Small Business Loans

Business Term Loan

A longer term more traditional loan, that can be approved quickly
Loans are approved quickly, no collateral may be needed, little paperwork, lower rate
Excellent personal credit is required, shorter repayment term than bank loans

Loan Amount: $5,000 – $2M

Loan Term: 1 – 5 years

Rate: 5% – 30%

Time to funds: Immediately to 4 weeks

Payment frequency: Daily / Weekly / Monthly

Business Line of Credit (LOC)

A loan where capital is available to draw upon when needed to meet a variety of business needs
Only pay interest on funds drawn. Credit is available when you need it. It is suitable for the majority of business needs.
May require collateral in some cases. Higher interest rates if you have a low credit score. There is a personal guarantee.

Loan Amount: $2,000 – $100,000

Loan Term: 1 – 6 months

Rate: 8% – 25%

Time to funds: 1 – 4 weeks

Payment frequency: Monthly

Merchant Cash Advance (MCA)

A short term loan that is paid back with a percentage of future credit and debit transactions. Learn more

Short time to funding, no collateral required, repayment adjusts to how well business is doing
Higher cost depending on qualifications, revenue and sales history required

Loan Amount: $5,000 – $200,000

Loan Term: 3 – 12 months

Rate: 18% – 40%+

Time to funds: 1 – 7 days

Payment frequency: Daily / Weekly / Monthly

ACH Cash Flow Loan

A short term advance on cash flows paid back daily from your bank account
Perfect credit not required, collateral not required, short time to funding, and little paperwork
Higher cost, automatic payment

Loan Amount: $1,000 – $350,000

Loan Term: 3 – 24 months

Factor: 1.06 – 1.7

Time to funds: 1 – 3 days

Payment frequency: Daily / Weekly

SBA Express

Smaller traditional loan, also available to borrowers in special situations i.e. disaster, low income communities
Low APR, fixed or variable rate
Longer application process, require a personal guarantee or collateral

Loan Amount: $1,000 – $100,000

Loan Term: 1 – 5 years

Rate: 7% – 15%

Time to funds: 1 – 3 months

Payment frequency: Monthly

Business Credit Card

A credit card with a set limit than can be used when needed
0% intro APR's, Spending Rewards
Variable Rate, Possible annual fee

Loan Amount: $500 – $50,000

Loan Term: 1 – 2 months

Rate: 0% – 30%

Time to funds: 1 – 7 days

Payment frequency: Monthly

Factoring (AR/PO)

Sell invoices at a discount that turns slow paying customers into cash now
Immediate cash to cover funding gaps, no required credit check, spend less time collecting from customers
Customer may rather deal directly with business, depending on the situation can be a higher cost

Loan Amount: Up to 85% of Accounts Receivable

Loan Term: 1 – 3 months

Rate: Fee equal to 10 – 25%

Time to funds: 1 – 7 days

Payment frequency: Upfront fee

Equipment Leasing

Lending for businesses with good credit in need of machines, vehicles, technology or other types of equipment
Lowest interest rate to buy equipment, tax deductible and depreciation benefit, own the equipment outright
Equipment with loan can become outdated, higher down payment than lease

Loan Amount: $20,000 – $1M

Loan Term: 2 – 10 years

Rate: 8% – 25%

Time to funds: 1 – 4 weeks

Payment frequency: Monthly

Commercial Real Estate

A loan used to purchase real estate used for business purposes
Low APR, earn equity on property, built in collateral
Must include plans to build a structure. Longer application process

Loan Amount: $150,000+

Loan Term: 20 – 25 years

Rate: 4% – 8%

Time to funds: 1 – 2 months

Payment frequency: Monthly

Large SBA

Traditional loan for businesses with a solid track record and assets
Lowest interest rates of all types, longer terms, can borrow larger amount
Application is time consuming, long time to approval and funding, down payment required

Loan Amount: $200,000+

Loan Term: 7+ years

Rate: less than 10%

Time to funds: 2 – 6 months

Payment frequency: Monthly

MORE OPTIONS

Personal Loan

Many start-ups and early stage companies rely on the business owners personal credit to initially capitalize their business. Depending on the credit score (typically 680 or better), the business owner can often leverage the the equity in their home or obtain other personal credit to start their business.
A potentially lower interest rate, requires no time in business, quick access to capital.
The business owners personal credit and collateral is at risk.

Asset Based Loan (ABL)

Asset-based loans include everything from equipment to personal asset loans. Personal asset loans are sometimes considered to be a business pawn loan. Luxury assets like jewelrey, watches, or exotic cars are held as collateral for business owners looking for quick access to cash. For some business owners unable to find capital in other ways, this type of financing can provide quick cash—albeit at a premium.
Quick access to capital, no credit check, and easy-to-understand terms.
The financing comes at a premium with very high interest rates. The borrower is required to physically hand over the asset to the lender for the duration of the loan.

Business / Franchise Purchase

Traditional lenders like banks (and even the SBA) offer loans for business acquisition. Alternative lenders also make capital available for purchasing a business. These are typically longer-term loans with fixed interest rates. The SBA considers business acquisition an appropriate use for their 7(a) loan program (see below).
Low interest rates and longer terms for those who qualify.
The borrower will need to demonstrate personal credit worthiness as well as the viability of the business being purchased. Be prepared to personally contribute 25% to 50% of the loan amount.

Crowdfunding

Crowdfunding has become an option for many early stage or idea stage startups that don't have the capital, the credit, or the equity investment to get things started. Crowdfunding sites like Kickstarter have been very useful to facilitate a pitch and access contributions for advance release of products or merchandise for contributors. Recent legislation also makes it possible for small investors to get a piece of equity in return for a relatively small investment in an early stage startup.
If you offer a product or project with a lot of mass appeal, finding capital via crowdfunding is relatively straightforward.
It can be just as challenging as obtaining financing via traditional channels and can feel like the small business owner has multiple minority partners to answer to.