As a small business owner, when you think about obtaining financing, an SBA loan is usually one of the first options that comes to mind. While in many financial situations these loans are just the ticket, an SBA loan is not a perfect fit for every small business. SBA loans are a viable option for businesses without a lot of established credit and they often offer lower monthly payments, but they may come with higher interest rates and require more paperwork than other loans. Here are the important details you need to know before you consider applying for one: Pros: \tThe loan is guaranteed by the SBA (Small Business Administration) so lenders are more willing to approve loans for applicants who have limited business credit or collateral and as a result would normally be denied funding. \tSBA loans typically require lower down payments than traditional business loans from a bank. \tAn SBA loan can be structured with longer loan terms in order to reduce monthly payment amounts. Cons: \tSBA loans can have higher interest rates than traditional business loans. \tSBA loans require much more paperwork and the approval process generally takes more time than most other loan types. Many financial institutions say the turnaround time is 1–4 weeks, but more often than not it takes longer than that. \tThere are several restrictions surrounding eligibility for this funding: business ownership, the industry of the business and more. Even if your business does qualify for an SBA loan, consider all of your funding options before you apply. There are several specialty and general business loan types, and chances are, you will qualify for multiple financing options. The challenge then is in choosing the option for funding that best fits your business’s needs. Here are a few of the choices and the most important points to consider as you weigh the options: Business Credit Cards: They’re exactly what you think they are. They’re just like regular credit cards but for business expenses. Uses: \tDay-to-day business expenses \tBusiness credit building \tPurchasing inventory Pros: \tQuick approval process \tFlexible use \tA great way to begin building a business credit profile, which can help you become qualified for larger business loans \tMany have rewards programs like a small percentage of cash back or travel rewards Cons: \tNot a good option for large purchases like equipment or real estate \tAPR is generally high and can make payments expensive if card is not paid off on time \tLate payments affect your personal and business credit Business Lines of Credit: In many ways, a line of credit is similar to a credit card, but there are some key differences. Lines of credit are much more flexible than credit cards, especially with cash withdrawals. There are also secured and unsecured lines of credit. Uses: \tShort-term, recurring business expenses, such as inventory \tPayroll \tCovering costs up front for future projects Pros: \tVery flexible access to funding \tBetter APR than most credit cards \tBuilds credit \tEstablishes a relationship with a lender Cons: \tGenerally restricted to companies that have been in business for two or more years \tMore in-depth approval process than business credit cards Equipment Loans: As you can imagine, this form of funding is used to obtain equipment for a business. Whether it’s a pizza oven for your restaurant, a tractor for your farm or a 3D printer for your cutting-edge start-up, an equipment loan can help you get it. Uses: \tPurchasing equipment Pros: \tLow APR \tHelps build business credit \tThe equipment purchased acts as collateral for the loan Cons: \tOften requires a high down payment \tRequires good credit in order to get a good APR \tEquipment can depreciate quicker than the loan gets paid off Merchant Cash Advance: Cash advances are generally given to merchants based on credit card sales. Essentially, the lender providing the cash advance is purchasing future credit card sales. Uses: \tPay off other debts \tAvoid late fees with operating costs (utility bills, rent, etc.) \tPayroll \tPaying for vendor services Pros: \tHigh approval rates \tYou don’t need perfect credit to qualify \tNo collateral required Cons: \tOften times APR is higher \tLenders may charge various fees This list is more of a highlight reel than an exhaustive encyclopedia of loan types, but you can see there are many options for small business funding outside of an SBA loan. If your bank is unable to get you the financing you need, don’t sweat it. Generally, a local bank is only proficient in a small handful of these loan types; getting your loan application denied by a bank is far from the end of the line for your business. Online lending marketplaces, such as Lendio, work with a wide variety of lenders and loan types to help you get the funding that suits your specific needs. While an SBA loan is a valuable resource for many small businesses, it is not a one-size-fits-all loan product. Before you apply, assess your needs, do your research and weigh all of the options to determine which type of loan or line of credit will help you build and grow a successful business.