Small Business Loans
Business financing comes in more shapes than consumer credit, from SBA loans to lines of credit to equipment financing. Matching the loan to the need is half the battle.
Typical APR
7% to 30%+
Common terms
6 months to 25 years
SBA loan rates
Often the lowest available
Collateral
Varies by product
Figures above are typical ranges for general guidance only. Your actual rate and terms depend on your credit, income, and lender, and change over time. Confirm current numbers directly with a lender.
Small business financing is not one product but a family of them, each suited to a different need. A term loan funds a specific large purchase. A line of credit covers uneven cash flow and seasonal gaps. Equipment financing uses the equipment itself as collateral. Invoice financing advances cash against unpaid invoices. Picking the right structure matters as much as the rate.
For most established businesses, an SBA loan is the gold standard. These are loans from regular banks that the Small Business Administration partially guarantees, which lets lenders offer lower rates and longer terms than they otherwise would. They take more paperwork and patience, but the cost savings are real. At the other end sit merchant cash advances and very short-term online products, which fund fast but can carry effective rates that dwarf a traditional loan.
Lenders look at your time in business, your revenue, your personal and business credit, and often your personal guarantee. Newer businesses and those with thin credit files pay more or get turned down, which is why many founders start with a line of credit or a smaller term loan to build a track record before seeking larger financing.
When it makes sense
- You need capital for a specific purpose like equipment, inventory, or expansion.
- Your business has steady revenue and at least a year or two of history.
- You can document your finances and are comfortable with a personal guarantee.
What to watch for
- Merchant cash advances fund fast but can carry punishing effective rates.
- Daily or weekly repayment products can strain cash flow more than the rate suggests.
- Most small business loans require a personal guarantee that puts your own assets at risk.
Guides on business loans
Browse all guidesFrequently asked questions
What is an SBA loan?
An SBA loan is a loan from a bank or other lender that the U.S. Small Business Administration partially guarantees. That guarantee lets lenders offer lower rates and longer terms than they normally would. They require more documentation and time, but they are usually the most affordable option for established businesses.
Can I get a business loan for a startup?
It is harder. Most lenders want at least one to two years in business and steady revenue. New founders often start with a business credit card, a small line of credit, or an SBA microloan to build history before pursuing larger financing.
Do I have to personally guarantee a business loan?
Usually yes. Most small business lenders require a personal guarantee, which means you are personally responsible for the debt if the business cannot repay it. Read this clause carefully before you sign.