The Ultimate Small Business Loans Guide
Small Business Loans: Which Type Is Right for Your Business
Cash rules everything around your business — see how each type of small business loan stacks up before you choose one.
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Cash rules everything around me — and around your business, too. Cash flow is critical to SMB survival: how well you manage it determines whether you can meet payroll, pay rent, and cover the rest of your operational expenses on time.
Sustainable Solutions for All Types of Businesses
Different loans work well for different kinds of companies. This guide breaks down the pros and cons of six common small business funding options, so you can match the right one to your business's needs.
Bank Term Loans
The best game in town
Bank term loans typically offer the lowest interest rates available, with fixed, predictable payments on a reliable long-term repayment schedule.
Nice work if you can get it
Qualification is highly restrictive — about 75 percent of small business loan applications are rejected — and the application timeline can stretch from weeks to months.
A Line of Credit
Credit where credit is due
A line of credit functions like a credit card but with better terms: borrow up to your approved limit and repay with interest, drawing funds as needed rather than in one lump sum.
An exclusive club
Qualification standards are often stricter than for traditional loans, and the application process can be lengthy despite quick access to funds once approved — a real hurdle for young or emerging small businesses.
Online Invoice Financing
Advancing the money you've earned
Invoice financing advances capital based on invoices you've already sent, with minimal paperwork and an online application. FundThrough, for example, can advance 100% of your invoice value in as little as 24 hours, and funding doesn't get reported to credit bureaus or affect your credit score.
A B2B-focused solution
This option is designed for businesses that invoice their customers, so it works best for B2B transactions and large client orders — it's less suited to B2C companies without an invoicing model.
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Create a Free AccountMerchant Cash Advances
No credit? No problem
Merchant cash advances (MCAs) have lower qualification requirements than traditional loans and offer faster access to cash, making them accessible to new businesses with weak credit.
The wild frontier of SMB funding
An MCA advances cash in exchange for a percentage of future credit or debit sales, repaid according to a factor rate (typically 1.2–1.4) rather than a standard interest rate. For example, $20K at a factor rate of 1.4 becomes $28,000 repaid over the life of the advance — roughly 28% in financing cost. With minimal regulation, MCAs are sometimes called the Wild West of alternative lending, and carry real risk of exploitative terms.
Small Business Administration Loans
Long-term solutions tailored to small businesses
Government-backed programs — notably the SBA's 7(a) loan program — are designed specifically for small business development, with 10- to 25-year terms and government-capped maximum interest rates, for businesses with good credit.
The government giveth, the government taketh away
SBA loans are vulnerable to government shutdowns, during which operations can halt entirely — in one shutdown, $2 billion in small business loans were put on hold, with recovery taking weeks after reopening. That political unpredictability is worth factoring into your plans.
Personal Loans
Built on entrepreneurial spirit
A personal loan lets you self-fund and bootstrap your business using your individual credit, with a simpler qualification process than a business loan requires.
No man is an island
Borrowing capacity is limited — typically maxing out around $50,000 — which usually isn't enough as a sole funding source, and you carry full personal liability if the business falters.
Which Loan Is Right for You?
Each of these funding types serves a different business need and situation. A bank term loan might be right for an established company with strong credit and time to spare; invoice financing suits a B2B business that needs cash now against work it's already done; an SBA loan fits a business that can wait out a long approval process for better long-term terms. Weigh qualification odds, speed, and cost against what your business needs today.
Get working capital now for your business when you sign up with FundThrough.
Read the Small Business Finance Guide → Read the Ultimate Invoice Factoring Guide →
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