Because small businesses are so critical to the country’s success, the federal government launched the Small Business Administration (SBA) to help foster American small businesses.
The most popular way the SBA furthers its mission is through SBA 7(a) loans—if your business qualifies, you can get funding backed by the government that can help take your enterprise to the next level.
What is an SBA 7(a) loan?
An SBA 7(a) loan is a form of financing that is partially guaranteed by the U.S. Small Business Administration. These loans are named after Article 7(a) of the Small Business Act of 1953, which launched the SBA and tasked the agency with supporting American small businesses through lending.
SBA 7(a) loans are popular for financing real estate purchases, working capital, and purchasing furniture and supplies. They’re also commonly sought for refinancing existing business debt.
Are all SBA loans 7(a) loans?
SBA 7(a) loans are the most popular type of loans offered by the SBA, so many people refer to them as “SBA loans”. Keep in mind that 7(a) loans are a specific loan program offered by the SBA, and there are several types of 7(a) loans. In addition, the SBA offers other types of loan programs, such as the 504 loan program, that don’t fall under this umbrella.
Acquiring, refinancing, or making improvements to Real estate
New-building construction
Renovation or expansion
Starting a new business
Purchasing an existing business
Refinancing current business debt
Purchasing furniture, fixtures and supplies
Multiple purpose loans
Changes of ownership
Loan proceeds may not be used to:
Pay off an existing business loan
Buy out a partner
Pay delinquent state or federal withholding taxes
Anything else that wouldn’t be considered a sound business purpose as determined by the SBA
Types of SBA 7(a) loans
The SBA has a suite of different financing products under its 7(a) distinction, and each one is meant to fill a different need in the small business ecosystem.
When considering your options, think about how large of a loan your business needs, your intended use of the funds, and how quickly you need the money.
SBA loans require a fair amount of information and paperwork, so researching 7(a) loan types will save you time later.
Type
Maximum loan amount
Maximum guarantee
Terms
Collateral
Purpose
Standard 7(a)
$5 million
85% up to $150,000 75% for loans greater than $150,000
Up to 10 years (working capital) Up to 25 years (real estate)
Required
Working capital Equipment Real estate Business expansion
7(a) Small Loan
$350,000
85% up to $150,000 75% for loans greater than $150,000
Up to 10 years (working capital) Up to 25 years (real estate)
>$50,000: Lender follows its policy for similar loans
Working capital Equipment Real estate
SBA Express
$500,000
50%
Up to 10 years (working capital) Up to 25 years (real estate)
Up to 10 years (revolving line of credit)
>$50,000: Lender follows its policy for similar loans
Working capital Equipment Real estate
Export Express
$500,000
>$350,000: 75%
Up to 7 years (lines of credit) Up to 10 years (working capital, equipment, and inventory purchases) Up to 25 years (real estate)
>$50,000: Lender follows its policy for similar loans
Entering or expanding an export business
Export Working Capital
$5 million
90%
Up to 10 years (working capital) Up to 25 years (real estate) Up to 3 years (line of credit)
Required
Working capital to support export sales
International trade
$5 million
90%
Up to 10 years (working capital) Up to 25 years (real estate)
Required
Facilities and equipment used to produce goods or services involved in international trade
CAP Lines
$5 million
85% up to $150,000 75% for lines greater than $150,000
10 years 5 years (Builders CAPLine)
Required
Cyclical working capital needs
Standard 7(a) loan
The standard 7(a) loan is the most common and most popular type of 7(a) loan backed by the SBA. The purpose of these loans is to allow small businesses to expand by funding working capital or the purchase of equipment, supplies, and real estate.
A standard 7(a) loan is available in amounts of $350,000 to $5 million. The maximum SBA guarantee is 85% for loans up to $150,000 and 75% for loans greater than $150,000. The SBA requires lenders to collateralize all standard 7(a) loans.
For standard 7(a) loans, while it is the lender's responsibility to perform credit analysis, loan structure and verify that the applicant meets SBA eligibility requirements, the SBA makes the final approval decision before providing a loan number.
7(a) small loan
The 7(a) small loan is similar in many ways to the standard 7(a) loans, but it’s meant for businesses that need smaller amounts of funding to get off the ground or expand.
The maximum loan amount is $350,000. Their turnaround time and eligibility decision process are the same as standard 7(a) loans. The SBA guarantees 85% of loans up to $150,000 and 75% of loans over that amount. Collateral is not required for loans under $50,000. The lender follows its collateral policy for loans greater than $50,000.
Applicants can usually expect a decision in two to 10 business days.
SBA Express loan
The SBA express loan is built for speed—sometimes, entrepreneurs need funding ASAP.
The maximum amount for an express loan is $500,000, and an application will be responded to in 36 hours or less. These loans are 50% guaranteed by the SBA. Only lenders with SBA Express authority can issue these loans, and the lender makes all eligibility, collateral, and credit decisions under delegated authority.
7(a) Export Trade Finance
The SBA has 3 core 7(a) international trade finance programs geared towards helping small businesses be competitive in export markets.
Export express loan
The export express loan was specifically created as a streamlined option for businesses in the export industry or those looking to develop an export operation. It has many similar features to an SBA Express loan, but provides a higher guarantee to mitigate international credit risk.
The loans, with a maximum amount of $500,000, have a breakneck turnaround time of just 24 hours or less. Similar to SBA Express, lLenders make all eligibility and collateral decisions through delegated authority. The SBA guarantee is 90% for loans of $350,000 or less and 75% for larger loans. This funding can take the form of a term loan, or a revolving line of credit that can last up to seven years.
Export working capital loan
Also tailored for exporters, the export working capital loan is meant to fund working capital for businesses that generate export sales.
These loans can range up to $5 million, and the SBA guarantee is 90%. Eligibility decisions are made by the SBA or lenders who have delegated EWCP authority. Unlike other 7(a) loans, there is no maximum interest limit imposed by the SBA for export working capital loans. The decision turnaround time is five to 10 business days.
Collateral is required, usually in the form of export inventory and personal guarantees from a business’ owners. This loan can take the form of a term loan, or a revolving line of credit for three years or less.
International trade loan
International trade loans are SBA 7(a) loans aimed at businesses that want to grow their export side or need to modernize their operation to handle foreign competition.
The maximum loan amount is $5 million, and the eligibility decisions, turnaround time, and SBA guarantee are the same as for export working capital loans. For international trade loans, the loan maturity is set at 10 years for permanent working capital.
Equipment and machinery, loans mature up to 10 years or at the useful life of the equipment (not to surpass 15 years). Real estate loans mature at 25 years.
7(a) CAPLines
CAPLines of credit are a form of a standard SBA 7(a) loan that works as a line of credit instead of a loan.
Remember, a business line of credit is a form of financing that allows businesses to access money as expenses arise, similar to a credit card. With a business loan, on the other hand, a full amount is disbursed upon approval, and repayments are made based on the approved amount.
The loan maximums, terms, and decision process of CAPLines of credit are the same as for standard 7(a) loans. The SBA offers four types of CAPLines:
Working Capital CAPLine
A line of credit for businesses that are unable to meet credit standards for other long-term financing, typically businesses that provide credit to other businesses, and in which repayment is based on assets.
To be eligible for a Working Capital CAPLine, your business must generate accounts receivable (not notes receivable), and/or have inventory.
Contract CAPLine
A line of credit aimed at financing businesses that work on a contract basis. Rather than permanent working capital, this specific type of working capital is meant to be used for working capital for one or more specific projects.
Builders CAPLine
A line of credit for small general contractors or builders that construct or renovate residential or commercial buildings. To be eligible for the Builders CAPline, you must be a construction contractor or a homebuilder with demonstrated experience in profitable construction or renovation.
Seasonal CAPLine
The Seasonal CAPLine is a line of credit meant for businesses that operate on a seasonal basis to help provide working capital for the busy season. To be eligible, your business must have been in operation for at least one year, and be able to demonstrate a pattern of seasonal activity. You can’t use this working capital to weather downturn or slow seasons, and must use it to finance increases in accounts receivable, inventory, and associated labor costs.
7(a) Working Capital Pilot (WCP) Program
Launched on August 1, the WCP pilot program offers monitored lines of credit to businesses through the SBA 7(a) loan program.
Through the pilot program, eligible businesses can receive a line of credit up to $5 million. In order to qualify, businesses must operate in industries like manufacturing, wholesale, or professional services and have at least one year of operating history.
Businesses applying must be able to provide financial statements, accounts receivable, and accounts payable, as well as regular inventory reports.
The loan guarantee is the same as regular SBA (7a) loans.
Eligibility requirements for SBA 7(a) loans
Most U.S. small businesses can qualify for an SBA 7(a) loan, but there are a few exceptions such as nonprofits and certain restricted membership organizations. The SBA also requires that business owners meet basic criteria around location, profit status, size, citizenship and access to other financing.
SBA loans are meant to support long-term small business growth.
SBA loan maturity terms, as a result, are based on the ability to repay, the purpose of the loan, and the life of assets financed by the loan. Loan maturity refers to how long it takes for a borrower to repay the loan. At the end of your loan maturity term, you’ll make the final repayment.
The maximum maturities for SBA 7(a) loans are as follows.
The maximum maturity for real estate is 25 years.
The maximum maturity for equipment is 10 years.
The maximum maturity for working capital or inventory is 10 years.
SBA 7(a) loans used to buy fixed assets, like real estate or equipment, carry a maturity limited to the economic life of those assets, not to exceed 25 years. Fixed assets, which also include commercial property or furniture, are assets meant for long-term use that cannot be quickly converted to cash.
SBA 7(a) loan rates
With SBA 7(a) loans, the interest rate is set by the lender. In most cases, the lender will determine a rate based on creditworthiness, loan amount and repayment terms, and the applicant either accepts or rejects that rate. In many cases, you might be able to further negotiate the rate with your lender.
Current SBA loan interest rates are tied to the prime rate, which can be fixed or variable. As of November 3, 2025 the prime rate is 7.00%. The SBA allows lenders to add a markup, but caps how high the rate can go.
Want to see exact SBA rate ranges for the current month, caps, and how your rate is calculated?
Along with interest rates, you should expect to pay a guarantee fee to the lender for SBA 7(a) loans. This fee will be based on the size of the loan and the type of 7(a) loan you apply for. Guarantee fees for 7(a) loans for fiscal year 2025 range between 2% and 3.5%.
Notably, the SBA expressly prohibits lenders from charging most other fees, including processing, origination, application, renewal, and brokerage fees.
Lenders are, however, allowed to charge a flat fee of $2,500 per loan.
Curious what you might pay on an SBA 7(a) loan? Use our SBA Loan Calculator to estimate your payments!
How to apply for an SBA 7(a) loan
While hundreds of different lenders offer 7(a) loans, the process is fairly standardized by the SBA.
The SBA 7(a) loan application process involves three main steps: choosing the right loan, gathering financial documents, and submitting your application to a qualified lender. Depending on the loan type, approval timelines can range from a few days to several weeks.
The requirements for SBA 7(a) Loans can be stringent. Maybe you feel it isn’t right for your business at this time! Here are some potential alternatives to SBA 7(a) loans to explore:
SBA Microloans- These loans are smaller, and geared to newer businesses, but come with less strict borrower requirements.
SBA Express Loan - These loans don’t require SBA review, which means you could work with a lender who can provide you funds you need quickly, with slightly less requirements than an SBA 7(a) loan.
Lendio - While you can apply for an SBA loan with Lendio’s quick application, we can also connect you with online lenders to offer other flexible financing options that work for your business.
Ready to apply for an SBA 7(a) loan?
Apply for an SBA loan with Lendio’s quick application. We’ll connect you with the right lender for your situation, and can, on average, get you funded with a 7(a) small loan in less than 30 days.
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 November 2025, we're seeing rates that range from about 5.26% 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.
Property type
Current starting rate
Multifamily loans
5.26%
Mobile home parks
5.72%
Retail
6.11%
Office buildings
6.11%
Industrial properties
6.11%
Self-Storage
6.11%
Medical properties
6.11%
Hospitality properties
7.25%
CMBS loans
6.11%
Bridge loans
9%
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 4.13%.
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.
Financing type
How it works
Time to funds*(after approval)
Line of credit
Draw as much or as little money as you need up to a set credit limit.
As soon as same business day
Term loan
Receive a lump sum of cash repaid in set installments (e.g. monthly, weekly)
As soon as same business day
Equipment financing
Receive a lump sum used to purchase approved equipment.
As soon as same business day
Revenue-based financing
Receive an advance on expected future revenue repaid in daily or weekly installments.
As soon as same business day
Invoice factoring
Sell your invoices at a discounted rate to get access to expected income faster.
As soon as same business day
*Varies by lender
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.
Did you know? Term loans and lines of credit are offered through small business platforms like QuickBooks Capital leveraging QuickBooks users' account info. These solutions can be quicker and easier to apply for than a financing option from a standalone funder.
Individual lenders for business term loans will offer different terms, but these feature ranges are typical:
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:
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:
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.
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.
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.
1Advertising Disclosure: Lendio may provide compensation to the entity who referred you for financing products and services listed on our site. This compensation may impact how and where certain products and services are offered to you. We may not list all financing products and services available to you. The information provided by Lendio is intended for general informational purposes only and should not be construed as professional tax advice. Lendio is not a tax preparer, law firm, accountant, or financial advisor. Lendio makes no guarantees as to the completeness, accuracy, or reliability of the information provided. We strongly recommend that you consult with a qualified tax professional before making any decisions. Reliance on any information provided by Lendio is solely at your own risk, and Lendio is not liable for any damages that may result from the use or reliance on the information provided.
From buildouts and equipment to software and payroll, dental and medical startup costs can quickly climb to six figures. And that’s just to get through the first few months.
The right financing can help cover those expenses, giving you time to find your footing and room to grow. It starts with understanding the types of loans available to healthcare professionals without practice revenue, learning how to qualify, and avoiding common cash flow mistakes that can derail your practice in its first year.
Typical startup costs for new medical practices.
Depending on your specialty, location, and growth plans, your total startup costs could range from $100,000 to $500,000 or more. Some of the most common medical startup expenses include:
Office lease and buildout: Securing a space is often the largest startup expense. It may include costs such as security deposits, upfront rent, interior construction, and medical-grade flooring.
Medical and diagnostic equipment: Making a practice patient-ready requires investments in equipment such as imaging machines, exam chairs, and sterilization tools, as well as basic items like gloves, stethoscopes, and blood pressure cuffs.
IT systems and EHR software: Modern medical practices require advanced technology systems. Startups need to purchase computers, networking hardware, and the subscription, implementation, and training fees for an electronic health record (EHR) system.
Licensing, insurance, and credentialing: This covers business licenses, malpractice insurance, facility insurance, and the costs associated with the provider credentialing process.
Payroll for core staff: You’ll need to hire and pay a core team, such as a medical assistant, receptionist, and office manager, for at least a few weeks before the practice opens. These positions are critical for effective pre-launch setup and organization.
Securing sufficient financing well ahead of your launch may help preserve your personal finances while giving you the funding needed to give your practice a strong start.
Common types of medical practice loans.
Without revenue or financial history, securing a traditional small business loan may be a challenge. However, the following loans are commonly used to support new medical practices during their launch phase.
Healthcare startup loans.
Designed for zero-revenue operations, healthcare startup loans offer funding for anything from practice buildouts to working capital. They often provide 100% financing and offer favorable terms.
Equipment financing.
When you need to purchase major medical machinery, diagnostic tools, or office technology, equipment financing may be the right solution. These loans use equipment as collateral, often resulting in lower interest rates and small to no down payment requirements.
SBA loans.
These government-backed loans offer lower down payments, favorable rates, and longer repayment terms (up to 25 years for real estate). SBA loans are often used for larger funding needs, such as major practice buildouts or real estate purchases.
Business line of credit.
A startup business line of credit provides flexible access to cash. Since you only pay interest on the funds you use, it often acts as a cushion for temporary shortfalls, such as unexpected inventory needs, payroll, or operational expenses.
How to qualify for a medical startup loan.
When applying for a medical startup loan, lenders typically closely examine your personal financials, credit history, and how well-prepared you are for the launch. These key factors may strengthen your application:
Personal credit score: Since the business has no credit history, the borrower’s personal credit score becomes a primary decision factor. A strong score indicates financial responsibility, which may make it easier to get approved and secure competitive interest rates.
Business plan and projections: Presenting your lender with a detailed startup plan based on conservative projections shows that you’ve thought through the numbers and have a plan to repay the loan.
Industry experience: Credentials, licensing, and work history assure the lender that your practice is legitimate and positioned to start earning revenue.
Cash reserves or collateral: Some medical startup loans offer 100% financing, but having personal capital to contribute or offering sufficient collateral may help you secure better terms, especially for non-SBA loans.
Showing lenders that you’re organized, strategic, and financially disciplined may improve your odds of getting funded. A financial advisor specializing in healthcare may help you refine your projections or suggest other options for strengthening your financial position. If you have little to no credit history or high student loan debt, consider seeking a cosigner with strong personal financials.
Managing cash flow in your first year.
The first 12 months for a medical startup are often the most financially challenging. Even a well-run practice that appears profitable on paper can feel the pinch when faced with delayed insurance reimbursements, unexpected expenses, and slower-than-expected patient volume.
When used strategically, medical startup financing can help cover operating costs and working capital needs. Set aside enough funding to cover three to six months of fixed expenses and don’t skimp on marketing during this critical time. Remember that patient acquisition takes time, and cutting back on your visibility may extend the time it takes to start turning a profit.
Evaluating Return on Investment (ROI)
Think of your medical practice loan as an investment rather than a cost. Taking this approach may help create long-term, sustainable profitability.
To measure its return, start by comparing the cost of your loan to projected revenue growth. Then, estimate how long it will take to break even. Don’t forget to consider intangible returns such as improved patient access, operational stability, or stronger brand trust.
Avoid these startup financing mistakes.
Many new medical entrepreneurs are so focused on getting approved for a loan, they get tripped up by other financial and strategic errors. As you prepare for your launch, be aware of these common pitfalls:
Underestimating startup costs: Build a contingency fund (approximately 20-30% of total estimated costs) into your financing request.
Taking on too much debt without a repayment plan: Borrow no more than what you can comfortably pay back based on conservative financial projections.
Neglecting marketing or patient acquisition costs: Allocate sufficient funds to digital marketing, local outreach, and referral networking. This is critical for growing a patient base, especially in your first year.
Overinvesting in non-essential equipment at launch: In your first year, avoid investing in high-end office furniture, specialty equipment, or other items that aren’t strictly required for quality patient care.
To create a solid financial foundation, focus on strategic, phased spending that’s aligned with patient growth.
Lendio simplifies medical practice financing.
Starting a new medical practice requires strategic planning and the right financial partner. Lendio simplifies the funding process, connecting healthcare professionals with 75+ lenders and loans designed specifically for medical startup companies.
Compare loan options side-by-side, explore offers aligned with your medical specialty, and find the medical practice loan that’s right for your needs with one simple application.
Opening a new clinic, buying diagnostic tools, or hiring additional staff can easily cost six figures. But healthcare businesses have a significant advantage. Since many medical practices have consistent demand and predictable reimbursement models, lenders often view them as lower-risk borrowers.
A healthcare business loan might be the right move if you’re planning for growth or need to stabilize cash flow. Common scenarios include:
Expanding or relocating your medical office: Buying real estate or financing major buildouts or extensive renovations.
Purchasing medical equipment: Financing revenue-generating assets such as surgical robots, MRI machines, dental chairs, ultrasound systems, or advanced diagnostic tools.
Updating systems and technology: Modernizing patient management software, Electronic Health Record (EHR) systems, or specialized billing platforms.
Managing temporary cash flow disruptions: Covering gaps in working capital, particularly those caused by seasonal slowdowns or delayed insurance reimbursements.
Supporting acquisitions or mergers: Purchasing another practice, merging with partners, or covering transition costs.
While a healthcare business loancan be a financial safety net, manyforward-thinking medical professionals use it as a proactive tool to fuel growth. When used strategically, the funds may help improve efficiency, expand patient capacity, and make your practice more competitive.
Loan options for medical professionals.
Medical professionals typically have access to several types of small business loans. The right option for your needs depends on several factors, including how quickly you need funding, what you need it for, and how much time you need to repay it. Here are some of the most common medical financing structures.
Loan Type
Best Uses
Typical Terms
SBA 7(a) loan
Large investments such as real estate, acquisitions, major renovations, long-term working capital.
Loan amounts up to $5 million. Repayment rates up to 25 years. Competitive interest rates.
Equipment Financing
Purchasing specific, high-cost medical equipment, such as diagnostic machines, surgical tools, or office technology.
Loan amounts based on equipment value. Terms typically match equipment lifespan.
Business Line of Credit
Covering short-term gaps in cash flow, unexpected expenses, or recurring costs.
Revolving credit up to a predetermined maximum. Borrow as needed, pay interest only on what you use.
Term loan
Major one-time costs such as software updates, office buildouts, or financing a partnership buy-in.
Fixed payments. Terms typically range from 1 to 5 years. Fast funding options.
A reputable lending marketplace, like Lendio, can help you compare healthcare loan options side-by-side and connect you with lenders who understand the cash flow patterns of medical practices.
How to qualify for medical office financing.
A healthcare business may already have a small edge when it comes to getting a small business loan, but your practice still needs to meet specific requirements. When evaluating applications for a medical practice loan, lenders typically look for:
Strong credit score and financial history: Lenders may check both your personal and business credit scores to verify that you have a solid history of managing debt responsibly.
Reliable income or contracts: Steady patient volume or stable contracts with major insurers help to prove your practice generates consistent income.
Business plan and projections: Newer practices may need to provide a detailed business plan with conservative revenue and expense projections.
Financial statements: Established practices typically must provide current financial statements to prove profitability.
Industry experience and professional licensing: Licenses, certifications, and time in the field help demonstrate your practice’s long-term viability.
Quick Tip: Having well-documented patient volume data and clear expense tracking may strengthen your application, particularly if you’re applying during a period of growth or transition.
Smart borrowing strategies.
The right strategic decisions can turn a medical practice loan into an investment tool that supports your long-term growth. Use these tips to help ensure your loan strengthens your practice without creating unnecessary financial pressure.
Borrow based on need.
Start with a clear estimate of how much you’ll need to achieve your goal. It’s reasonable to include a small buffer for unexpected costs, but if the lender offers significantly more than planned, think twice. Taking on extra debt may lead to higher monthly payments and unnecessary interest charges.
Match loan terms to asset lifespans.
Make sure you’re not paying for an asset beyond its useful lifetime. Secure shorter-term financing, such as a line of credit, for consumables or short-term working capital. Reserve longer-term financing for assets that match or exceed the repayment period, such as real estate or major equipment.
Maintain a strong cash reserve.
Even if your medical practice has reliable income, unexpected expenses or insurance delays could create a gap in cash flow. Before taking on a small business loan, you might consider setting aside three to six months of cash reserves. This can help create the flexibility to manage loan payments during lean times without dipping into funds needed for your daily operations.
Understand your loans repayment terms.
Carefully read the details before signing a loan agreement. Make sure you understand the interest structure, payment frequency, and whether it’s subject to prepayment penalties.
Maximizing returns for medical practice loans.
The best investments start with a clear plan. To get the most value from your financing, focus on improvements that directly improve your patient care, capacity, or efficiency. This ensures your financing is spent towards business improvements that positively impact revenue.
Then, continually measure outcomes by tracking metrics such as appointment volume, billing turnaround times, or administrative costs. Some financing, like medical equipment loans, may bring in more revenue right away. For other loans, it might take longer to start seeing a return on your investment.
Once you start experiencing ROI, consider reinvesting early gains into additional marketing or service expansion. These types of thoughtful, disciplined moves may help strengthen your practice’s overall financial resilience.
Tax and accounting considerations.
A medical practice loan may offer tax advantages. Interest payments are often deductible as business expenses. Equipment purchases may qualify for Section 179 deductions, allowing you to reduce taxable income quickly after making capital investments. You may also be able to depreciate renovation and buildout costs over time. To capture all potential tax benefits, consult with a healthcare-focused CPA who is experienced in medical practice accounting.
Lendio helps medical practices find the right loan.
Launching or growing a medical practice often means taking on six- or seven-figure expenses. Lendio simplifies the search for financing by connecting doctors, dentists, and other healthcare entrepreneurs with a network of more than 75 lenders specializing in business and medical financing.
Apply today to compare offers side-by-side and find a medical practice loan that fits your needs.
Launching a startup can be an exciting yet unpredictable challenge. Expenses often pile up before your first sale or invoice payment. Even a solid business plan can run into cash flow gaps that stall growth or make it tough to cover day-to-day costs.
That’s where a startup business line of credit can help. This flexible financing tool gives you on-demand working capital when you need it most. But like any business funding tool, it also comes with benefits and drawbacks.
Before you apply, it’s important to understand how a business line of credit for startups works, what lenders look for, and how its pros and cons stack up against other funding options.
How business lines of credit work for startups.
A typical business line of credit is a revolving form of financing, similar to a business credit card (though often with higher credit limits and different repayment terms). Instead of receiving a lump sum upfront as you would with a term loan, you qualify for a credit limit and only borrow what you need, when you need it. You pay interest solely on the funds you draw, not the full credit limit. And as you repay, your available credit resets. The cycle repeats throughout the draw period.
For example, if your startup secures a $50,000 revolving credit line and you draw $10,000 for a project, you’ll only pay interest on that $10,000 until you repay the balance. Once you pay back the money you borrowed, the full $50,000 limit becomes available to use again.
This revolving structure gives startups breathing room between pay cycles, new projects, or product launches. For many founders, that flexibility makes business credit lines a preferred financing alternative to long-term debt.(Note: Some lenders also offer fixed lines of credit. This financing option lets you borrow once and repay without the ability to draw again.)
Startup eligibility factors.
Qualifying for a business line of credit depends on each lender’s eligibility criteria. Banks tend to prefer established companies. Online lenders often work with newer businesses that demonstrate repayment ability.
Time in business: Traditional lenders, such as Wells Fargo or American Express, may prefer to work with borrowers that have one to two years in business. However, online lenders may accept newer startups (at least six months of operating history) that can show steady deposits or strong financial projections. Within the Lendio Marketplace, we partner with multiple lenders who offer lines of credit to businesses from brand new startups, to those with 6 months - 1 year in business.
Revenue and cash flow: Consistent monthly revenue demonstrates an ability to repay the money your business borrows. Requirements vary, but startups with at least $8,000 in monthly revenue often have better approval odds.
Personal and business credit scores: Both your business credit and personal credit matter. If your company is new, strong personal credit may help offset limited business credit history and help you qualify for better rates.
Collateral or personal guarantee: Some lenders may ask for collateral, like business equipment or inventory, if you’re applying for a secured business line of credit. If collateral isn’t an option, a personal guarantee might also boost approval odds or help you secure lower interest rates.
Financial statements and projections: Lenders may review financial statements (e.g., bank statements, profit-and-loss reports, cash flow forecasts, etc.) when you apply for a startup credit line. These documents can help show that your business has a plan to manage and repay the money it borrows.
Meeting lender requirements doesn’t guarantee approval for financing, but it may put your company in a better position. If your business is too new to qualify with a bank, Lendio’s marketplace includes lenders that specialize in startup-friendly business financing.
Pros of a business line of credit for startups.
A business line of credit can be a valuable resource when you’re building a company from the ground up. Below are some of the top advantages for startups.
Flexible funding for fluctuating cash flow
Most startups haven’t had a chance to establish predictable income yet. You might make a big sale one month and barely break even the next. Although this situation can be stressful, it’s part of the growth process. A business line of credit for startups can help you manage that inconsistency.
You might use a line of credit to cover inventory purchases before a busy season, fund marketing campaigns, or handle payroll while waiting for invoices to clear. That flexibility is why many small business owners prefer a revolving credit line over a traditional business loan.
No lump-sum debt commitment.
Traditional loans provide a fixed amount of money you have to repay with interest, whether you use the full balance or not. With a line of credit, you borrow only what you need, when you need it.
That means you’re not paying interest on unused money or stuck with debt you don’t need right away. This arrangement can help startups keep financing costs lower while still having access to capital for future needs. As a result, startups can reduce the risks of overborrowing and overspending.
Opportunity to build business credit.
An often overlooked perk of business lines of credit is their ability to help you build business credit. Lenders often report payment activity on credit lines to the business credit bureaus (like Experian, Equifax, and Dun & Bradstreet). Over time, paying on time and keeping your credit utilization low could improve your business credit score—possibly opening doors to better financing options later.
A business credit line could be a fast, easy way for your startup to begin separating personal and business credit. Remember, keeping personal and business finances separate is essential for your company’s long-term stability.
Quick access to working capital.
Many business loans take days or weeks to fund. But some online lenders can approve and fund a business line of credit within a few days or less. And once you open a business credit line, you’ll have the ability to access funds as needed during your draw period (up to the credit limit on your account).Fast access to cash means you can act quickly when unexpected costs come up, like broken equipment or a time-sensitive investment opportunity. For new business owners juggling uncertainty, having access to instant working capital can be a major stress relief.
Cons of a business line of credit.
While the benefits of a business credit line are appealing for startups, founders should also consider the limitations of this type of financing before applying.
Cost factors: rates, fees, and potential for overspending.
Business lines of credit typically feature variable interest rates, meaning that the APR you pay fluctuates based on market conditions. While this arrangement can work in your favor when interest rates drop, it also means that rates (and your payments) could increase unexpectedly.
On top of interest, lenders may charge:
Annual fees
Origination fees
Draw fees (for each withdrawal)
Late payment fees
It’s important to read the fine print before you sign any agreement. You should always calculate the total cost of borrowing upfront.
Because funds are so easy to assess, overspending is another risk to be aware of with business credit lines. As a startup, it’s important to be aware of this fact and treat your business line of credit like a financial tool, not extra cash.
Qualification barriers for startups.
New startups with limited credit history or inconsistent revenue may struggle to qualify for a business line of credit. Other startups might receive smaller credit limits or higher rates. Many lenders prefer borrowers to have at least six months of business history and a solid credit score before offering favorable financing terms.You might offset qualification challenges with collateral or a personal guarantee, but those options carry added risk. If your business can’t repay its debt, you could be personally responsible.
Short-term nature compared to other funding sources.
A line of credit is designed for short-term needs, not large-scale projects. So, if your startup needs funding for long-term investments (e.g., real estate, large equipment, etc.), a term loan or SBA loan might make more sense.
Lender can reduce credit limit.
Another drawback to consider is the fact that lenders can reduce or freeze the credit limit on a business line of credit. If your business experiences financial setbacks or your credit score declines, you might experience this scenario. That’s why it’s important to maintain a strong financial foundation and diversify your funding sources.
Pros and cons of a business line of credit at a glance
Pros
Cons
Flexible, revolving access to funds.
Variable rates could increase borrowing costs.
Pay interest only on funds you use.
Fees may apply for draws or maintenance.
Potential to build business credit with on-time payments.
May require collateral or personal guarantee.
Helps manage cash flow and payroll gaps.
Not ideal for long-term or large-scale financing.
Quick approval and funding options.
Risk of overspending or mismanagement.
Business line of credit vs. other startup financing options
Even if a business line of credit seems like a good fit, it’s smart to consider and compare other financing solutions. The right funding source for your business depends on your goals, timeline, and risk tolerance.
When a line of credit makes sense for startups
A business line of credit could be a good choice if your startup:
Needs help managing cash flow gaps or seasonal slowdowns.
Wants flexibility to handle recurring or short-term expenses.
Plans to borrow small amounts of money and repay debt quickly.
Prefers to avoid long-term debt.
Consider the following scenarios. An Ecommerce startup might use a line of credit to stock up on inventory ahead of a holiday rush and repay the balance after sales post. Likewise, a new consulting firm might draw from its credit line to cover payroll while it waits for client invoices to clear. In both cases, access to revolving capital keeps business operations running smoothly without the burden of fixed-term debt.
Startup financing alternatives.
If a business line of credit doesn’t seem right for your startup, there are other ways to borrow. Below are more startup business loans that might work for your company instead.
1. Term loans
A business term loan provides a lump sum you repay over a fixed schedule. It’s a strong choice for long-term investments like expanding operations, purchasing equipment, or hiring staff. Payments stay consistent throughout the life of the loan, making budgeting easier.
2. SBA loans
The U.S. Small Business Administration (SBA) partially guarantees SBA loans. There’s less risk involved for the lender and borrowers receive improved access to capital. SBA loans typically feature longer repayment terms and competitive interest rates. These benefits often make https://www.lendio.com/blog/sba-loan-startup (provided applicants have steady revenue and detailed business plans to satisfy SBA lender requirements).
3. Business credit cards
A business credit card could also work for new business owners who want a financing option to cover everyday expenses and small purchases. While credit limits are sometimes lower than business lines of credit, business credit cards may also offer rewards and help build credit. Just be mindful of higher interest rates if you carry a balance.
4. Equipment financing
Equipment financing can help you purchase machinery, tools, vehicles, or electronics while preserving cash flow. The equipment you finance serves as collateral for the loan. Repay the money you borrow in fixed monthly payments (plus interest) over a fixed term.
5. Invoice financing
Another funding option that may work for certain startups is invoice financing. With this type of financing, you essentially sell your business’ outstanding invoices to secure working capital now. Terms vary, but you may be able to borrow up to 80% of your accounts receivables.
Is a business line of credit right for your startup?
Whether or not a business line of credit is right for your startup depends on your goals, risk tolerance, and how you plan to use the funds. When you manage a credit line responsibly, it has the potential to help your new business maintain stability, cover short-term expenses, and build business credit.
However, a business credit line isn’t ideal for every startup. If your funding needs are large, long-term, or growth-oriented, you might benefit from pairing a line of credit with another financing option (like a term loan or SBA loan). Explore the best startup lines of credit in the Lendio marketplace and apply today.
As a small business owner, you often have the difficult job of balancing opportunities with obligations. And if you use a business line of credit to help cover short-term expenses, manage seasonal slowdowns, or support growth, you know just how important maintaining a flexible business financing source can be.
However, there may come a time when you need a change. Although your business may benefit from keeping an open credit line over an extended time, the original interest rate, fees, terms, or credit limit might not always be the best fit for your company’s needs. That’s where refinancing comes into play.
When you refinance a business line of credit, it may be possible to lower borrowing costs, improve cash flow, and access additional working capital for new business opportunities. Yet before you refinance, it’s important to understand the process, including potential benefits and common pitfalls, to decide whether it’s the right move for your business.
Can you refinance a business line of credit?
It is possible to refinance a business line of credit, but not all borrowers will automatically qualify. Refinancing a credit line simply means taking out new financing, like a new business line of credit or even a business loan, and using it to pay off your existing debt. In general, the goal is to find a new financing solution that offers better terms than your current credit line, such as a lower interest rate, higher credit limit, or a better repayment structure.
Of course, it’s important to keep in mind that there are caveats when it comes to refinancing a business line of credit. Some lenders may restrict early refinancing or your financing agreement might include a prepayment penalty if you close a credit line before a certain date. You’ll also need to meet a new lender’s qualification requirements, including creditworthiness and annual revenue standards, to qualify.
On the other hand, if your business credit score, personal credit score, or cash flow has improved since you first opened your line of credit, refinancing might be an easier task. With improvement in these areas (or others), you could be in a stronger position as a borrower to refinance and potentially secure better financing terms.
Is refinancing your business line of credit right for you?
Refinancing a credit line can sometimes be helpful, but it isn’t a one-size-fits-all decision. Before you make a switch, it’s wise to evaluate your current financing situation, business goals, and eligibility.
When refinancing makes sense.
Refinancing a business line of credit could be a smart move if:
You’re seeking a longer draw period or better repayment terms.
You need access to more capital to support business growth or new projects.
You want to consolidate multiple credit lines or business debt into a single account.
When refinancing might not help.
It may not be the right time to refinance a business line of credit if:
Your credit utilization ratio is high.
Your credit score has declined.
Cash flow for your business is unpredictable.
Prepayment penalties may apply (and outweigh potential savings) if you refinance early.
Benefits and drawbacks of refinancing a business line of credit.
There are also pros and cons to consider before you refinance a business credit line. See the chart below for side-by-side comparisons you can use during the decision-making process.
Benefits
Drawbacks
Possible to lower interest rate and overall cost of borrowing (if eligible).
May involve new origination and closing fees.
Possible to improve repayment terms for better cash flow management (based on eligibility).
Requires time and effort to apply and qualify.
Opportunity to consolidate debt into a single payment.
Lenders may not approve refinancing for existing borrowers, and you'll need to qualify if seeking financing from a new lender.
Understanding risks and limitations.
Every financing decision involves trade-offs. For example, while a lower interest rate might reduce your monthly payment, a renewed (and therefore) longer overall repayment term could increase total interest costs over time. Likewise, switching lenders might cause a dip in your average age of credit history, potentially triggering a decrease in your credit score.
Before you move forward, calculate these variables. Then, make sure the projected savings from refinancing your credit line is the right strategy to support your long-term business goals.
How to prepare for refinancing: Key steps and requirements.
If you’re considering a business credit line refinance, preparation is key. Lenders will review your company’s financial health, repayment history, and risk profile before approving a refinance or any other type of new business financing. So, if you take time to strengthen your business’ financial position and creditworthiness before you apply, it may improve your approval odds and make your overall refinancing process smoother.
Business credit score: Lenders assess your credit profile to evaluate your ability to manage business debt responsibly. A higher credit score could unlock lower interest rates and better borrowing terms.
Annual revenue: Your company’s gross revenue helps lenders determine your repayment capacity. Lenders want assurance you can manage new business debt payments comfortably.
Cash flow: Consistent cash flow indicates stability and demonstrates an ability to meet financial obligations like debt payments, payroll, and operating expenses.
Time in business: Some lenders prefer businesses to have at least one or two years of operational history. However, companies with six months or more in business may be eligible for a startup business line of credit.
After reviewing these factors, take the time to address possible weak points. For example, improving your credit or increasing your working capital might put you in a better position for approval.
Navigating the application process for a refinance.
Once you’re ready to move forward, it’s also helpful to understand what to expect when you apply for a refinance. The process can vary slightly from one lender to another, but here’s a general idea of what you might experience.
1. Review your current loan agreement.
Before applying with another lender, review your existing loan terms. Take time to understand fees, rate structures, and prepayment penalties in your current financing agreement. These details can help you make informed decisions when you evaluate new financing offers.
2. Assess your financial health.
Check your business credit, personal credit, and recent financial statements. Pay down debt balances (especially business credit card balances) whenever possible. Most of all, pay on time to protect your credit score.
3. Determine your refinancing goals.
Identify your top priorities for refinancing, like lowering your interest rate, consolidating debt, or increasing your credit limit. Clear financial goals make it easier to sort through offers and choose the best financing solution for your business.
4. Gather key documentation.
Most lenders require you to provide financial statements, tax returns, and bank statements when you apply for a new credit line or other types of business financing. So, it’s wise to prepare these documents in advance to help speed up the application and underwriting process.
5. Compare lenders and offers.
Request financing quotes from multiple lenders, including online lenders, banks, and SBA loan programs (depending on your borrowing needs). Once you receive quotes, compare interest rates, repayment terms, and fees carefully to find the best fit for your company.
6. Submit your refinance application.
After you select the best credit line or business loan for your needs, complete your new lender’s application with accurate details and supporting documents. If the lender asks for any additional information, be sure to respond promptly to avoid potential delays.
7. Review approval terms.
Once a lender approves your application, read through the final loan agreement carefully. Confirm the new interest rate, fees, repayment term, and any collateral requirements before signing.
8. Close and receive funds disbursement.
After closing, your lender pays off the existing credit line or disburses funds so you can do so. If you’re opening a new credit line, be sure to activate your new account and confirm access. With any type of credit, be sure to make your new payments according to the terms of your financing agreement to avoid problems and (hopefully) continue building positive business credit history for the future.
Maximizing benefits and avoiding pitfalls post-refinance.
After refinancing, use your new business line of credit strategically. If you’ve secured a lower interest rate or reduced fees, you can use the savings to reinvest in business growth—perhaps through equipment purchases, operational expansion, or improved cash flow management.
It’s also important to keep your credit utilization ratio low and make all monthly payments on time to maintain a healthy business credit score. Consider setting up automatic payments to avoid missed due dates that could affect future financing opportunities.
Finally, avoid the temptation to take on unnecessary new loans or additional debt. A refinance has the potential to optimize your company’s finances. But it’s essential to manage the refinance process with discipline and a clear growth plan to avoid potential setbacks.
Next steps.
Refinancing a business line of credit can be a smart move, as long as you’re doing it for the right reasons and you manage the process carefully. By securing lower interest rates, better terms, or a higher credit limit, you can improve cash flow and reduce borrowing costs. And either of these scenarios could give your business more flexibility to grow.
Before you commit to refinance a business line of credit, however, it’s essential to evaluate your full financial picture. You also want to compare multiple business financing options. With a little preparation and the right lender, refinancing a business line of credit could transform your business financing strategy and better position your company for long-term success.
SBA loans can boost your business, helping you to expand, pay debts, or keep payroll current. However, the work’s not done when you fill out the application. By maintaining a strong, trusted relationship with your SBA lender, you can stay on top of loan issues, get access to better terms, and even get fast-tracked for future financing opportunities.
Here’s what it takes to be known as the ideal SBA borrower, including communication tips and ways to be proactive about your loan repayment.
Why your SBA lender relationship matters.
Just as you would want a good relationship with a landlord to keep our living situation secure and worry-free, you’ll want to prioritize the connection you have with your SBA lender to give your business as much stability as possible.
Why? Lenders don’t just pay out loan money. They can advise you on the right amount of risk to take, help you navigate the loan process, and even advocate for that “yes” when you need it most.
If you earn your lender’s trust, they can be more open to your preferred loan terms (monthly payment amounts or term length) and can even consider you for more loans down the road. It’s actually much easier for banks to work with existing customers, since they have much of what they need for approvals on file. It benefits them to keep working with the business owners they know.
As you build credibility, you may gain access to more and better startup loans over time, a win-win for both borrower and lender.
Practical steps to strengthen your SBA lender relationship.
Keeping your lender in your good graces works much like maintaining any type of relationship, with a few special considerations. They include:
1. Communicate clearly and often.
Don’t make the bank come to you for clarification, especially when it comes to late or missing payments. Even if you have no news to report, making a quick call or email to update them on business goal progress, challenges, or wins can go a long way. Avoid hiding bad news, such as a sudden revenue loss or legal situation.
2. Keep documentation organized.
The SBA loan application won’t be a one-and-done and is actually the start of some dedicated bookkeeping and reporting. Continue tracking financials, collecting tax returns, and updating business plans, and create a second, lender-specific copy of important documents that you don’t have to have back. As the lender asks for information, you’ll have it handy and ready to go. If they don’t, it will be ready to provide for your next loan application.
3. Show consistency in business performance.
The lender will want to see that they took a good financial risk when lending you money, and you can play a key role in demonstrating your creditworthiness. In addition to the necessary documents shared above, keep separate reports, executive summaries, and pitch decks that highlight your milestones. Include new business contracts, customer testimonials, or market expansion plans. This isn’t a time to be modest about your accomplishments!
4. Be transparent about risks.
Even if you didn’t have these concerns when you first applied for the SBA loan, it’s up to you to make the lender aware of any risks that could jeopardize the loan. Lenders prefer honesty over surprises and would rather you share even a suspected hazard that hasn’t occurred yet. Explain how you’re dealing with any challenges, no matter how seasonal or temporary. This includes industry shifts, buyer sentiment, and product defects.
5. Use your lender as a resource.
Lenders make their money by betting on the right businesses. So, they’ve seen their fair share of successful scenarios. Instead of treating the loan like a one-time business transaction, ask for advice on structuring debt, preparing for expansion, or improving overall credit. By making them a long-term partner with a vested interest in your success, you ensure you both get all you can from the relationship.
Mistakes to avoid with SBA lenders.
Lenders can be understanding if you don’t follow these best practices perfectly. However, it’s best to start on the right foot and set the tone for a professional and reliable partnership. If possible, avoid these errors that can make it difficult for your lender to trust you and may harm your relationship over time.
Keeping information about your business challenges to yourself
Submitting incomplete paperwork or documents with errors
Not staying in touch after the loan payout
Applying for much more money than you can reasonably afford, even if you qualify for that amount
Any one of these mistakes can keep you from enjoying a fruitful partnership with your lender. It can keep you from getting faster approvals for future SBA loans and access to other lines of credit or promotional offers.
Lendio can help.
Do the SBA loan requirements seem like too much? It’s true that failing to nurture the lender relationship can limit your future borrowing options and may cause you to miss out on some trusted business advice.
The good news is that you don’t have to shoulder the burden of this alone. Lendio not only helps you find the best SBA-approved lender that’s right for your initial borrowing needs, but it also helps you foster long-term relationships to keep your business going strong – even in difficult times.
The platform offers one application for multiple lender options and simplifies the documentation and submission process. With less time spent on paperwork, you can keep on top of lender communication while you tend to the health of your business.
With strong relationships comes stronger business, and Lendio’s here to help at every stage of your journey. Start your application for an SBA loan with Lendio today!
Social media can be a game-changer for small businesses—if you know how to use it. This guide covers everything from choosing the right platforms to creating engaging content and growing your audience. With actionable tips and proven strategies, you’ll learn how to turn likes and follows into real business results.
Email marketing is one of the most powerful tools for small businesses—when done right. This guide covers everything from building your email list to crafting engaging campaigns that drive results. With actionable tips and step-by-step guidance, you’ll learn how to connect with your audience, boost sales, and grow your business through email.
Digital marketing doesn’t have to be overwhelming. This guide simplifies the essentials, from building an online presence to leveraging social media, email, and SEO. Packed with practical tips and step-by-step strategies, it’s designed to help small businesses succeed in the digital world without a big budget or a full marketing team.
Let’s face it. There’s a lot of bad marketing advice out there. Or great advice that’s far too in-depth for a small business owner who isn’t looking to start a full-time career in marketing. We created this guide to cut through the clutter and provide you with principles, direction and the applicable step-by-step how-tos to get the job done.
Your brand is more than just a logo—it’s the heart of your business. This guide walks you through the essentials of small business branding, from defining your identity and crafting your message to building a strong, lasting impression. With clear steps and actionable advice, you’ll create a brand that resonates with customers and sets your business apart.
Hiring for small businesses doesn’t have to be complicated. Your business can achieve success when you understand relevant legal requirements and find the right job candidates for your open positions. This comprehensive guide covers everything from finding the right employees to hire to employee training and development.
Your best customers are your biggest growth opportunity. This guide breaks down customer marketing strategies tailored for small businesses, helping you turn happy customers into loyal advocates. From building relationships to leveraging referrals, discover actionable steps to maximize lifetime value and drive sustainable growth.
From selecting the right franchise opportunity to navigating the financial aspects, this step-by-step resource equips aspiring entrepreneurs with the knowledge and strategies needed to thrive in the world of franchising.
Have a business idea but not sure where to start? Our comprehensive guide to starting a business has everything you need to know. From legal requirements to market research, we’ve got you covered.
Running and growing a business is no easy feat. Our guide to running a business has everything you need to know to keep things running smoothly. From managing employees to marketing your business, we’ve got you covered.
Take your business to the next level with our Accounting Guide. Master the language of numbers, understand financial statements, and make informed decisions based on accurate financial data. Discover the power of sound financial management.
Master the art of cash flow management with our comprehensive guide. Learn strategies to optimize your cash flow, forecast revenue and expenses, and keep your business financially stable. Take control of your finances and achieve long-term success.
Streamline your billing process with our Invoicing Guide. Learn how to create professional invoices, manage client payments, and maintain a healthy cash flow for your business. Get paid faster and efficiently track your revenue.
A great marketing strategy is the foundation of small business success. This guide takes you step-by-step through defining your goals, identifying your audience, and choosing the right channels. With practical tips and clear direction, you’ll build a tailored strategy that drives growth and delivers measurable results.
Navigate the complex world of taxes with our Tax Preparation Guide. From understanding tax obligations to maximizing deductions and filing quarterly taxes, we’ll help you stay compliant and minimize your tax burden. Unlock the secrets of tax success for your business.
Stay on top of your business finances with our Bookkeeping Guide. Learn the art of tracking income and expenses, maintaining financial records, and keeping your books in order. Unlock financial success with our expert tips.
Need help securing funding for your business? Our business loans guide simplifies the financing process, explains key terms, and walks you through your loan options.
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