit help.

Final Thoughts

The best small business loan is the one that solves the right problem without damaging your cash flow.

If you qualify and can wait, SBA loans and bank loans usually offer the best long-term value. If you need flexibility, a business line of credit may be better. If you are buying equipment, equipment financing is often the cleanest fit. If unpaid invoices are slowing growth, invoice financing can help. If your deal is time-sensitive or does not fit bank requirements, private money lending may be worth exploring.

Avoid choosing a loan based only on speed. Compare the total repayment cost, payment frequency, collateral requirements, and impact on monthly cash flow.

Before applying, review how to get a business loan so you can prepare your documents, compare lenders, and improve your chances of approval.