Small Business Loans
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Financing Options For Your Business’s Needs
Table of Contents
Compare Your Business Loan Options
Whether you’re looking to expand, upgrade equipment, or bridge seasonal cash flow gaps, you need enough capital to run your business. Small business loans offer you the financial resources needed to grow your business. You can apply for financing from banks and alternative lenders, but both follow different eligibility criteria.
If you’re a small business owner looking for more information on the different small business loans, you’re in the right place. We’ve compiled everything you need to know about your small business loan options.
Compare Business Financing Options
Type of Small Business Loan |
Maximum Loan Amount |
Term |
Interest Rates |
Speed |
|---|---|---|---|---|
| Business Line of Credit | $10,000 -$5,000,000 | Revolving | Starting at 7.99% | 24 – 48 Hours |
| SBA Loan | $100,000 – $10,000,000 | 10 – 25 years | Starting at 6.25% | as little as 30 days |
| Equipment Financing | $25,000 – $5,000,000 | up to 10 years | Starting at 5.99% | 24 – 48 hours |
| Asset Based Loans | $250,000 – $10,000,000 | Revolving | Starting at 5.25% | 10 to 14 days |
| Bridge Loan | $25,000 – $5,000,000 | 6 to 36 Months | Starting at 12% | 24 – 48 Hours |
| Inventory Financing | $25,000 – $10,000,000+ | Revolving | Starting at 7.25% | 24 – 48 Hours |
| Invoice Financing | $25,000 – $10,000,000+ | 6 – 24 Months | Starting at 12% | As little as 24 hours |
| Purchase Order Financing | $25,000 – $10,000,000+ | Revolving | Starting at 15% | 24 – 48 Hours |
| Business Term Loans | $25,000 – $5,000,000 | 2 – 25 years | Starting at 6.99% | 5 to 7 days |
Business Term Loans
Best for: Addressing short-term needs or investing in long-term business opportunities
Term loans are a straightforward business financing option. Small business owners receive a lump sum upfront, which they can pay back in fixed weekly or monthly installments over an agreed-upon timeframe or term.
These business loans have loan terms ranging from a few months (short-term loans) to ten years (long-term loans). Depending on your business’ credentials (i.e., credit score, revenue, and time in business), you can qualify for anywhere between $25,000 to $5 million. Most lenders will require collateral to secure the loan.
Once approved, you can use business term loans to fund business initiatives like bridging cash flow gaps, equipment purchases, inventory reordering, expansion, renovations, business acquisitions, and more.
Business Term Loan Pros
- Companies can qualify for high loan amounts
- Low repayments
- Affordable rates
- Offers spending flexibility
Business Term Loan Cons
- Collateral and personal guarantee may be required
- Potential prepayment penalties
- Businesses with poor credit scores may not qualify
How to Qualify for Business Term Loans
To apply for business term loans, you need to meet the following eligibility criteria:
- A business credit score of 680 or higher
- Annual revenue of at least $500,000
- At least 6 months of business history
Ready to apply for Business Line of Credit?
Secured vs. Unsecured Business Line of Credit
There are two types. of business lines of credit: secured and unsecured business lines of credit which could be also known as small business lines of credit. Both options qualify a borrower for a set amount of credit, businesses must understand what each option entails.
As the name implies, secured business lines of credit are financing that requires collateral or an asset that will serve as security for the small business loan. It could be real estate, equipment, or other valuable assets the company holds. Regardless of the purchase, the collateral adds a layer of protection for the credit line.
With collateral, lenders will have something to repay if the borrower defaults on the loan. This gives them enough confidence to offer excellent terms and high credit limits to borrowers.
Unsecured business lines of credit do not have the collateral requirement. That being said, the lenders have nothing to tie up the loan to. Nothing to seize in case the business cannot fulfill the monthly payments. This adds significant risk to the lender’s side. Lenders are more likely to charge a higher interest rate for the financing and may require the borrowers to sign a personal guarantee agreement to mitigate the risks.
Terms |
Secured Business Line of Credit |
Unsecured Business Line of Credit |
|---|---|---|
| Collateral requirement | Yes | No |
| Credit limit | Lower | Higher |
| Interest rate | Lower | Higher |
| Risk (for lenders) | Low Risk | High risk |
Business Line of Credit vs. Business Credit Card
Another distinction that borrowers must know is the difference between business lines of credit and business credit cards. Both options work similarly in a way that it provides businesses with access to a set amount of credit line. But there are certain things that you cannot pay for using your credit card, but a line of credit can cover.
A business credit card can come in handy in many instances. For instance, you can use the card for expenses like company food purchases, travel expenses, purchasing inventory, or paying the utility. Business credit cards also have a higher credit limit than personal credit cards. Plus, many credit card providers don’t report business activities to personal credit, making it an ideal solution for businesses who want to separate business and personal expenses and those who want to protect their personal credit.
But it’s worth noting that you can only use credit cards for vendors that accept credit card payments. If the vendor doesn’t accept credit cards, you may have to resort to cash payments. This is where a business line of credit can come in handy. You can use the cash from your business for expenses like working capital, rent, payroll, and other invoices. Plus, business lines of credit can also have higher credit limits than credit cards.
So, how do you know which financial resource to get for your business?
Having both financial resources can be helpful for your business. In general, use a business credit card under the following circumstances:
- You don’t need a significant amount of cash for a specific business expense
- You want to take advantage of detailed expense tracking
- Paying for travel expenses like plane tickets, meals, accommodation, etc.
- You want to earn rewards like points or cashback
Choose a business line of credit if:
- Your business needs to fund a short to mid-term investment like expensive equipment
- You want more flexibility
- You need a financing resource with higher credit limits
Pros and Cons of Business Line of Credit
Business lines of credit are a great financial resource because it gives your company a chance to cover certain expenses without draining your cash flow. However, like other investments, it comes with certain disadvantages and risks.
Below, we’ll outline the pros and cons of business lines of credit:
PROS
CONS
How to Get a Business Line of Credit
When apply for revolving line of credit, you’ll need to fill out our online application form (it’s free and won’t affect your credit score) and submit your bank statements. We’ll review your application and reach out to you to discuss the loan options suitable for your business.
Ready to apply for Business Line of Credit?