15 of the best loans for small business owners


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Small business owners often rely on various types of business loans to help them manage cash flow, cover daily expenses, expand, remodel, or invest in equipment or property. Many factors contribute to the type of small business loan you choose, including your industry, how much cash you need, your business’s financials, and what you need funding for.With many business loan options to choose from, how can you decide which one is right for you? In this guide, we’ll break down 15 types of small business loans to help you choose the funding that will help you meet your business and financial goals.

1. Term Loans

Many of the business loan types available come in the form of term loans. With these loans, you receive a sum of money upfront and agree to repay the funds, with interest, over a set period of time. Banks and alternative lenders offer term loans in varying amounts depending on the type of business loan, applicant’s qualifications, and terms and conditions. There are long- and short-term business loan options available. What you receive will depend on your business needs and qualifications. Typically, long-term business loans are more difficult to qualify for since they present more risk to the lender.

Advantages: Predictable payments over the life of the loan and higher borrowing amounts.

Disadvantages: May require collateral to secure the loan.

Who it’s good for: Small businesses with good credit and a desire to expand.

2. SBA Loans

An SBA loan is guaranteed by the U.S. Small Business Administration and offered by approved sources, including banks and some online lenders. The SBA has numerous loan programs with loan amounts up to $5 million available for everything from working capital to commercial real estate investments.

Advantages: High borrowing amounts and low interest rates.

Disadvantages: May be difficult to qualify and the application process can be lengthy.

Who it’s good for: Borrowers with strong credit who don’t need cash quickly.

3. Business Line of Credit

A business line of credit is a type of business funding that gives borrowers access to cash up to a set credit limit determined by the lender. Like a credit card, a credit line charges interest only on the money that you withdraw. Most lines of credit are revolving, while others may end after you’ve spent and paid off the full credit amount.

Advantages: Flexible borrowing for short-term expenses.

Disadvantages: Lower borrowing limits and typically higher interest rates.

Who it’s good for: Businesses that need funding for small ongoing expenses, assistance managing cash flow, or emergency expenses.

4. Equipment Financing

An equipment loan can be used to purchase or upgrade necessary business equipment. The equipment acts as collateral for the loan, and the length of the loan is often equal to the expected lifespan of the equipment. Rates vary depending on the type of equipment and your business’s qualifications.

Advantages: Allows small businesses to build equity without having to put down additional collateral.

Disadvantages: Loan can only be used for the purchase of equipment.

Who it’s good for: Small businesses that want to invest in equipment rather than lease.

5. Merchant Cash Advance

Like a business line of credit, a merchant cash advance offers a borrower cash upfront, but payments are made to the lender with a percentage of future credit card sales. Automatic withdrawals can be set up directly from your bank account on a daily or weekly basis.

Advantages: Fast cash, often within 24 to 48 hours of applying.

Disadvantages: Frequent payments with potentially high fees; lack of regulatory oversight could result in undesirable lending practices.

Who it’s good for: Borrowers that struggle to qualify for other types of business loans.

6. Inventory Financing

Inventory financing loans are asset-based and used to purchase necessary inventory, maintain consistent cash flow, or support working capital. The inventory serves as collateral and lenders base financing on a percentage of the inventory’s value.

Advantages: Helps prep for seasonal highs with no need for additional collateral.

Disadvantages: May require assessments (with fees).

Who it’s good for: Small businesses with high inventory turnover or seasonal demands.

7. Invoice Factoring

Invoice factoring allows you to get fast cash upfront in exchange for unpaid customer invoices, which the factoring company is then responsible for collecting. This type of business loan can help B2B companies that deal in customer invoices and irregular billing cycles maintain regular cash flow.

Advantages: You don’t have to wait for customer invoices to be paid for access to business funding.

Disadvantages: Can be costly and you don’t control collection practices.

Who it’s good for: Small businesses that process invoices regularly and have customers who reliably pay their invoices.

8. Online Business Loans

Online business loans are types of alternative business loans offered by lenders that aren’t traditional banks or credit unions. The types of small business loan products vary from lender to lender, but they typically have a quick application and approval process.

Advantages: Usually have a speedy application and approval process.

Disadvantages: May have higher costs than a traditional bank loan. 

Who it’s good for: Small businesses who want more business loan options and faster funding.

9. Microloan

Microloans are business loans, typically for $50,000 or less, that are often given by nonprofit organizations or mission-based lenders. These can be great types of loans to start a business or for newer businesses in underserved communities. 

Advantages: Credit requirements tend to be low and microloans may come with additional services, such as counseling.

Disadvantages: Lower borrowing amounts typically with above-market interest rates.

Who it’s good for: Startups and newer businesses that don’t have established business history.

10. Commercial Real Estate Loan

A commercial real estate loan is used to purchase or improve a building or property that’s used for business purposes. Getting one may help a small business expand their business and build equity.

Advantages: Business loan options designed specifically for commercial real estate needs.

Disadvantages: Can be difficult to qualify for.

Who it’s good for: Established small businesses who want to transition from leasing to owning their commercial property or expand their business.

(Learn more: Personal Loan Calculator

11. Working Capital Loan

A working capital loan can be any type of loan product used to cover everyday expenses, such as payroll, monthly bills, and repairs. These are common loan types for small businesses that need assistance managing cash flow fluctuations as they build their business. 

Advantages: Quick access to funding for maintaining positive cash flow. 

Disadvantages: Short-term and, depending on the type of financing, may be more costly than a longer-term option.

Who it’s good for: Small businesses with seasonal revenue or ones that want to expand and need cash to handle daily expenses during growth.

12. Restaurant Loans

Restaurant loans can be helpful in starting, expanding, or supporting various aspects of a restaurant business. These types of business loans can be from traditional banks, alternative lenders, or P2P lenders, and they come in a variety of forms, including term loans, business lines of credit, equipment loans, etc.

Advantages: Numerous business loan options to choose from.

Disadvantages: You need financial stability to ensure repayment of long-term loan options.

Who it’s good for: Startups and established restaurants that want to expand, remodel, or manage cash flow during business fluctuations.

13. Franchise Financing

Franchising loan options are offered by a number of sources, including traditional banks, online lenders, franchise financing companies, and sometimes even the franchisors themselves. These types of business loans can help to cover the many costs associated with opening a franchise location. Advantages: Loans may be easier to obtain than they are for an independent small business.Disadvantages: It may be expensive to start a business under a larger franchise.Who it’s good for: New franchise owners who need help covering franchise fees and other startup costs.

14. Peer-to-Peer Lending

Peer-to-peer (P2P) business lending allows borrowers to get funding directly from other individuals (lenders), eliminating the need for a financial institution to act as a middleman. Borrowers and lenders can quickly connect using online platforms that facilitate the entire loan process. 

Advantages: Quick and easy access to funding that may be easier to qualify for; potentially lower APRs compared to traditional lenders.

Disadvantages: Less regulation compared to traditional loan types, and application review is based largely on personal credit score.

Who it’s good for: Small businesses that don’t qualify for other types of small business loans.

15. Alternative Lending Options

Alternative small business loans are any offered by lenders other than a traditional bank or credit union. This category  may include:

  • Crowdfunding
  • Angel investors
  • Venture capitalists
  • Contributions from friends and family
  • Grants 

Advantages: Many alternative business loan options are faster to get than traditional loans.

Disadvantages: Depending on the type of loan, borrowing limits may be lower and interest rates higher.

Who it’s good for: Small business startups or borrowers with poor credit who don’t qualify for a bank or SBA loan

Choosing the Right Loan for Your Business

As you consider different types of business loans, take the time to assess your business. The following five questions can help you clarify your needs and qualifications so you can start to narrow in on the types of business loans that may be right for your operation.

1. What industry is your business in?

Certain types of small business loans are better suited for certain industries, and some lenders have rules about which industries they will lend to. For example, some lenders choose not to lend to cannabis companies, and some types of loans, like invoice factoring, are typically better suited for B2B operations. Check that potential lenders work within your industry before applying.

2. How much funding do you need?

Know how much money you need before choosing a loan type or a lender. If you are planning on making specific purchases or renovations, you may want to get pricing or estimates. This will show a lender that you understand your business needs and also help narrow your search to loans that match your funding needs. 

3. What are manageable loan terms for your business?

Loan terms can refer to different things. Most often, loan terms refer to how long the loan repayment period will last if you’re making timely payments to your lender. Ask yourself if your business is in a position to take on long-term loans, or if you should consider short-term options. 

A term loan, for example, sets a specific amount of time. If you have a five-year loan term, that means you’ll be making regularly scheduled payments for five years. The term also affects your monthly payment.  Typically, the longer the term, the lower the monthly payment. However, with long-term loans, more interest is paid over the life of the loan than with short-term options.

Loan terms can also refer to additional features or business loan options that come with the loan. When you search for lenders, ask questions about additional terms and conditions on the loan to make sure it aligns with your needs and ability to pay. 

4. How soon do you need money?

How quickly you need funding may influence how expensive a particular type of business loan is for you. Typically, the faster you get the money, the more expensive the loan, due to interest rates and fees. Essentially, you pay extra for the convenience of getting the money quickly. If you’re able to wait, it may help you secure a less expensive loan. 

5. What are the costs of different business loan types?

The cost of a small business loan goes beyond interest rates and monthly payments. While those are important in determining if you can responsibly pay back the loan, it’s also good to know if the type of business loan you choose has additional costs.These may include:

  • Origination fees
  • Prepayment penalties
  • Balloon payments
  • Late payment fees
  • Factoring fees
  • Monthly service fees
  • SBA guarantee fees

Do your research to ensure you understand all of the costs associated with the type of business loan you’re interested in so there aren’t any unpleasant surprises down the road.

The Takeaway

Trying to figure out your best option for securing a small business loan can feel overwhelming. We’re here to help you spend less time on the loan search and application process so you can spend more time taking care of your business. 

This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.

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11 women-focused business grants

11 women-focused business grants

Women are a core pillar in business, but in far too many cases women face inordinate challenges and find themselves behind their male counterparts based on several measures when it comes to business ownership and incomes. While there are many incredibly success entrepreneurs that come to mind when discussing women in business, women remain underrepresented at the workplace and often earn less than their male counterparts for the same work. These 11 grants are doing something to solve that problem. If you are a woman looking to start or grow a business, these female-focused business grants may be just what you need to get to the next level.

The Eileen Fisher Women-Owned Business Grant is one of the best known women focused grant programs around. Since 2004, this grant program has helped women-owned companies that are already beyond the startup phase expand their business, with attention paid to social and environmental impact.

Eileen Fisher is a women’s clothing brand, and it awards $100,000 in annual grants. Up to 10 recipients get at least $10,000 injected into their business. Learn more at Eileen Fisher.

The Small Business Association, or SBA, is responsible for the InnovateHER Challenge. This competitive process goes back to 2015, and awards three InnovateHER Challenge awards ranging from $10,000 to $40,000. Applicants go through a rigorous process, and ten finalists get major press coverage through the SBA.

InnovateHER is managed by the Office of Women’s Business Ownership, a great resource for any woman looking to start or grow a business. Learn more about the InnovateHER Challenge here.

The Amber Grant is a monthly $500 grant, with opportunities to qualify for larger grants in some rare cases. While the dollars are not as big as the five-figure award you may be after, every dollar counts. Women can apply at the Amber Grants for Women website, and winners are picked from a judging panel from WomensNet.

This grant started in 1998 when a 19-year-old young woman named Amber passed away before reaching her entrepreneurship dreams. The grant is designed to help women reach that same goal in her honor.

While the FedEx Small Business Grant isn’t exclusively for women, the sponsoring company makes a point to fairly distribute awards between men and women. 10 winners total take home a price, up to $25,000 for first place. Winners also get access to free FedEx Office print and copy services on top of their cash prize.

This grant recognizes “incredible small businesses from across the country.” If you are a woman that runs such a business, make sure to apply! Learn more at FedEx.

Idea Cafe offers grants of $1,000. The quick and easy grant application is highly competitive, but if you have a great business idea that is “ground-breaking or a simple, but yet creative solution to an everyday problem, [Idea Cafe] would like to hear about it.”

This one is not specific to women, like the FedEx grant, but is very friendly to women applicants. The last three winners are women, as a matter of fact. Learn more and apply.

The American Association of University Women, or AAUW, offers Community Action Grants for one or two year community-based projects. These grants are more focused on education than general business ownership and entrepreneurship, but if your business idea overlaps with any clearly defined activity that “promotes education and equality for women and girls,” you are in the running.

This grant is part of a long string of funding going back to 1972. As it comes from a women’s organization, it is only fitting that this grant is woman focused. Recent winners include programs like ECO Girls, a Michigan based organization that seeks to connect minority girls with the environment through a unique and exciting program.

The Cartier Women’s Initiative Awards seek to advance female entrepreneurs all across the world, including North America. They will review all applicants and choose 21 finalists, who will receive personalized business coaching prior to Awards week, media visibility, and a scholarship to attend the INSEAD Social Entrepreneurship 6-Day Executive Programme.

From the pool of 21 finalists, 7 laureates will be chosen and will each receive $100,000 in prize money along with one-on-one mentoring, while the 14 remaining will receive $30,000. Get more information and apply with Cartier Women’s Initiative Awards

Open Meadows Foundation grants are biannual awards of $2,000. The grant is awarded to smaller organizations with an operating budget of under $75,000 per year. Grants are specifically for women-led projects that benefit women and girls.

The foundation looks for projects that are designed and implemented by women and girls, and focus on building community. Those with limited financial access have the best odds of taking home the prize. Learn more at the Open Meadows Foundation website.

This women-focused grant is also industry-focused. The Halstead Grant is an annual grant awarded to an exceptional jewelry designed working in silver. For 2018, the winner takes home $7,500 and $1,000 in supplies, plus a trip to Halstead’s offices in Prescott, Arizona.

This grant is certainly not for everyone, but it is great for women working with silver jewelry. If that sounds like you, learn more and apply.

A group of women investors came together to create 37 Angels. They recognize that just 13 percent of angel investors are women, and work to bring that to 50 percent. 37 Angels grants come with an accelerator program to bring your entire business to the next level.

While the capital inflow comes in the form of an investment, not a grant, it could be just what your business needs to grow and succeed. Learn more at 37 Angels.

Belle Capital offers investments in early stage, women-led companies. Like 37 Angels, they want a return on their investment. The Belle Capital fund is targeted to invest in 10 to 15 high growth companies. Like other venture capital firms, they want to participate and bring expertise to help the business grow. This is no handout.

Learn more at Belle Capital, including the strict investment criteria. They are looking for businesses that can reach $20 million in revenue within five years. 

Women in business have more opportunities than ever before. With these grants, you have a little more ammunition to reach the next level in your business adventure. If you are looking for additional grant opportunities, be sure to read our list of small business grants for general audience.Keep in mind that business isn’t all about grants. While they help, remember to focus on your revenue, bottom line, and business credit score (check yours for free with Nav) to keep other borrowing and capital opportunities available to your and your business.

This article first appeared on Nav.com and was syndicated by MediaFeed.org.

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