Small-business financing: match the loan to the job
There is no single "business loan" — there are five common products, and the right one depends on what you need the money for and how fast. The spread is wide: an SBA loan can cost a third of what an online lender charges for the same dollars.
| Product | Typical rate | Amount | Funding speed |
|---|---|---|---|
| SBA 7(a) | 10.50–13.50% | Up to $5M | 30–90 days |
| Bank term loan | 7.50–12.00% | $25k–$500k | 1–4 weeks |
| Online term loan | 14.00–45.00% | $5k–$250k | 1–3 days |
| Business line of credit | 10.00–25.00% | $10k–$250k | 1–7 days |
| Equipment financing | 7.00–20.00% | Up to 100% of cost | 2–10 days |
Source: Representative July 2026 ranges. Rates depend on personal and business credit, revenue, and time in business.
Every product in the table above solves a different problem. The cheapest money — an SBA 7(a) A loan partially guaranteed by the U.S. Small Business Administration, which lets banks lend to businesses they otherwise couldn't. loan — is also the slowest and most paperwork-heavy, which makes it right for planned growth and wrong for a Friday payroll gap. Online lenders flip that trade: money in a day or two, at a rate that reflects the speed and the thinner underwriting.
One thread runs through nearly all of it: the personal guarantee A promise that makes the owner personally liable if the business defaults, exposing personal assets. . Because most small businesses lack the collateral or track record banks want, lenders underwrite the owner too — your personal credit, income, and assets sit behind the loan. Treat a business loan as a personal financial decision, because legally it usually is one.
Bank or online lender?
A bank or SBA loan fits when
- You have time to wait for the lowest available rate
- Your credit and books are strong enough to qualify
- You want long terms that keep payments manageable
- The need is planned — equipment, expansion, real estate
An online lender fits when
- You need the money in days, not months
- Your credit or time in business falls short of bank minimums
- The cost of waiting exceeds the higher rate
- The need is short-term and you can repay it fast
What owners ask before borrowing
What credit score do I need for a business loan?
Banks and SBA lenders generally want a personal score of 680+, since most small-business loans are personally guaranteed. Online lenders go lower — into the 600s — but price the added risk with rates that can top 40%. Time in business and revenue often matter as much as the score itself.
Is an SBA loan worth the paperwork?
For most established small businesses, yes. SBA 7(a) loans carry the lowest rates and longest terms available to companies that cannot get conventional bank credit, because a federal guarantee de-risks the lender. The trade is a slower, document-heavy process — 30 to 90 days — so they suit planned growth, not a cash-flow emergency.
What is a personal guarantee?
A promise that makes you personally liable if the business cannot repay — the lender can pursue your personal assets. Nearly every small-business loan requires one, which is why your personal credit and finances are underwritten alongside the company's.
Term loan or line of credit?
Take a term loan for a specific, one-time investment you can size now — equipment, a buildout, an acquisition. Use a line of credit for recurring or unpredictable needs like inventory and payroll gaps, where you want to draw and repay as cash flow moves.