Lending Library

A business line of credit can be one of the most flexible financing solutions available for small business owners. Business lines of credit give you the freedom to draw funds as needed, repay what you use, and borrow again when your company needs access to more cash. Yet before you apply for this useful funding tool, it’s crucial to understand that not all lines of credit work the same way. 

Most lenders offer two primary types of business credit lines: secured and unsecured. The key difference between these financing options has to do with a term known as collateral. When you open a secured line of credit, the lender requires you to provide business (or sometimes personal) assets to back the loan— these assets are collateral. With an unsecured credit line, the money you borrow depends on overall creditworthiness, including your business and personal credit scores, instead. 

Both options have benefits and tradeoffs. Knowing how they work and which solution aligns best with your company’s financial situation can help you make a smart funding choice. Use the guide below to learn what sets secured and unsecured business lines of credit apart, the pros and cons of both types of credit lines, and how to decide which option is the best fit for your funding goals.

Comparing secured and unsecured business lines of credit.

A business line of credit works like a reusable financial safety net—similar to a business credit card in several ways. When you open a new business credit line, the lender sets a credit limit for the account and you decide how and when to draw funds. You also only pay interest on the money you borrow, not the total available credit limit. This structure can make credit lines a great fit for managing cash flow, covering payroll, or handling unexpected expenses. 

Learn more about how a business line of credit works.

Business lines of credit fall into one of two categories: secured or unsecured. The difference between these options comes down to collateral, and that important detail shapes your approval odds, borrowing limits, and cost of financing.

What is a secured business line of credit? 

A secured business line of credit lets you borrow against assets your company already owns or, in some cases, against personal assets. When you open the credit line, you pledge collateral such as real estate, equipment, vehicles, or accounts receivable. The lender evaluates the assets and sets your credit limit based on their value, your financial strength, and other details. 

Collateral provides the lender protection and lowers its risk in the event of a default. If you stop making payments, the lender can take or sell the pledged assets to recover some (or all) of the outstanding balance on your debt. Because this structure reduces the lender’s risk, secured credit lines often feature lower interest rates, higher credit limits, and more flexible repayment terms. But the approval process may take longer due to the need for asset valuation.

Secured credit lines can be helpful for newer companies and startups. This type of financing can also be useful if you’re working to build business credit and for business owners who want to borrow larger amounts at lower rates. For example, a trucking company might use its commercial fleet as collateral to secure a credit line with a higher limit and lower borrowing costs. 

In general, secured credit lines work best for business owners who: 

• Own high-value assets or property.
• Place a priority on lower interest rates, higher credit limits, or longer repayment terms. 
• Need to build or strengthen business credit.

What is an unsecured business line of credit?

An unsecured business line of credit gives you access to financing without pledging collateral. Instead of reviewing assets, lenders evaluate your creditworthiness (including personal and business credit scores, annual revenue, cash flow trends, and repayment history).

Because lenders take on more risk, some unsecured credit lines may feature smaller credit limits, higher interest rates, and shorter repayment terms. The qualification requirements for an unsecured credit line may also be stricter. And it’s common for lenders to require a personal guarantee, which connects repayment to your personal credit. However, approval and funding speeds tend to be faster with this type of financing.

Unsecured lines of credit may appeal to established businesses that want quick access to cash without risking assets like equipment or property. For example, a marketing agency with strong monthly revenue and an excellent credit score could use an unsecured credit line to gain quick access to working capital for managing payroll between client payments.

An unsecured business line of credit may work well for businesses who: 

• Have excellent credit and stable revenue. 
• Need smaller credit limits and short-term funding solutions to stabilize cash flow. 
• Prefer to avoid pledging business or personal assets.

Secured vs. unsecured lines of credit.

Below is a side-by-side comparison of secured and unsecured business lines of credit so you can compare the key features of these popular financing options at a glance.

Weighing the benefits and risks: What each option means for your business.

Every financing decision comes with tradeoffs. So, it’s important to carefully consider the pros and cons of each option (secured and unsecured credit lines) before you choose the path that’s right for your business. Both financing options can support cash flow, operations, and growth. But the selection you make will influence your costs and risk exposure.

Interest rates and fees

Providing collateral reduces lender risk. So, lenders typically offer competitive, lower rates on secured credit. Unsecured credit, by contrast, tends to cost more because lenders assume additional risk. In fact, some lenders may be more likely to add on annual or maintenance fees for unsecured credit lines or other unsecured business loans.

Learn more about average interest rates for business lines of credit.

Asset impact and liability 

A secured credit line requires collateral, which puts your business or personal assets on the line if your company doesn’t repay its debt. If you default, the lender can take the pledged collateral. An unsecured credit line protects your assets, but often features a personal guarantee which can have a negative impact on your personal credit if the business fails to repay. This type of past due debt could harm your credit for many years into the future (possibly up to seven years).

Pros and cons

Secured line of credit

• Pros: Lower interest rates, higher credit limits, easier approval criteria
• Cons: Collateral risk, slower funding speed

Unsecured line of credit

• Pros: No collateral, faster funding, protects assets‍
• Cons: Higher interest rates, smaller credit limits, stricter qualification criteria, personal guarantee

Decision factors: Matching a business line of credit to your situation.

As you compare secured and unsecured business lines of credit, numerous factors may determine the best borrowing solution for your business. Your business goals, financial history, and available resources all have a role to play in the decision making process. 

If you want access to a larger credit line or if you wish to reduce borrowing costs, a secured credit line may serve you better. Meanwhile, for businesses that value fast funding speed and prefer not to risk assets (e.g., equipment, vehicles, property, etc.), an unsecured business line of credit might make the most sense. 

Of course, it’s also important to consider eligibility requirements and the type of credit line you’re more likely to qualify for before you apply. Every business credit line application is different, but lenders commonly evaluate factors such as the following.

• Credit scores: Many lenders require borrowers to have a minimum 600 FICO® Score to be eligible for a business credit line. Unsecured credit lines may feature stricter requirements, especially for larger credit limits. 
• Annual revenue: Minimum revenue requirements are often $100,000 per year, and in some cases as high as $50,000 per month depending on the lender and type of small business loan or line of credit.
• Business age: Some lenders prefer to work with applicants that have been in business for at least one to two years. Yet there are lenders willing to approve borrowers with six months or more of operational history.
• Available collateral: Traditional lenders may prefer for applicants to pledge assets to back their credit lines or loans. Online lenders, however, are often more flexible when it comes to this requirement and may offer more unsecured financing options. 

When to use secured vs. unsecured business lines of credit.

Both types of business credit lines have the ability to be helpful when your company needs a flexible financing solution. See the chart below for a look at several different scenarios and whether a secured or unsecured line of credit makes the most sense.

Remember, strong credit can lower your business line of credit interest rates. But so can offering valuable collateral with a secured credit line. In the end, deciding whether an unsecured or secured credit line is best for your company comes down to identifying priorities and the type of financing you’re more likely to qualify for when you apply.

Bottom line.

A business line of credit can help you manage cash flow, cover expenses, and invest in the growth of your company. But you’ll need to choose which type of credit line makes the most sense for your business. Secured credit lines often reward you with lower interest rates and higher credit limits when you pledge collateral. Unsecured credit lines tend to offer speed and flexibility when you already have strong credit and want to avoid putting assets at risk.

Both options can support your financial goals when you use them responsibly. So, take the time to review your financials, consider your risk tolerance, and compare interest rates and fees before you choose a credit line that works for you. 

From there, explore Lendio’s business line of credit calculator to estimate how much you may be able to afford to borrow and learn how to qualify. When you’re ready, you can compare the best small business lines of credit to review rates, borrowing requirements, and more.

SBA loan rates are tied to a base rate that changes with the market. Lenders can charge borrowers a rate that falls somewhere between the base rate and the maximum set by the government.

Current SBA rate maximums range from 10.00% to 15.00%.

Explore the most popular SBA loan programs and their rate structures to find out which one is the best fit for your company. 

Before we dive in, get familiar with the basics in our SBA loans overview- a great place to start if you're exploring funding options.

How SBA loan interest rates work.

SBA loan rates are regulated by the U.S. Small Business Administration. Private lenders negotiate their own rates with each individual borrower. But the offered loan rate cannot exceed the maximum set by the SBA for each loan program. 

The maximum is tied to a base rate, which can be one of the following:

• Prime rate: The most commonly used rate, currently at 7.00%
• Optional peg rate: Updated quarterly by the SBA based on market conditions, currently 4.75%

The borrower is then charged a markup (a percentage over that base rate). That varies based on:

• Loan amount
• Type of SBA loan
• Loan maturity date

Current SBA loan rates (December 2025).

Here is how each SBA interest rate breaks down, based on the loan program and other details. 

SBA 7(a) loan rates

SBA 7(a) loans can be used for general working capital needs and have interest rates that can either be variable or fixed. Fixed rates have a higher premium but never change, even if the base rate increases over time.

SBA 7(a) rates range from 3% to 8% above the base rate. Use the following table to compare rates for different loan sizes and term lengths. The current (December 2025) Wall Street Journal Prime Rate is 7.00%.

Historical Prime rates

SBA 504 loan rates

SBA 504 loans are designed to purchase assets that help with job creation or business growth, such as new facilities, machinery, or renovating an existing property. These loans are available through certified development companies (CDCs) and offer fixed interest rates.

You can apply for either a 10-year or a 20-year repayment period. The SBA 504 rates are incrementally pegged above the current rates for 5-year and 10-year U.S. Treasury issues. The rate typically totals 3% of the loan amount. 

Historical U.S. Treasury rates

SBA Microloan loan rates

Microloans from the SBA help newer small businesses with startup or expansion costs. Borrowers can get approved for up to $50,000, although the average loan size is $13,000. The maximum repayment term is six years.

Microloan rates are based on the lender’s cost of funds.

Loans over $10,000: 7.75% over cost of funds

Loans of $10,000 or less: 8.5% over cost of funds

Expect SBA microloan rates to range from 8% to 13%. 

SBA Express loan rates

SBA Express loans allow for a shorter approval time, so you can get faster access to capital. In fact, you'll get an initial response within 36 hours. The maximum loan amount is capped at $500,000 and rate maximums are the same as SBA 7(a) loans.

SBA Community Advantage loan rates

The SBA Community Advantage loan program was created to help businesses in underserved markets. These loans were capped at $350,000. Interest rates were negotiated by the lender but were subject to the SBA's maximums. This program was sunsetted in October 2023.

Lenders under this program are now licensed as Community Advantage Small Business Lending Companies in the 7(a) loan program and will continue to provide access to financing to underserved communities.

Typical SBA loan fees

In addition to paying interest on SBA loans, borrowers may also pay an upfront SBA Guaranty Fee.

Upfront fee on SBA 7(a) loans

This fee is based on the approved loan amount, including both the guaranteed and the unguaranteed portions.

To calculate monthly payments for your SBA loan, visit our SBA loan calculator. Need help finding the best interest rate for your SBA loan or other business term loan?

Apply with Lendio today!

You might consider an SBA microloan if you’re trying to start or expand a small business.

But how exactly does getting a microloan through the SBA work? What do you need to meet the requirements? What do terms look like? How do you get started with an application?

We’ll answer  all these questions in more in our guide to SBA microloans. We’ll explain how it all works, highlighting requirements, current interest rates, microloan lenders, alternatives, and how you can apply today.

What is an SBA microloan?

The SBA microloan program consists of small loans funded by the Small Business Administration. However, these loans don't come directly from the SBA to the borrower. Instead, the SBA provides the funds to a network of intermediary lenders, such as community based nonprofit lenders.

This network then provides microloans to eligible small businesses and certain childcare centers. Participants in the nonprofit lender network are selected not only for their experience in lending, but in management and technical assistance as well, so that these intermediaries can administer the microloan program effectively.

SBA microloans provide financing to traditionally underserved businesses, such as startups, women-owned companies, and minority-owned businesses.

Eligible businesses can borrow up to $50,000, but according to the SBA, the average microloan is around $13,000.

What can SBA microloans be used for?

Microloans can be used for many purposes, affording small businesses flexibility when needing to rebuild, re-open, repair, or improve their business.

Seeking an SBA microloan might be a solution if you are looking to:

• Access working capital
• Purchase or replenish inventory or supplies
• Replace or purchase furniture or fixtures in your business
• Purchase new machinery, or secure equipment upgrades

However, you can not use an SBA microloan to pay existing debts, settlements of lawsuits, trade disputes, fines or penalties, or purchase real estate. You also can’t use the SBA microloan for personal, non-business use.

SBA microloan requirements

The SBA microloan loan program is geared for early-stage businesses and startups, but all for-profit small businesses and certain nonprofit childcare centers are eligible.

Because SBA microloans target early-stage businesses and underserved business segments, the requirements for qualification are less stringent than other types of traditional loans. Even if you have limited credit history or lower income, you may qualify.

Of course, each intermediary lender will have its own eligibility requirements, but most will ask for some or all of the following:

• Collateral and/or a personal guarantee from the business owner
• Minimum credit score - 620 or higher is good to have, but intermediary lenders may accept lower scores
• Owner’s Personal finance history
• Business finance history, with current cash flow or cash flow projections
• A certain location within the lenders geographic service area
• A minimum amount of time in business

SBA microloan rates, fees and repayment terms.

Although the SBA places certain restrictions on intermediary lenders, such as not exceeding $50,000 in loan amounts, interest rates and fees are up to your specific lender.

The interest rates will vary depending on your lender, but they typically range between 8% and 13%. And repayments terms are available for up to seven years.

SBA microloans also cannot be made as a line of credit - the microloan is structured as a term loan.

Pros and cons of SBA microloans

Pros

• Easier to qualify for: If you’re a startup or don’t have much business history, it can be hard to qualify for a business loan. Microloans, on the other hand, come with less stringent requirements, having been built to provide financing to businesses that traditionally struggle to find funding. 
• Faster funding: If you apply for a traditional SBA loan, the application and funding process can take months to complete. In comparison, you could receive funding through your microloan in just 30 days. 
• Low interest rates: Like all SBA loans, microloans come with low interest rates. The rates will vary depending on your lender, but the average rate is between 8% and 13%.
• Flexible loan terms: SBA microloans come with repayment terms of up to 7 years, so your monthly payments are more affordable. 

Cons

• Small loan amounts: If you need to borrow more than $50,000, the microloan program might not be the best option for you. 
• Spending restrictions: SBA microloans do come with certain spending restrictions. For instance, you can’t use the funds to pay down existing debt or purchase real estate. 
• Lenders may charge fees: The SBA caps its fees, but individual lenders can charge their own fees. For instance, you may have to pay an application fee, loan processing fee, or closing costs.
• Availability is limited: Since SBA microloans are offered by nonprofit intermediary lenders, these loans can be harder to find. These lenders don’t have the resources and staff that larger lenders have, so these loans might not be available in your area.

Finding SBA Microloan Lenders

The SBA has hundreds of lending partners located across the country, and provides a comprehensive list of microloan lenders to help you find a match. 

Most lenders will require you to either speak to a lending specialist over the phone or apply in person. 

The lender you work with will inform you about any necessary paperwork and documentation to apply. In addition, some lenders may require that you complete a workshop or training program as part of the application process. 

As part of your paperwork, you’ll need to provide a range of information, including:

• Proof of identity
• Description of collateral
• Balance sheet data (income and expenses)
• Personal and business tax records
• Business details (industry, licensing, assets, leases, etc.)

Once you’ve submitted all the required paperwork, your application is complete, and your lender will review and process the loan.

Alternatives to SBA microloans

If you’re not sure if an SBA microloan is the right fit for your business, here are some alternatives to consider:

• SBA 7(a) loans: SBA 7(a) loans are a good choice for businesses that need larger loan amounts. These loans are available for up to $5 million, but the qualification criteria are more strict. 
• Business credit cards: A business credit card can be used for any business purchase, and the application process is relatively easy. If you go this route, look for a card with an introductory 0% APR. 
• Invoice factoring: If you have a lot of cash tied up in your unpaid invoices, invoice financing allows you to leverage your outstanding invoices to get access to capital. 

The bottom line

SBA microloans can help startups and small businesses access the capital they need. These loans are a good option for traditionally underserved borrowers, like women and minorities, or low-income community businesses. If you’re interested in exploring your loan options, you can use Lendio to quickly compare loan offers from multiple lenders.

An SBA 7(a) loan is a government-backed small business loan that provides up to $5 million in flexible financing for working capital, equipment, real estate, and business expansion.
The U.S. Small Business Administration (SBA) guarantees a portion of each loan to reduce lender risk, making capital more accessible for qualified businesses. Created under Section 7(a) of the Small Business Act, this program is widely used for growth initiatives, business purchases, and refinancing existing debt.

When to use an SBA 7(a) loan.

SBA 7(a) loans are designed to support a wide range of business needs, especially those that improve long-term financial health or strengthen the business’s ability to grow.

Loan proceeds can be used for working capital, expansion, equipment, real estate, acquisition, or refinancing existing debt under qualifying conditions.

What SBA 7(a) loan funds can be used for.

Working capital and operations

• Operating expenses
• Inventory purchases
• Seasonal cash-flow gaps

Equipment and asset purchases

• Purchasing new or used equipment
• Equipment installation and upgrades
• Buying furniture, fixtures, technology, or supplies

Real estate projects

• Purchasing owner-occupied commercial real estate
• Refinancing existing owner-occupied real estate
• Building a new facility
• Renovating or expanding an existing property

Business acquisition or expansion

• Buying an existing business
• Funding startup costs (in eligible cases)
• Expanding a current business
• Changes of ownership, when structured and SBA-approved
• Multiple-purpose loans, such as partial acquisition and working capital

Refinancing existing business debt

SBA 7(a) loans can consolidate or refinance business debt when the refinancing improves cash flow or meets SBA benefit requirements.

What SBA 7(a) loan funds cannot be used for.

Loan proceeds from SBA 7(a) loans cannot be used for purposes that do not benefit the business directly, or do not meet the SBA’s lending standards. Ineligible uses include:

• Paying off or refinancing an existing SBA loan
• Buying out a partner, unless part of SBA-approved ownership change structure
• Paying delinquent federal or state withholding taxes
• Payments or distributions to business owners that do not serve a business purpose
• Any purpose that the SBA deems not sound, speculative, or primarily personal

Eligibility requirements for SBA 7(a) loans.

Most U.S. small businesses can qualify for an SBA 7(a) loan if they meet SBA standards for location, business purpose, size, and creditworthiness. The SBA sets nationwide rules for who is eligible, while individual lenders may have additional requirements. Your business must meet all of the following SBA criteria to be eligible.

1. Business type and status

• Must be a for-profit business
• Must be actively operating
• Must operate within the United States or U.S. territories‍
• Must be in an eligible industry

2. Business size standards

Must meet the SBA’s definition of a small business. The SBA defines a small business based on industry-specific size standards that consider factors like annual revenue and number of employees.

3. Ability to repay

• Must demonstrate sufficient cash flow to support loan payments
• Personal credit history and business financials must show responsible borrowing behavior

4. Equity and owner participation

• 100% of direct and indirect owners and guarantors must be U.S. citizens, U.S. nationals, or lawful permanent residents ("green card" holders)
• The business must show reasonable owner equity investment
• Owners with over 20% ownership must provide:
  • Unlimited personal guarantee
  • Financial disclosures

5. Use of proceeds

• SBA loan proceeds must be used for sound business purposes
• Must not be used for ineligible or personal purposes (see When to Use an SBA 7(a) loan)

6. Exhaustion of other financing options

Borrowers must demonstrate that they are unable to obtain credit elsewhere on reasonable terms.

Ineligible businesses.

Certain business types cannot qualify for SBA loans, including:

• Nonprofit organizations
• Financial businesses primarily engaged in lending
• Real estate investment firms not occupying property
• Businesses engaged in illegal activities
• Pyramid sale distribution plans
• Certain restricted membership organizations, such as private clubs
• Speculative or investment-based ventures

Common disqualifiers for SBA 7(a) loans.

A borrower may be ineligible for a 7(a) loan if:

• The business or owner has delinquent federal debt
• The owner has recent criminal activity (the SBA evaluates case-by-case)
• The business cannot demonstrate ability to repay
• Loan proceeds would be used for ineligible purposes
• Insufficient equity injection for acquisition or startup funding
• Some or all of the owners or guarantors are not U.S. citizens, U.S. nationals, or lawful permanent residents

Lender-driven requirements for SBA 7(a) loans.

In addition to the SBA program rules, lenders typically layer on additional requirements:

• Minimum personal credit score (often 640-680+)
• Minimum time in business (often 2+ years, but this can vary)
• Minimum revenue thresholds
• Collateral requirements for loans over a certain size
• Bank statement health, including consistent cash flow

These requirements are not SBA rules, but instead are lender underwriting standards.

Learn more about SBA loan eligibility

For a deeper breakdown, including full disqualifier lists, industry restrictions, and eligible use of proceeds, read our complete guide to SBA loan eligibility requirements.

Types of SBA 7(a) loans.

The SBA offers several loan programs under the 7(a) umbrella, each designed to serve different business needs. These factors include loan size, speed of funding, working capital structure, or international trade.

When choosing a 7(a) loan type, consider:

• How much funding you need
• How quickly you need the funds
• Whether you need a term loan, or line of credit
• Your intended use of the loan proceeds

Below is an overview of the primary SBA 7(a) loan types, followed by a explanations of each.

Standard SBA 7(a) loan

The standard 7(a) loan is the SBA’s most common and flexible loan option.

Best used for:

• Working capital
• Equipment and supplies
• Owner-occupied real estate
• Business expansion or acquisition

Key features:

• Loan amounts from $350,000 to $5 million
• SBA guarantees 85% of loans up to $150,000 and 75% for larger loans
• Collateral is required
• SBA provides final approval before issuing a loan number

7(a) small loan

The 7(a) small loan is designed for businesses that need a smaller amount of financing, but want the benefits of SBA backing.

Key features:

• Maximum loan amount: $350,000
• Same guarantee structure as Standard 7(a) loans
• No collateral required for loans under $50,000
• Faster processing compared to larger SBA loans

SBA Express loan

The SBA Express loan prioritizes speed and convenience, with much faster approval and processing times than traditional 7(a) loans.

Best used for:

• Businesses that need faster access to capital

Key features:

• Maximum loan amount: $500,000
• SBA guarantee: 50%
• Lenders make eligibility, credit, and collateral decisions under delegated authority from the SBA
• Response time of 36 hours or less

Export-focused SBA 7(a) loans

The SBA offers three specialized 7(a) programs to support businesses involved in international trade.

Export Express loan

A streamlined option for businesses entering or expanding export operations.

Key features:

• Maximum loan amount: $500,000
• SBA guarantee:
  
  • 90% for loans up to $350,000
  • 75% for larger loans
• Can be structured as a term loan or revolving line of credit
• Lines of credit may last up to 7 years
• 24-36 hour response time

Export Working Capital Program (EWCP)

Designed to fund working capital directly tied to export sales.

Key features:

• Loan amounts up to $5 million
• SBA guarantee: 90%
• Working capital terms up to 10 years
• Equipment financing up to the useful life of the asset (max 15 years)
• Real estate terms up to 25 years

International Trade loan

Built for businesses that need to expand exports or modernize operations to compete internationally.

Key features:

• Loan amounts up to $5 million
• SBA guarantee: 90%
• Working capital terms up to 10 years
• Equipment financing up to the useful life of the asset (max 15 years)
• Real estate terms up to 25 years

SBA CAPLines

CAPLines are SBA-backed revolving lines of credit designed for businesses with cyclical or short-term working capital needs.

General features:

• Loan maximums and guarantees align with Standard 7(a) loans
• Structured as lines of credit rather than lump-sum loans

Types of CAPLines

Working Capital CAPLine

For businesses with accounts receivable and/or inventory that needs asset-based financing.

Contract CAPLine

For businesses performing work under contracts, covering costs tied to specific projects.

Builders CAPLine

For construction contractors and builders financing residential or commercial projects.

Seasonal CAPLine

For businesses with predictable seasonal revenue cycles. These businesses must demonstrate prior seasonal patterns to qualify.

7(a) Working Capital Pilot (WCP) program

The WCP program offers monitored, asset-based lines of credit for certain industries.

Key Features:

• Loan amounts up to $5 million
• Available to businesses in manufacturing, wholesale, and professional services
• Requires at least one year of operating history
• Requires detailed financial reporting, including inventory and receivables
• SBA guarantee aligns with standard 7(a) loans

SBA 7(a) loan rates, fees, and repayment terms.

SBA 7(a) loans are structured to support long-term small business growth, with interest rates, fees, and repayment terms designed to balance affordability with lender risk. While the SBA sets maximum limits, the final loan terms are determined by the lender based on borrower qualifications and loan structure.

SBA 7(a) loan interest rates

SBA 7(a) loan interest rates are set by the lender, not the SBA. Rates are based on factors such as:

• Creditworthiness
• Loan amount
• Repayment term
• Business financial strength

Borrowers may accept, reject, or sometimes negotiate the offered rate with the lender.

How SBA 7(a) interest rates are calculated

Most SBA 7(a) loans use a prime-based interest rate, which may be fixed or variable.

Interest rate formula:

Prime Rate + Lender Markup (capped by the SBA)

As of December 3, 2025, the prime rate is 7.00%. The SBA allows lenders to add a markup, but caps how high the total interest rate can be, depending on loan size and repayment term.

Want current SBA rate caps?

For exact SBA 7(a) rate ranges, monthly caps, and a full explanation of how your rate is calculated, see our guide to SBA loan interest rates.

SBA 7(a) guarantee fees

In addition to interest, SBA 7(a) loans require a one-time SBA guarantee fee. This fee helps offset the cost of the SBA’s loan guarantee and is typically financed into the loan.

How guarantee fees work

• Fee amount depends on loan size and 7(a) loan type
• For FY 2025, guarantee fees typically range from 2%-3.5%
• Fees are assessed only on the guaranteed portion of the loan

See full guarantee fee tables

For a complete breakdown of SBA 7(a) guarantee fees by loan size and year, read our guide to SBA guarantee fees.

Other SBA 7(a) loan fees (and what fees are prohibited)

One of the advantages of SBA loans is fee transparency.

Fees the SBA prohibits

The SBA expressly prohibits lenders from charging most common loan fees, including:

• Application fees
• Origination fees
• Processing fees
• Renewal fees
• Brokerage fees

Permitted lender fee

Lenders may charge a flat fee of up to $2,500 per loan, regardless of loan size.

Estimate your SBA 7(a) loan payments

Curious what your monthly payment might look like for an SBA loan?

Use our SBA loan calculator to estimate payments, based on your loan amount, rate, term, and fees.

SBA 7(a) loan repayment terms (maturity)

SBA loans are designed for long-term repayment, with maturity periods tied to the loan’s purpose and the useful life of the assets financed.

‍Loan maturity refers to the total time a borrower has to repay the loan. The final payment is made at the end of the maturity term.

Asset life rule

When SBA 7(a) loans are used to purchase fixed assets, such as real estate, equipment, or commercial property, the loan maturity is limited to the economic life of the asset. This can not exceed 25 years.

Fixed assets are long-term assets that:

• Are not easily converted to cash
• Are intended for ongoing business use
• Include real estate, machinery, and furniture

How SBA 7(a) loans work.

SBA 7(a) loans follow a structured approval process designed to ensure borrowers meet eligibility requirements, and lenders are protected by the SBA’s guarantee. While lenders handle most of the underwriting, the SBA plays a key role in approving and backing the loan.

Below is a step-by-step overview of how the SBA 7(a) loan process works.

Step 1: Define your loan purpose and funding needs

Before applying, you must clearly identify:

• How much funding you need
• How you will use loan proceeds
• Whether the use of funds meet SBA eligibility requirements

Your proposed loan purpose impacts:

• Loan type
• Repayment term
• Collateral requirements
• SBA approval criteria

Step 2: Confirm your eligibility

Next, you must meet SBA eligibility requirements related to:

• Business type and size
• Location and ownership
• Ability to repay
• Access to other financing

Lenders typically conduct an initial eligibility review before moving forward.

Step 3: Choose the right SBA 7(a) loan type

Based on funding needs and timing, you’ll select the most appropriate 7(a) loan type:

• Standard 7(a)
• 7(a) small loan
• SBA express
• Export-focused 7(a) loan
• CAPLine

The loan type determines:

• Maximum loan amount
• SBA guarantee percentage
• Approval speed

Step 4: Gather required documents

SBA loans require detailed financial documentation, which may include:

• Business and personal tax returns
• Financial statements
• Business debt schedule
• Business plan, or use of funds explanation
• Ownership and management details

Having documents prepared in advance can significantly reduce approval time.

Step 5: Apply with an SBA-approved lender

Borrowers apply directly through an SBA-approved lender, not with the SBA itself.

The lender:

• Reviews creditworthiness
• Structures the loan
• Determines collateral requirements
• Submits the loan to the SBA (or approves under delegated authority where applicable)

Step 6: Lender underwriting and SBA review

Depending on the loan type:

• Standard 7(a): SBA provides final approval
• Express/delegated loans: Lender makes approval decision

The SBA then assigns a loan authorization number, which enables funding.

Step 7: Loan closing, funding, and repayment

Once approved:

• Loan documents are finalized
• Funds are disbursed
• Repayment begins according to the agreed term

Borrowers must maintain compliance with loan agreements throughout the repayment period.

How to apply for an SBA 7(a) loan.

To apply:

1. Choose an SBA-approved lender
2. Prepare financial and business documentation
3. Submit an application for review
4. Respond to underwriting questions
5. Complete loan closing

Timelines vary, but approvals can take several weeks for standard loans, and as little as a few days for SBA Express loans.

Applying for an SBA loan

Interested in applying for an SBA loan? Read our complete guide to the SBA loan application process.

Bottom line: Is an SBA 7(a) loan right for your business?

An SBA 7(a) loan is one of the most flexible and widely used financing options available to small businesses, offering government-backed funding for working capital, equipment, real estate, expansion, and debt refinancing. With long repayment terms, capped interest rates, and broad eligibility, 7(a) loans are designed to support sustainable business growth rather than short-term cash needs.

While SBA loans require more documentation and a longer approval process than many alternative financing options, they often provide lower costs and longer maturities in exchange. For businesses that can meet eligibility requirements and prepare the necessary paperwork, and SBA 7(a) loan can be a powerful tool for long-term stability and expansion.

Key takeaways:

• SBA 7(a) loans offer up to $5 million in flexible, government-backed financing
• Funds can be used for working capital, equipment, real estate, acquisitions, and refinancing
• Interest rates are prime-based with SBA-imposed caps
• Repayment terms extend up to 25 years, depending on loan purpose
• Approval timelines vary by loan type, with Express options available for faster funding‍
• Strong preparation and documentation significantly improve approval odds

Related resources

Learn more about SBA loans:

• SBA Loan Eligibility Requirements
  
• SBA Loan Interest Rates Explained
  
• SBA Guarantee Fees Guide

Compare SBA financing options:

• SBA 7(a) vs SBA 504 Loans

Estimate your 7(a) loan costs:

• SBA loan calculator

Starting a small business is expensive. Almost every small business owner faces startup expenses, whether you’re a solopreneur needing a laptop or a construction company purchasing a lot full of heavy machinery. Inventory and equipment must be bought, employees or contractors must be paid, and rent comes due every month.

What’s harder, outside funding is often difficult to access when your company is young, but in need of capital. Startup business loans are a great way to bridge this funding gap—and even if you have a suboptimal credit score, there are forms of financing you can probably still access.

Best startup business loans for bad credit with easy approval.

The following list highlights lenders from our selection of best business loans that offer minimum credit requirements of 650 or below and a minimum time in business requirement of six months or less.

Small business loan options for startups with bad credit.

If you’re starting a business with a lower credit score, there are several loan routes you can take. 

Service providers

As embedded financing unlocks new ways for business service providers and platforms to service their customers, financing options are now available in places you already frequent. From accounting software to e-commerce platforms, many tools you already use to run your business may offer access to capital directly within their interface—often with faster approvals and tailored options based on your business data.

SBA loans

While the SBA 7(a) and SBA 504 loan programs were created for established businesses, the SBA does offer two startup loans.

1. Microloans

The Small Business Administration's (SBA) microloan program is designed specifically to assist small businesses, start-ups, and nonprofit child care centers. This program offers loans up to $50,000, with the average loan being around $13,000. The funds can be used for various purposes including working capital, inventory, supplies, and machinery or equipment. However, microloans cannot be used to pay off existing debts or purchase real estate.

To qualify for an SBA Microloan, the borrower must meet certain criteria:

• Credit history - The borrower's credit history is reviewed. While there isn't a minimum credit score requirement, a good credit history can improve the chances of approval.
• Collateral - Depending on the loan amount, the borrower may have to provide collateral to secure the loan.

Remember, the SBA doesn’t provide the loan itself, but instead, it works with approved intermediary lenders to offer these loans.

2. Community Advantage 7(a) Loans

The Community Advantage (CA) program (now under the SBA 7(a) program) is another offering by the SBA, aimed at promoting economic growth in underserved markets. Community Advantage Small Business Lending Companies (SBLCs) can provide up to $350,000 in funding. These funds can be used for a range of business activities, including startup costs, expansion of an existing business, and working capital.

To qualify for a Community Advantage loan, certain criteria must be met:

• Credit history - Similar to the SBA Microloan, the borrower's credit history is assessed. While no specific minimum credit score is set, borrowers with a good credit history typically have a higher chance of approval.
• Collateral - Depending on the loan amount, collateral might be required to secure the loan. The specifics regarding collateral are determined on a case-by-case basis.
• Location - The business must be located in an approved underserved market. These included businesses located in Low-to-Moderate Income communities, Empowerment Zones and Enterprise Communities, Historically Underutilized Business Zones, Promise Zones, Opportunity Zones, and rural areas. Additionally, each lender is authorized to work within a certain state or group of states.
• Demographics: Underserved markets also include newer businesses in operation for less than two years, businesses that are at least 51% owned by veterans, or businesses with at least 50% low-income workers.

Remember, as with the SBA Microloan program, the SBA does not provide the loan directly. Instead, it works with approved SBLCs to provide Community Advantage loans.

Online lenders

In the realm of bad credit business loans, online lenders often emerge as a viable option for startups. These lenders provide a variety of financing options, many of which are designed with lenient credit requirements, specifically catering to business owners with bad credit. While online lenders also offer SBA loans and term loans with more stringent credit requirements, they also offer alternative forms of financing.

Business Lines of Credit

Many online lenders provide business lines of credit that allow businesses to draw funds up to a maximum limit as needed. Similar to a credit card, you only pay interest on the amount you use, making it a flexible financing option.

Invoice Financing

Online lenders often offer invoice financing, allowing businesses to borrow against their outstanding invoices. This can provide immediate cash flow while waiting for customers to pay.

Revenue-based financing

A revenue-based financing, sometimes called a business or merchant cash advance, is an upfront sum of cash in exchange for a slice of future sales. This can be a beneficial option for businesses with strong sales but poor credit.

Equipment Financing

Equipment financing is offered in the form of a term loan or equipment lease for the purchase of qualified equipment. Since the equipment serves as partial collateral for the loan, equipment funders often have less stringent credit score requirements.

CDFIs

Community Development Financial Institutions, or CDFIs, are private financial entities that are primarily dedicated to delivering responsible, affordable lending to aid low-income, low-wealth, and other disadvantaged communities. CDFIs play a significant role in generating economic growth and opportunity in some of the nation's most distressed communities. They can offer an array of financial products and services, including business loans, to help underserved communities join the economic mainstream.

CDFIs are found across the United States, and you can locate one near you by visiting the CDFI Fund's Award Database. This database provides information about CDFIs that have received financial awards or recognition from the U.S. Department of the Treasury.

In terms of requirements to work with CDFIs to get a business loan, it varies across different institutions. However, typical requirements may include a business plan, financial projections, personal and business credit history, and collateral. Some CDFIs may also require that the business operates in a specific geographic area or serves a particular community. It's recommended to directly contact a CDFI for their specific lending criteria and application process.

How to get a startup business loan with bad credit.

Navigating the world of business financing with poor credit can seem daunting, but it's far from impossible. Let's dive into the steps to get your startup funded, even if your credit score isn't quite up to par.

1. Evaluate your needs - The first step to obtaining a startup business loan is to evaluate your business needs. Understand how much money you need and what you will use it for. This clarity will help you determine the type of loan appropriate for your business.

2. Research your options - Research various loan options available for startups. Each type of loan has its own eligibility criteria and terms, including minimum credit score requirements. Compare those requirements to your current credit score to see if you may qualify.

3. Prepare your business plan - Lenders generally require a comprehensive business plan. This should include an overview of your business, details about your products or services, market analysis, organizational structure, and financial projections.

4. Gather required documentation - Gather all required documents such as financial statements, tax returns, and legal documents. The specific documents required will vary by lender, so make sure to check with them directly.

5. Apply for the loan - Once you have all the necessary documents and a complete business plan, apply for the loan. This process varies depending on the lender. It could be online or in-person.

Alternate forms of financing

In addition to a small business loan, there are alternate forms of financing that can be explored if you have a lower credit score.

Crowdfunding

Crowdfunding platforms like Kickstarter or Indiegogo allow you to raise capital through small contributions from a large number of people. This form of financing is often used by startups looking to launch new products or services, and it also offers an opportunity to validate your business idea in the market.

Venture capital

Venture capitalists invest in startups with high growth potential in exchange for equity in the company. These investments are high-risk but can provide substantial funds for your business, with the bonus of gaining experienced partners who can offer strategic advice.

Grants

Business grants are sums of money awarded by government departments, foundations, trusts, and corporations to help businesses get started or grow. The great advantage of a grant is that it doesn't need to be repaid. On the downside, competition can be intense, and the application process can be time-consuming.

Business credit cards

You will need a credit score of at least 650 to qualify for a business credit card, but if you meet that minimum requirement, a business credit card is a great way to bolster your credit even further while covering smaller, short-term expenses.

Personal loan

In some circumstances, you may qualify for a personal loan with a poor credit score. While this may not be the most ideal option, it could provide you with the funds you need to get your business off the ground. Just make sure to carefully consider the terms and interest rates before making a decision.

Whether you’re a seasoned investor or a novice entrepreneur, commercial real estate rates will always be a focal point guiding your investment decisions.

This article will simplify commercial mortgage rates, shedding light on key points of consideration and practical strategies to optimize your investments.

Current commercial real estate rates.

As of December 2025, we're seeing rates that range from about 5.16% to 15%, depending on the asset type and specific circumstances of the loan.

Key elements of commercial real estate rates.

Commercial mortgage rates are determined based on a combination of market factors, property-specific factors, the stance of the lender and borrower, and the loan structure.

Market conditions

Overall market conditions play a role in determining commercial real estate rates. Several macroeconomic factors contribute to rate fluctuations.

Economic factors

Commercial mortgage rates are influenced by broader economic conditions, such as inflation, economic growth, and the overall health of the economy.

Interest rates

The general level of interest rates in the economy—often indicated by benchmark rates such as the prime rate, LIBOR (London Interbank Offered Rate), or the U.S. Treasury yields—can impact the rates offered by lenders.

It's important for borrowers to carefully consider these factors and work with lenders to secure the most favorable terms, based on their financial situation and the specific details of the commercial property transaction.

Property-specific factors

The nature of the property itself will significantly impact mortgage rates, namely property type and location will also impact your final rate.

Property type

Different types of commercial properties may have varying risk profiles, affecting the interest rates. For example, rates for office spaces might differ from those for industrial properties.

‍

Location

The location of the property can impact rates. Properties in high-demand or economically thriving areas may have lower rates compared to those in less desirable locations.

Borrower's creditworthiness

Your creditworthiness and general financial situation will impact your rate.

Credit score

The creditworthiness of the borrower is a crucial factor. Lenders assess the borrower's credit history, financial stability, and debt-to-income ratio to determine the risk associated with the loan.

Business financials

Lenders may also evaluate the financial health and performance of the business occupying the commercial property.

Loan-to-value (LTV) ratio

The loan-to-value (LTV) ratio is the percentage of the property’s value that you’re looking to finance with the loan.

If you’re looking for a high LTV ratio, it means you’re seeking to borrow a larger portion of the property’s value, which could present a higher risk to the lender. Because of this increased risk, you may find that higher LTV ratios are typically accompanied by higher commercial mortgage rates.

Loan term and amortization period

Rates will also vary based on the length of the loan and the repayment schedule.

Loan term

The length of the loan term can influence the interest rate. Shorter-term loans may have lower rates but higher monthly payments, while longer-term loans might have slightly higher rates but lower monthly payments.

Amortization period

The time it takes to repay the loan (i.e. the amortization period) can also impact the interest rate. A longer amortization period may result in a higher overall interest cost.

Lender's policies and competition

Every lender's rates are impacted by its investment portfolio and competition.

Lender policies

Each lender may have its own criteria and policies, impacting the rates they offer. Some lenders may specialize in certain property types or industries.

Competition

The competitive landscape among lenders can affect rates. Borrowers may get more favorable rates if lenders are competing for their business.

Fixed vs. variable rates

Commercial mortgage rates can be fixed (i.e. unchanging throughout the loan term) or variable (i.e. fluctuating based on market conditions). Fixed rates provide stability, while variable rates may offer initial cost savings but involve more risk. Borrowers should choose the type of rate that aligns with their financial goals and risk tolerance.

SBA 504 loan rates: An option for small businesses.

For entrepreneurs seeking to finance major fixed assets like real estate or equipment, the Small Business Administration's (SBA) 504 loan can be a great option. The SBA 504 loan is known for its competitive and predictable rates, making it a popular choice among borrowers.

Fixed-rate loans under this program are tied to U.S. Treasury bonds, which typically carry some of the market's best rates.

• The rates for SBA 504 loans are set when the SBA sells the bond to fund the loan. This means borrowers can lock in a low, long-term fixed rate, protecting their business from future interest rate increases. The 10-year Treasury rate as of November 2025 is around 4.06%.

It's also essential to understand that SBA 504 loan rates include two different loans—one from a Certified Development Company (CDC) and one from a bank or other financial institution.

• The CDC loan, which covers up to 40% of the total project cost, has a fixed interest rate.
• In contrast, the bank loan, covering 50% or more of the total project cost, can have a variable or fixed rate, depending on the specifics of the agreement.

Remember, despite these attractive rates, it's important to consider all aspects of your financial situation and business goals before deciding on a loan product. Consult with financial professionals to make sure you're making the best choice for your business.

Wrapping up

By familiarizing yourself with the primary elements that influence these rates, and keeping an eye on current market conditions, you’re already on the right path.

Whether you're considering a traditional commercial mortgage or exploring options like the SBA 504 loan, remember that the best choice will depend on your unique financial situation and business goals.

Yes, you can almost always get fast small business financing. Here are five small business loans that can fund in just 24 hours.

When your business needs a quick cash infusion to deal with unexpected expenses, seize growth opportunities, or meet urgent operational costs, fast business loans come to the rescue. These loans are designed for swift approval and funding—often within 24 hours—making them an ideal choice for situations where traditional loan processes may be too slow. 

This guide will walk you through the various options for a quick business loan, helping you make an informed decision that suits your business needs.

Fastest types of business loans.

Here are five quick business loans and other financing structures that provide fast approval times, as well as quick funding. The terms and repayment structures vary for each type of loan or financing, so take a look to see which might be the best option for your company.

1. Business term loan

A term loan is a lump sum of cash that is repaid with interest over a set period, typically ranging from one to 10 years. These loans are available through traditional banks, as well as alternative lenders and online platforms. The application process can take anywhere from a few days to several weeks, but certain lenders offer expedited application processing, approval and funding for those in need of fast business loans.

Individual lenders for business term loans will offer different terms, but these feature ranges are typical: 

• Loan amount: $1,000-$6 million
• Loan repayment term: 1-7 years
• Interest rate: 9.99% and up
• Funding time: As soon as same business day

Compare business term loan lenders.

2. Line of credit

A business line of credit is similar to a credit card. You have a credit limit you can draw upon at any time, and you pay interest only on the amount you draw. A line of credit can help cover short-term needs such as paying for inventory or seasonal changes in cash flow.

Features of a business line of credit can include:

• Loan amount: Up to $3 million
• Loan repayment term: 6-24 months
• Interest rate: 8% and up
• Funding time: As soon as same business day

Compare line of credit lenders.

3. Revenue-based financing

Revenue-based financing isn't a loan, but an advance based on future sales. This makes qualifying easier since the financing company considers revenue and sales more than your credit history. The repayment is an agreed-upon percentage of your income that comes directly from your bank account each day until your balance is repaid. This type of financing is ideal for companies with stable cash flow.

Features of revenue-based financing, also called a business cash advance, are as follows:

• Loan amount: Up to $2 million
• Loan repayment term: 3-36 months
• Factor rate: As low as 1.08
• Funding time: As soon as same business day

Compare revenue-based financing companies.

4. Equipment financing

Equipment financing is an excellent option for businesses that need to purchase or lease new equipment quickly. This type of loan covers a wide range of items like machinery, vehicles, office technology, and more. The equipment itself serves as collateral for the loan, which often results in more favorable terms, since the lender has a secure form of repayment. Depending on the lender, you might be able to finance up to 100% of the equipment cost.

Features of equipment financing are as follows:

• Loan amount: $5,000-$5,000,000
• Loan repayment term: 1-10 years
• Interest rate: 7.5% and up
• Funding time: As soon as same business day

Compare equipment financing companies.

5. Invoice factoring

Invoice factoring allows you to get paid faster for your outstanding invoices. With invoice factoring, the financier will purchase your invoice at a discounted rate, giving you a percentage of the money upfront. Then, after the customer pays the invoice in full to the funder, you receive the rest of the money, minus a fee. Funds from invoice factoring can be available as soon as the same day. Plus, the factoring company handles collecting payment from your customers, freeing up your time and resources for other areas of your business.

Features of invoice factoring are as follows:

• Loan amount: Up to 85% of invoice value
• Loan repayment term: Up to 1 year
• Factoring fee: As low as 3%
• Funding time: As soon as same business day

Compare invoice factoring companies.

When to get a fast business loan.

While speed to funds is one factor to consider when comparing business loan options, it’s important to compare multiple factors when selecting a business loan including the total cost of the loan and the maximum loan amount. In some cases, waiting a few more days or weeks will allow you to work with a lender who can offer more favorable terms.

Some common reasons to get a fast business loan include:

• Immediate working capital needs
• Unexpected business expenses
• You don’t qualify for a traditional bank or SBA loan

Fast Small Business Administration (SBA) loan options.

In some scenarios, the Small Business Administration (SBA) provides expedited loan options that offer both speed and beneficial terms, making them a worthwhile consideration for businesses in need of swift funding.

SBA Express Loans

An SBA Express Loan is a variant of the popular SBA 7(a) loan with a faster approval time. This expedited process, often within 36 hours, offers loan amounts up to $350,000.

Applying for an SBA 7(a) Small Loan with Lendio.

Lendio offers a convenient SBA loan application process. While it might take 30 to 90 days with your local bank, potential borrowers can complete an application and get a pre-approval within 24 hours, and after providing the required documentation, can get funded with a 7(a) small loan in fewer than 30 days.

How to get a fast business loan.

Follow these steps to obtain fast business funding:

1. Determine your needs - Understand the exact amount you require and the purpose of the loan. Make sure a fast business loan is the right choice for your needs.

2. Check your credit score - Lenders will consider your personal and business credit scores when determining approval and rates. Ensure your credit is in good standing to increase your chances of approval.

3. Gather necessary documents - This usually includes business and personal tax returns, bank statements, balance sheets, and a detailed business plan. Having these documents ready can speed up the process significantly.

4. Compare lenders - Different lenders offer different terms, requirements, and rates. Research and compare multiple lenders to find the one that best fits your needs.

5. Submit your application - Complete your loan application with your chosen lender. Be thorough and accurate to avoid unnecessary delays.

Remember, while fast business loans provide quick access to capital, they may come with higher rates and shorter repayment terms. Consider all your options and understand the terms before making a decision.

Pros and cons of fast business loans.

Just like any financial product, fast business loans come with their own set of benefits and drawbacks. Understanding these pros and cons can help you make a more informed decision.

Pros of fast business loans:

1. Quick access to capital - The most significant advantage of fast business loans is their speed. When your business needs funds immediately, these loans can provide cash within one business day, making them an ideal solution for emergencies.

2. Simple application process - Fast business loans typically have a straightforward online application process that can be completed within minutes, without the need for extensive paperwork.

3. Potential for approval with bad credit - Many fast business loan providers are more flexible with credit score requirements, which can be beneficial for businesses with a less-than-stellar credit history.

Cons of fast business loans

1. Higher rates - The convenience and speed of fast business loans often come at a cost. The rates can be significantly higher than those of traditional business loans.

2. Short repayment terms - Fast business loans usually must be repaid relatively quickly, often within a few months to a few years. This could potentially strain your cash flow.

3. Risk of debt cycle - If used improperly or over-relied upon, businesses may find themselves in a cycle of debt, taking out another loan to pay off the previous one.

Before applying for a fast business loan, weigh these pros and cons carefully. Consider how the repayment terms and rates will impact your business's cash flow and growth, and consult with a financial advisor if needed.

How to compare fast business loans.

When you're considering a fast business loan, it's all about striking the right balance between speed, terms, and cost. Here's how to navigate the maze and compare multiple options effectively.

Understand your urgency

Your first step is assessing the urgency of your financial needs. Do you require the funds within 24 hours, or can you wait a week or two? The urgency will narrow down your options and help you focus on lenders who can meet your timeline.

Know your numbers

Financial literacy is non-negotiable in the world of business funding. Calculate exactly how much you need, and more importantly, how much you can afford to repay. Use loan calculators and projections to understand the long-term impact of the loan.

Read the fine print

The devil is in the details. While speed is your priority, don't skim over the terms and conditions. Look for prepayment penalties, additional fees, and any other clauses that could affect your small business negatively.

Review the repayment terms

Fast business loans often come with shorter repayment terms. Ensure you can meet the daily, weekly, or monthly repayments without straining your cash flow. If you can't find a loan with terms that suit your business's financial rhythm, it may not be the loan for you.

Evaluate the total cost

The Annual Percentage Rate (APR) is a common benchmark for evaluating the total cost of a loan, especially for term loans, lines of credit and other traditional financing products.. The lower the APR, the cheaper the loan. However, APR isn’t the full story, and in many cases it may not be used. For example, some business financing products, like revenue-based financing or invoice factoring don’t charge interest. Instead, they use a factor rate or a fee-based model. Make sure you understand the fee structure for your loan, and also consider the application fees, processing fees, and any other costs that could push the total cost up.

Shop around

Don't settle for the first offer or even the third. Approach multiple lenders and use the competitive landscape to your advantage. You might find that you're eligible for lower rates or better terms than you initially thought.

Secure or unsecured?

Fast loans can be secured against your assets or unsecured, with no collateral required. While secured loans often have lower rates, unsecured loans are quicker and don't put your personal or business assets at risk.

Understand credit score repercussions

Applying for multiple loans can impact your credit score, so be strategic. If your credit score allows, consider pre-qualification offers that give you a rough idea of what you qualify for without a hard credit check.

‍

Every great business has to start somewhere. The founders of Apple and Amazon launched their business dreams in garages. Samsung began as a grocery store. Coca-Cola originally made its product in jugs and sold the now-famous soda for a nickel a glass at a local pharmacy.

Many businesses start from nothing before becoming something special. When the right moment arrives, securing the right funding for your startup can be pivotal in getting your business off the starting block and on the path to success.

The good news? Startup business loans exist, even if you have no revenue or a limited credit history.

While traditional lenders prefer established businesses, there are alternative financing options designed specifically for entrepreneurs starting from scratch.

Getting a startup loan with no money or revenue.

Getting funding as a brand-new startup with no money can be a challenge. The majority of small business loans have at least some minimum revenue requirements.

So, if you have the ability to wait until your business is earning some money, it could open the door to more financing options and more attractive borrowing terms. 

In the meantime, there are at least two potential ways to get a loan for your startup before it begins earning revenue.

Equipment financing

Some equipment financing lenders (though not all) are willing to work with startups. These lenders may have no minimum monthly revenue requirements and no minimum time in business requirements for applicants to satisfy.

The collateral your business is purchasing secures the loan and reduces the risk for the lender. However, you may likely need decent personal credit to qualify for this financing option, depending on the lender.

SBA microloans

An SBA microloan provides financing of up to $50,000 for small businesses. The loans are intended to support underserved communities and are distributed by nonprofit or community microlenders.

The requirements to qualify for a microloan will vary by the lender. Some will review your credit score and personal finances to qualify you for a loan while others will want to see a longer financial history for your business. While some of these lenders may not require positive business cash flow, they may still require a personal guarantee and/or collateral to secure the loan.

How to get a startup business loan with no money or revenue.

Decide how much you need

A key step in finding the loan that matches your business needs is identifying how much money you’ll need to borrow. Every lender has a different range of financing they are comfortable offering. Therefore, you probably wouldn’t search for a $5-million loan in the same place you’d search for a $5,000 loan.

Determine your timeline

Likewise, you should figure out how quickly you need the money you borrow to arrive. Some loan proceeds may be available in days or hours. For other loans, the funding process could take weeks or months.

Determine your budget

Next, crunch the numbers and see which loan gives you the best bang for your buck. There are plenty of easy-to-use loan calculators available online. So don’t worry if math isn’t your strong suit. (Note: It’s wise to compare multiple loan options to make sure you’re getting the best deal available for your small business.) 

Alternative forms of financing for your startup.

It’s not always easy to access business funding as a new startup. According to Gallup, 77% of small business owners use personal savings as a source of initial capital. Nonetheless, there are alternative ways to finance your business dreams that don’t involve potentially draining your personal bank account. 

Here are a few alternative business funding options to consider. 

• Crowdfunding - Crowdfunding is a way to raise money online for your young business—either by seeking loans from multiple investors (debt crowdfunding), asking for donations (donor crowdfunding), selling off small portions of your business (equity crowdfunding), or offering incentives for contributions (reward-based crowdfunding).
• Business Credit Cards - A business credit card could be a good financing option for startups with no revenue and no established business credit score. Depending on the type of business credit card you apply for, you may need good personal credit to qualify. But there are some options (including secured business credit cards) for small business owners with no credit or bad credit. 
• Family and Friends - Some small business owners are able to borrow money or raise investment funding from family members and friends. If you’re fortunate enough to have this option available to you, be sure to consider the risk up front. Should your business fail or if you’re unable to repay a loan from a loved one, these complications could damage important relationships. 
• Grants - For a startup, small business grants can be an appealing way to raise money since the business doesn't have to repay the money it receives. Yet with grants, you might also face a lot of competition. It can often be a challenge to stand out from other applicants where small business grants are concerned.