Small Business Loan Guide: Types, Qualification & Best Options
Compare SBA loans, term loans, lines of credit, and equipment financing for small business owners.
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Key Takeaways
- 1SBA 7(a) loans offer up to $5M with government-backed lower rates.
- 2Lenders evaluate credit score, revenue history, time in business, and cash flow.
- 3Lines of credit suit variable cash needs; term loans suit one-time investments.
- 4Prepare 2+ years of tax returns, P&L statements, and a business plan.
Small business loans fuel growth — inventory, equipment, hiring, or expansion. The right loan type depends on how much you need, how fast, and what collateral you can offer.
Compare total borrowing costs with our loan comparison calculator.
Types of Business Loans
SBA 7(a): government-guaranteed, up to $5M, best rates for established businesses. SBA Microloans: up to $50,000 for startups. Term loans: fixed amount, fixed repayment schedule.
Business lines of credit: draw as needed, pay interest only on used amount. Equipment financing: the equipment itself serves as collateral.
How to Qualify
Most lenders want 680+ credit score, 2+ years in business, and $100,000+ annual revenue. Startups may need SBA microloans or personal guarantees.
Improve your chances by fixing credit issues first — see how to improve credit score.
Application Tips
Prepare: 2 years tax returns, profit & loss statements, balance sheet, business plan, and use-of-funds statement. Apply to multiple lenders within 14 days to minimize credit score impact.
Side hustlers transitioning to full-time business should read budgeting with side income for cash flow management.
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