What is a Small Business Loan

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A small business loan is financing provided to small businesses to help with startup costs, operations, expansion, or other business-related needs. Loans can come from banks, credit unions, online lenders, or government-backed programs.

🏦 Common Types of Small Business Loans

  1. Term Loans
    • Lump sum of cash repaid over time with interest.
    • Great for: long-term investments, equipment, expansion.
  2. SBA Loans (U.S. only)
    • Backed by the Small Business Administration. Lower interest, longer terms.
    • Popular options: SBA 7(a), SBA Microloan, SBA CDC/504.
  3. Business Lines of Credit
    • Flexible funding—you borrow what you need, repay, and borrow again.
    • Great for: managing cash flow, unexpected expenses.
  4. Equipment Financing
    • Specifically for purchasing equipment. Equipment often acts as collateral.
  5. Invoice Financing / Factoring
    • Get cash based on unpaid invoices.
    • Good for: businesses with long billing cycles.
  6. Merchant Cash Advances
    • Advance based on future sales. Quick but expensive.
    • Use cautiously—high fees and fast repayment.
  7. Microloans
    • Smaller amounts (typically under $50,000).
    • Ideal for startups or very small businesses.

đź“ť What Do You Need to Qualify?

  • Good credit (personal and/or business)
  • Business plan and financial projections
  • Time in business (some lenders require 6 months – 2 years)
  • Revenue history
  • Collateral (sometimes)

🔍 Where Can You Apply?

  • Banks & Credit Unions – Lower rates, stricter requirements
  • Online Lenders (like Kabbage, BlueVine, OnDeck) – Fast funding, higher rates
  • SBA-Approved Lenders – Lower interest, longer processing
  • Community Development Financial Institutions (CDFIs) – Great for underserved communities

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