Business Financing Options Compared
Typical structure, strengths and trade-offs of the main business loan types in the United States.
This table compares types of business financing, not individual lenders. Pricing, limits and requirements vary by lender, by your credit profile and by market conditions, so the table describes how each option generally works and what to check. Use it to narrow the field, then request written offers and compare them by APR and total repayment.
Select a column header to sort.
| Option | How it works | Good for | Watch out for |
|---|---|---|---|
| Traditional bank term loan | Lump sum repaid in fixed monthly installments, often with fixed or prime-based variable pricing. | Established businesses with strong credit and financial records. | Slower approval, stricter documentation, collateral and personal guarantee requests. |
| SBA 7(a) loan | Loan made by a participating lender with a partial guarantee from the U.S. Small Business Administration; rates are capped by SBA rules. | Working capital, equipment, real estate or acquisitions when conventional terms are tight. | Paperwork, guarantee fees, and processing time; rate caps depend on current SBA rules. |
| SBA 504 loan | Fixed-asset financing combining a bank loan, a Certified Development Company loan and a borrower down payment. | Buying real estate or major equipment. | Down payment requirement, limited to fixed assets, prepayment penalty on the CDC portion. |
| Credit union business loan | Member-owned lender offering term loans and lines of credit, often to local businesses. | Borrowers who value relationship lending and lower fees. | Membership rules and smaller product menus. |
| Online term loan | Fintech lender with fast application and funding, often shorter terms. | Speed and flexible credit requirements. | Higher APRs, frequent or daily payments, origination fees. |
| Business line of credit | Revolving credit you draw on and repay; interest is charged on the drawn balance. | Uneven cash flow and short-term needs. | Variable rates, draw or maintenance fees, renewal reviews. |
| Equipment financing | Loan or lease secured by the equipment being purchased. | Buying vehicles or machinery without extra collateral. | Equipment loses value; lease buyout terms vary. |
| Merchant cash advance | Purchase of future receivables repaid from daily or weekly sales, priced with a factor rate. | Last-resort quick cash for businesses with card sales. | Very high effective APR, frequent debits, hard to compare with loans. |
Rates change frequently. Check the current prime rate in the Wall Street Journal or on the Federal Reserve site, and current SBA program rules at SBA.gov. Ask every lender for the APR and a full fee list in writing. This page is educational and is not a loan offer or financial advice.