All the small business funding options, compared

Reviewed by Turan Zeynal, Managing Partner, Outset Funding Partners · Last reviewed July 17, 2026

TL;DR

US small businesses have seven core funding options: SBA loans, conventional bank loans, online term loans, business lines of credit, merchant cash advances, equipment financing, and invoice factoring. Each is best for a specific combination of speed, cost, and credit qualification. Speed and cost trade against each other — the fastest options are the most expensive, and vice versa.

Quick facts

SBA 7(a): Prime + 2.75–4.75% · 45–90 days · 680+
Bank term loan: 6–12% APR · 2–6 weeks · 680+
Online term loan: 15–45% APR · 3–7 days · 600+
Business LOC: 8–30% APR · 1–8 days · 600+
MCA: 40–120%+ effective · 1–3 days · 500+
Equipment financing: 6–30% APR · 1–7 days · 580+
Invoice factoring: 1–5% per invoice · 1–3 days · No FICO min

The 60-second answer

There are seven main small business funding products, and the honest way to compare them is on four axes: speed to fund, all-in cost, credit qualification, and what they're actually best used for.

The trade-off across all seven is consistent: faster and easier-to-qualify products cost more. Slower and harder-to-qualify products cost less. There is no product that is both fast and cheap — that's the honest version of the small business funding market.

How it works, step by step

SBA loans (7a, 504, microloan)
Cheapest small business capital. Government-guaranteed portion lets banks offer prime + 2.75–4.75% APR and terms up to 25 years. Slow (45–90 days) and heavy documentation.
Conventional bank term loans
Cheaper than online lenders, faster than SBA. Requires 2+ years, 680+ FICO, strong DSCR. Best for existing bank customers with clean financials.
Online term loans
Faster than banks (3–7 days), easier qualification (600+ FICO, $100K+ revenue). Higher APR (15–45%). Best for businesses that don't qualify for a bank or need speed.
Business lines of credit
Revolving credit for cash-flow smoothing. Bank LOC cheaper and slower; online LOC faster and pricier. Best for recurring or uncertain cash needs.
Merchant cash advances
Fastest option (24–72 hours). Accepts 500+ FICO. Most expensive by effective APR. Best for cash-flow emergencies at businesses with steady daily card revenue.
Equipment financing
Equipment as collateral makes approval easier and terms longer. Startups and bad-credit borrowers have real access. Best when the funding need is specifically for equipment.
Invoice factoring
Sell your outstanding invoices at a small discount for immediate cash. Underwriting is based on your customer's credit, not yours. Best for B2B businesses with net-30/60/90 payment terms.

How to pick without wasting weeks

Cut the option list in half by answering two questions before you look at any product. First, how fast do you need the money — hours, days, or weeks? MCAs and short-term online loans fund in 1–3 days; online LOCs and term loans in 3–7 days; bank LOCs and conventional term loans in 2–4 weeks; SBA in 45–90 days. Second, how long will you actually use the money — under 12 months, 1–5 years, or 5+ years? Working capital products (LOC, MCA, invoice factoring) fit under 12; term loans fit 1–5; SBA and equipment finance fit 5+.

Those two answers alone rule out 70% of products for any given need. From what's left, compare on all-in cost over the specific period you'll hold the balance, not on advertised APR. Fees, prepayment penalties, and daily debits change the real number materially. A "24% APR" term loan with a 5% origination fee and no early-payoff savings held for six months costs roughly the same as a "35% APR" LOC drawn for the same period — and the LOC gives back the flexibility.

One useful shortcut for owners who don't want to think about this: a matched-fit funding marketplace does the product elimination for you in one pass, then quotes only the products your profile actually qualifies for.

Pros and cons

Pros

✓Every credit tier has real options
✓Every speed need has real options (24 hours to 90 days)
✓Every use case has a matching product
✓Debt-only funding preserves equity
✓Multiple products can be stacked strategically (though not casually)

Cons

×No product is both fast and cheap
×Personal guarantee required on nearly all small business funding
×Choosing the wrong product is a five-figure mistake for many businesses
×Stacking products without a plan causes defaults
×Slow options require patience most businesses don't have in a crisis

Who qualifies

•See individual product pages for specific criteria
•General floors: 6+ months in business, $10K+ monthly revenue, US bank account
•Best rates: 680+ FICO, 2+ years, $500K+ annual revenue, positive DSCR

Choose by scenario

Option	When to use	Watch out for
Need cash in 24 hours	MCA	Highest cost by far
Need $250K for equipment	Equipment financing or SBA 504	SBA cheaper but 60–120 days
Cash flow gaps every 30 days	Business LOC	Chronic gaps signal a bigger issue
$50K–$500K for growth, can wait 60 days	SBA 7(a) or bank term loan	SBA cheapest; conventional faster
B2B, waiting on net-60 invoices	Invoice factoring	Customer credit matters more than yours
550 FICO, need working capital	MCA or invoice factoring	Bad-credit funding is materially pricier

Frequently asked questions

What's the cheapest small business funding available?

SBA 7(a) loans (prime + 2.75–4.75% APR) are the cheapest broadly-available small business funding. SBA 504 for real estate can be even cheaper on the CDC portion (fixed rates on 25-year terms). Both take 45–120 days to close.

What's the fastest small business funding?

Merchant cash advances — often same or next business day for approvals before mid-afternoon ET. Online LOCs and short-term loans fund in 1–3 days. Equipment financing typically 3–7 days.

Can I combine multiple funding products?

Yes, and most established small businesses do. A typical stack: business credit card for small expenses, LOC for cash-flow smoothing, term loan for growth investments. The mistake is stacking similar products (multiple MCAs, multiple short-term loans) without a repayment plan.

How do I know which product I qualify for?

Check the qualification thresholds for each: SBA needs 680+ FICO and 2+ years. Bank loans same. Online loans 600+ FICO and 6+ months. MCA 500+ FICO and 6+ months. Equipment financing 580+ FICO. Invoice factoring often no personal FICO minimum.

Do I always need a personal guarantee?

For small business funding, almost always. The SBA requires a personal guarantee from any owner with 20%+ equity. Bank and online lenders typically require one for loans under $5M. Only very large or very established businesses can borrow without one.

Should I use a broker or apply directly?

It depends. Direct application to your bank or a specific lender is fine when you know what you want and qualify comfortably. A broker or marketplace helps when you're unsure which product fits, want to compare multiple lenders with one application, or have complicated circumstances. Verify the broker's fees and how they're paid.

Sources

Explore more

Ready to see your real options?

Get matched with funding partners in our network. Fast pre-qualification, no hard credit pull, no obligation.

Check funding options