Lending Library

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 approval and funding for those in need of fast business loans.

Features of a business term loan are as follows:

• Loan amount: $5,000-$2 million
• Loan repayment term: 1-10 years
• Interest rate: 8.49% 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 are as follows:

• Loan amount: Up to $250,000
• Loan repayment term: 6-18 months
• Interest rate: 8% and up
• Funding time: As soon as same business day

Compare line of credit lenders.

3. Business cash advance

A cash advance isn’t a loan but a cash 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 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 business cash advance 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 financier, 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 your benchmark for the total cost of the loan. The lower the APR, the cheaper the loan. But 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.

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.

Your small business has limited or no financial history, and you find yourself needing a business loan. With no tax returns on-hand and limited paperwork, what are your options?

As you might imagine, this is a very common question for entrepreneurs and new small business owners. The good news is that there are options.

Here, we’ll walk you through no-doc business loans, as well as some other alternative options that don’t require tax returns, and what you do need to qualify for them.

First off, can I get a business loan without tax returns?

Yes, you can. Many lenders offer business loans without requiring tax returns, typically referred to as no-doc business loans or low-doc business loans (meaning no or low documentation).

Traditional banks often require extensive documentation and financial history. Online and alternative lenders are making it easier to secure funding with minimal paperwork.

If you’re looking for a no-doc business loan, you’re probably in one of the following categories:

• Startup without tax history
• Small business owner with no/fluctuating income
• Entrepreneur prioritizing fast access to funds (regardless of tax history)

What are no-doc business loans?

A no-doc business loan is a type of financing that doesn’t require traditional financial statements like tax returns, profit and loss statements, or detailed revenue reports.

Instead, lenders evaluate eligibility with more day-to-day items, like bank statements, credit scores, merchant transactions, and invoices (both incoming and outgoing).

How do no-doc loans work?

Unlike traditional business loans, no-doc loans prioritize speed and accessibility. They’re typically offered by online or alternative lenders, and less so from traditional banks.

Instead of tax returns, lenders assess:

• Business bank statements (typically 3–12 months)
• Personal or business credit score
• Merchant processing statements (for businesses with credit card sales)
• Outstanding invoices (for invoice financing options)

As is the case for any alternative or fast loan options, no-doc business loans typically come with higher interest rates, lower funding amounts, and less favorable repayment terms. 

Personal and business credit scores, the steadiness of your business (revenue and spending), and collateral will typically be the biggest determinants of the terms you qualify for.

No-doc business loan options

As discussed above, no-doc loan options don’t require the same level of paperwork as traditional loans.

Most no-doc lenders still require business bank statements, credit scores, outstanding invoices, and proof of ownership (business info like EIN, entity type) and a voided check.

No-doc loans do not require:

• Tax returns
• (Some) Financial statements
• Business plans
• Personal collateral

1. Revenue-based financing (Business cash advance / Merchant cash advance)

Outside of specific no-doc loans, you still have a selection of options that won’t require a tax return. A business cash advance, for example, is an advance based on the future sales of your business.

How does it work?

A lender provides a lump sum upfront. For business cash advances, daily or weekly repayments are determined based on your cash flow. With MCAs, repayment is based on a percentage of your daily credit card transactions. Because repayment is based on sales, it’s a good option for business with strong, steady revenue.

Want to learn more? Read about your options for revenue-based financing.

When you shouldn’t use a business cash advance:

1. If you have tight profit margins. Repayments come daily/weekly, which can drain cash fast.
2. If you’re not as familiar with factor rates - these rates are expressed differently than typical interest rates and require some additional calculation to understand the total cost of your loan.
3. If you’re looking for long-term growth capital. Cash advances are for short-term growth, not strategic scaling.

2. Business lines of credit

A business line of credit works like a personal credit card, allowing small businesses to draw funds as needed up to a set limit. Unlike traditional loans, a line of credit is not delivered as a lump sum, but can be accessed as needed at any time (so long as the amount stays within the credit limit).

A business line of credit serves as a great safety net for different types of small businesses.

When you shouldn’t use a business line of credit:

1. If your startup is brand new. Lenders typically want 6–12+ months in business.
2. If you need a lump sum of cash upfront.
3. If you need money yesterday. LOC approvals can take a few days.

3. Invoice financing & factoring

Invoice factoring allows businesses to get an advance on unpaid invoices.

Lenders front a percentage of the invoice amount, giving small businesses access to immediate capital, instead of having to wait for customers to pay in-full. Repayment happens when the customer pays their invoice.

When you shouldn’t use invoice factoring:

1. If you don’t have invoices to factor (i.e. consumer retail, restaurants, etc.)
2. If you have low-margin invoices. Factoring fees can eat into profits.
3. If you don’t want clients to know you’re factoring (some lenders notify your customers during the process).

4. Short-term business loans

Short-term small business loans give you access to a lump sum upfront, with fixed repayment over a short period (usually 3 to 24 months, though sometimes up to 36).

Payments are daily, weekly, or monthly, depending on your terms. Like no-doc business loans, short-term loans require little documentation, but come with higher interest rates compared to traditional loans.

When you shouldn’t look for a short-term business loan:

1. If you have tight cash flow. Daily or weekly repayments can get rough fast
2. If you’re looking for long-term, low-cost funding. You’ll get a better deal with SBA or term loans.
3. If you don’t have revenue. You likely won’t qualify.

Feature comparison of small business loans that don't require tax returns

Qualifying for a no-doc business loan

Even without tax returns, lenders still need to evaluate the financial health of your business. So, even if you’re looking for a no-doc or low-doc business loan option, you should still be prepared with:

• A Strong Credit Score: No-doc lenders often rely heavily on personal or business credit scores.
• Bank Statements: Demonstrating steady cash flow helps prove repayment ability.
• Proof of Revenue: Alternative documentation, like merchant account statements or invoices, can replace tax returns.‍
• Collateral (Optional): Some lenders offer secured no-doc loans if you can provide business assets as collateral, which will help you qualify for more favorable terms.

Explore your options

Not having tax returns shouldn’t stop you from securing the funding your business needs. By exploring alternative financing options like no-doc loans, BCAs, and short-term loans, you can find something that works for you, and works for you now.

If you’re ready to explore your options, Lendio can connect you with lenders offering business loans without tax returns. Get started today!

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Understanding how small business financing impacts tax strategy and preparation is essential for business owners and financial managers seeking to optimize their tax strategy and improve financial planning. Business loans play a critical role in supporting small businesses by providing the necessary capital, but the associated tax implications can be complex.

Some of that complexity comes from different loan product types that a small business may obtain, and whether interest or payments can be deducted from taxes. In this article, we'll cover common business loan types and their tax implications, the criteria for claiming interest tax deductions, business loan payment deductions, and common mistakes to avoid when filing your taxes.

Are business loans taxable?

Business loans are not considered taxable income, because they represent borrowed funds that the business is obligated to repay. When a business receives a loan, the principal of the loan does not count as income for tax purposes, since the amount received isn't earned -- it's borrowed.

However, while the principal is not taxable, the interest paid on the loan might be eligible for tax deductions. Small businesses often deduct interest paid on a loan as a business expense, as long as criteria are met, which we will cover in section 2. By deducting interest payments, businesses can reduce their taxable income, lowering the tax burden.

What types of business financing are considered taxable?

There are situations where business financing becomes taxable income. For example, if a lender forgives or cancels a loan, the amount forgiven could be considered taxable income for the business. A recent example is Paycheck Protection Program (PPP) loans issued during the COVID-19 pandemic.

Many businesses applied for and received loan forgiveness for their PPP loans, becoming eligible to exclude the amount forgiven from taxable income. However, the IRS found recurrent instances where PPP loans were improperly forgiven, because the applicant did not meet the criteria for forgiveness through misrepresentation or omission. Businesses that were found to have improperly forgiven PPP loans were instructed to include the amount forgiven in their income and pay any additional income tax assessed.

Another situation where financing might be considered taxable is if it is used for non-business purposes. In this case, any interest paid on the loan would not be tax deductible and could be subject to taxes. These situations underscore why it is important for businesses to carefully consider tax implications when seeking financing, and ensure they are using funds appropriately, and in line with requirements set by lenders or government programs.

When in doubt, a professional tax filing service can be a big help. Lendio is proud to partner with Taxfyle, a real-time tax filing app that helps small businesses file taxes with the help of a dedicated CPA or EA professional.

Common business loan types and their taxability

Small businesses can find a wealth of loan types to increase their working capital and invest in growing their business. That's why it's essential to understand how each can impact your taxes and overall financial strategy. Below are some common types of small business financing, and considerations for their tax implications.

Business Term Loan

Business term loans are a lump-sum financing payment for small businesses that usually come with a fixed interest rate and repayment schedule over an agreed term. The interest paid on these loans is usually deductible as a business expense, reducing taxable income.

Business Line of Credit

Business lines of credit provide flexible access to capital. Small businesses can borrow as needed, up to a negotiated limit, and interest is paid only on what amount is used. The interest on the amount withdrawn is often deductible, provided it is used for legitimate business purposes.

Equipment Financing

Equipment financing is tied specifically to purchasing or leasing equipment, and the tax implications are two-fold. Both interest paid on the financing and depreciation of the asset may offer tax deductions to the business.

Revenue-Based Financing (BCA/ MCA)

Revenue-based financing, or cash advance, is a more unique form of financing, in that repayment is linked to future sales. Because of this model, these are not technically loans, and the associated fees may not qualify for interest deductions on taxes.

SBA Loans

Small Business Administration (SBA) loans provide favorable terms and low interest rates to borrowers, and these interest payments are generally deductible.

Deducting business loan interest: what's eligible?

An interest tax deduction is a valuable tool for small businesses looking to reduce taxable income. To claim these deductions, it is essential to first understand the criteria set by the IRS.

Conditions for interest payment deductibility

Small businesses can generally deduct some or all of the interest paid or accrued during a tax year on loans. However, you can only deduct the interest if you meet the following criteria:

• You are legally liable for the debt
• Both you and the lender intend the debt to be repaid
• You and the lender have a true debtor-creditor relationship

If you have received business financing and are using it for business-related expenses or purposes, this is fairly straightforward. There are some exceptions where deductibility is concerned to be aware of.

Exceptions to interest deductibility 

Gross Receipts over $29 million

The IRS provides a small business exemption for businesses with average annual gross receipts of $29 million or less over the past three years. If a business has more than $29 million in gross receipts, they may be limited on how many interest deductions they can claim. Form 8990 will help you determine if you must limit your business interest expense deductions and whether your business qualifies to elect out.

Part-Business, Part-Personal Loans

In some cases, a loan may be for both business and personal reasons. A common example is a car loan. If you use the car for business purposes and personal purposes, you can only deduct the interest on the percentage of business use for the car, not on the entire interest of the loan for the year.

Tracking and documenting business financing for taxes

Accurate tracking and documentation of business financing is important for small businesses to maintain, in order to optimize tax deductions and ensure compliance with the IRS. Record-keeping involves maintaining detailed accounts of all loan-related transactions, including:

• Original loan agreement
• Interest payment records
• Correspondence with lenders
• Repayment schedules
• Use of borrowed funds

By keeping these records organized and frequently updated, small businesses work toward managing business taxes well, and substantiate any deduction claims when filing their taxes. It also allows financial planning to maximize the potential for interest and payment deductions, as well as mitigate risks.

Expert tips for optimizing tax efficiency

Tax efficiency should be a goal of small businesses, especially during seasons when margins can be tight. Here are some tips to help you navigate some common financing-related tax mistakes that can affect your financial statements, and make tax season a real headache. 

Common Mistakes to Avoid

1. Misclassifying Expenses

A common mistake small businesses make when filing their taxes is mislabelling expenses, or categorizing them incorrectly. This can cause inaccurate financial records, and potentially disallow tax deductions that could reduce tax burden. The most common misclassification is classifying a personal expense as a business expense. Doing this can cause issues and potential penalties during an IRS audit. 

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Tip: Keep careful records with clear classification of expenses using accounting software or a dedicated financial professional. This will make reducing tax errors easier, and also give you more accurate insights into your operational costs and overall financial health.

2. Not reconciling loan interest correctly

As a practice, small businesses should keep careful records of each interest payment associated with a loan. When records aren’t properly updated or kept, discrepancies may appear on financial statements and in your tax filing, resulting in missing out on eligible deductions or even overpayment. Mismatched records may also be flagged during an IRS audit.

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Tip: Regularly update and review your financial records, particularly where loan interest payments are concerned. This provides clear visibility both for your business, and the IRS.

3. Reporting loan forgiveness incorrectly

If your business receives loan forgiveness, it is important to assess whether it needs to be reported as taxable income. Failing to do this can lead to serious tax implications, including penalties and interest owed. The PPP loan example above is a cautionary tale. Most cases of debt forgiveness or cancellation require you to include the cancelled amount in income, with some exceptions like bankruptcy or insolvency. IRS Publication 4681 offers guidance on canceled debts and exceptions. 

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Tip: Maintain accurate financial records and any correspondence or documents provided by the lender forgiving or cancelling the debt. Consult with a tax professional to determine if your forgiven loan should be reported as taxable income, and ensure compliance with IRS regulations.

Should you work with a tax professional?

Navigating business loan tax implications can be daunting for even the most experienced business owner. A tax professional can be an invaluable resource in optimizing your financial strategies, while ensuring you remain in compliance with IRS regulations.

But keeping a dedicated finance professional on the payroll can be a tough order for small businesses. That’s why services like Taxfyle, Lendio’s trusted partner,  can help small business owners immensely navigate tax filing, especially where business financing comes into play.

Taxfyle connects you to a licensed CPA or EA who will prepare and file your business tax return for you, looking for maximum eligible deductions, qualifying credits and filing with accuracy.

If you’re concerned about the state of your books, Taxfyle’s cleanup bookkeeping will organize your records, fix errors, and get your finances tax-ready before it’s time to file.

Want to learn more about Taxfyle? Visit www.taxfyle.com for more information. Lendio customers can get a discount on business tax filing services. Click here to get your code for 10% off!

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You might be worried your small business may face a huge tax bill, or perhaps you’ve received one already. Either way, if you feel you’re unable to pay your tax bill in full, there are options available to help you manage your tax debt and avoid high-interest penalties. Whether you explore an IRS payment plan, or seek a business loan to cover your tax debt, we’ll discuss your options in this article.

The tax dilemma for small business owners

Approaching tax debt can cause a dilemma for small business finances. On one hand, business owners want to keep their tax bill payments as low as possible to maximize profits, maintain cash flow, and keep growing their business. On the other hand, SMBs also need to ensure they pay off their tax debt quickly to avoid potential penalties from the IRS.

Tax payment options for small businesses

There are a few options to keep in mind when deciding how to pay your tax debt to the IRS. You can opt for an Installment Payment Agreement (IPA) with the IRS. Another option is an Offer in Compromise (OIC) with the IRS, if your business qualifies for the program. A third option is seeking a business loan to cover your tax debt.

IRS payment plan

Most business taxpayers can obtain a long-term payment plan (or installment agreement) from the IRS, as long as they have a total balance less than $25,000 in combined tax, penalties and interest from the current and preceding tax year. With a payment plan, business owners can make monthly payments for up to 24 months on their tax debt. 

Even if you have a payment plan, The IRS assesses interest every day that your payment is overdue. The 2025 rate for underpayment is 7 percent. Since interest compounds daily on IRS payment plans, you could pay much more than you originally owed.

Pros and cons of an IRS payment plan

Offer in compromise 

An offer in compromise is a program offered by the IRS to allow eligible individuals to settle their tax debt for less than the full amount owed. An offer in compromise is most often used when businesses cannot pay their full tax debt, or paying the full debt creates financial hardship.

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Eligibility requirements for an offer in compromise include:

• You’ve filed all required tax returns and made all required estimated payments.
• You aren’t in an open bankruptcy proceeding.
• You have a valid extension for a current year return, if you’re applying for the current year.
• You are an employer and made tax deposits for the current and past 2 quarters.

An offer in compromise application is more likely to be approved when small business owners offer the most the IRS can expect to collect within a reasonable period of time.

Obtaining a business loan for tax payment

A business loan can be a good choice for small business owners facing significant tax payments. While IRS payment plans have pre-set terms, business loans can offer greater flexibility in terms of a repayment schedule. For industries with irregular income streams, a business loan could also allow owners to align the repayment schedule with their cash flow cycles.

When is a business loan better than an IRS payment plan for paying tax debt?

For business owners with strong credit scores, a business loan might offer more favorable terms, such as lower interest rates compared to IRS underpayment penalties and interest rates. Many business loans can also provide immediate access to capital with a lump-sum payment, allowing businesses to take care of their tax obligations promptly, and potentially use additional funds for working capital and other business needs.

Best business loans to pay taxes

When business owners face the burden of paying taxes, assessing the best business loans for the task and their business profile is important. Factors to consider when borrowing are favorable interest rates and flexible repayment schedules, so that businesses can pay off their liability without straining cash flow.

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The length of the application process and approval process with each lender may be especially important too, especially with tax deadlines looming. Before applying for a loan, assess your financing needs, your businesses’ financial health, and IRS requirements for your repayment to determine the right loan option for you.

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Here are some loan options and financing structures that can help you tackle IRS debt repayment while freeing up working capital for your business. The terms and repayment options vary for each type of loan or financing.

Launching a startup business is exciting, but it can also be stressful if you need external money to keep the momentum going. While the U.S. Small Business Administration offers several small business loans for established companies, there are also some loan options available to new ventures. This guide will cover SBA funding for startups, as well as how to apply. We’ll also cover the SBA loan requirements for startups, and alternatives for capital if these loan types won’t work for your business.

SBA Loans For New Startups

While there’s no specific SBA startup loan, there are two financing options available to newer businesses: the SBA microloan and the SBA Community Advantage Program. Each one has its own loan terms and eligibility requirements, and can help serve brand new businesses that are just starting out.

SBA Microloan

An SBA microloan for startups allows businesses to borrow up to $50,000. The average loan size, however, is much smaller at $13,000. The maximum loan term is seven years. These smaller loans are geared towards early-stage businesses, so have less strict eligibility requirements than other SBA loans and traditional loan options.

Ideal for: Managing a new business and providing working capital.

Can be used for: Working capital, inventory, supplies, equipment, furniture or fixtures.

Cannot be used for: Paying existing debt, settling lawsuits, trade disputes, fines, penalties, or purchasing real estate.

Eligible businesses: For-profit small business or nonprofit child care center.

Application Process: Even when choosing to use an SBA loan to start a business, you’ll still need to apply directly through a lender. Lenders typically require collateral and a personal guarantee in order to get approved for a microloan. Read our guide to learn more about applying for an SBA microloan.

SBA Community Advantage Program

Historically underserved communities may be eligible for the Community Advantage Program for a SBA loan for their startup. It’s specifically designed to help new entrepreneurs in underserved markets obtain working capital. You can borrow up to $350,000 over the course of 10 years through Community Advantage Small Business Lending Companies (CA SBLCs)  Originally begun as the Community Advantage Pilot program that sunsetted September 30, 2024, the Community Advantage Program is now a permanent part of the SBA 7(a) loan program, through new licenses issued to previous lenders in the program who can now issue 7(a) loans to traditionally underserved businesses.

Ideal for: New businesses located in low-to-moderate income communities that are less than two years old.

Can be used for: Purchasing commercial real estate that the owner occupies, leasehold improvements or renovations, purchase of inventory, equipment, furniture, fixtures, working capital, business acquisition, or debt refinance for any of the above.

Cannot be used for: Illegal businesses or businesses that do not meet the eligibility requirements, delinquent taxes, investment real estate, or personal use.

Eligibility requirements: Eligible businesses must be part of an underserved market. There are several ways to qualify for this designation, such as:

• Businesses located in Low-to-Moderate Income Communities, Empowerment Zones and Enterprise Communities, Historically Underutilized Business Zones, Promise Zones, Opportunity Zones or Rural Areas
• New businesses that have been operating for less than two years
• Veteran-owned businesses that are 51 percent or more owned and controlled by one or more veterans
• Businesses where more that 50% of the full-time workforce is low-income or resides in LMI census tracts.

Interested in exploring loan options, including SBA loan products like microloans and 7(a) loans, for your new business? Compare loan offers from multiple lenders with Lendio. Applying is free, and won’t impact your credit. Apply now! 

SBA Loans For Established Startups 

Once your startup has reached two years old, the options for SBA loans expand. The following options have their own eligibility requirements.

SBA 7(a) Loan

SBA 7(a) loan funds can be used for a number of purposes. The maximum loan amount is $5 million, and any loan amount over $25,000 requires collateral. Loan repayment terms can vary depending on what the loan is used for, but the repayment period is usually 10 years.

Ideal for: Businesses who have reached the growth stage.

Can be used for: Working capital, equipment, supplies, real estate, debt refinancing and ownership changes.

Cannot be used for: illegal or unqualified business as defined by the SBA, delinquent taxes, investment real estate or personal use.

Eligibility Requirements: Each SBA lender's criteria may vary for an SBA loan. For example, some may require a higher credit score than other lenders. However, at minimum you must have owner equity and engage in for-profit operation in the U.S. or its territories. Read our guide for more information about SBA 7(a) loan requirements.

SBA 504 Loan

The SBA 504 loan is designed to help small businesses make major investments. Funds can be used for long-term assets such as real estate (including updates), land, equipment, machinery, or improvements to land, parking lots, and utilities. You can’t use the funds for working capital or inventory. If approved, you could borrow up to $5 million over a period of 10 or 20 years. 

Best For: Purchasing or upgrading major fixed assets for your business.

Can be used for: Real estate, land, equipment, machinery, or improvements to utilities, parking lots, and the above.

Cannot be used for: Working capital or Inventory purchase.

Eligibility Requirements: Like 7(a) lenders, 504 lenders may set more stringent criteria to access an SBA 504 loan. In most cases, you will need strong credit history, finances, and multiple years in business to qualify. Read our guide for more details on SBA 504 loan eligibility requirements! 

Explore Lendio to find the right SBA loan option for your startup, so you can start making the business moves you need to succeed.

How to Get an SBA Loan for Startups

In order to pursue an SBA loan for your startup and increase your chances of receiving a loan, you’ll want to do some preparation first. Here are the steps to take to prepare and submit an application for an SBA loan.

1. Calculate your Startup Costs

Knowing how much you need to borrow is your first step. Pull together the costs of starting your business, including one-time costs for permits, licenses, equipment, furniture and fixtures. You’ll also need to calculate recurring expenses, such as payroll, rent, and inventory for at least your first year in business. 

Calculating your business startup costs will give you an idea of how much money you will need to get your business off the ground.

2. Write Your Business Plan

Many lenders will want to see your business plan, including research on target market, pricing structure, marketing costs, challenges, and your industry competition. Your startup costs calculation also belongs in your business plan, as well as projected income.

Without multiple years of profits to lean on in your application, you’ll need to use these tools to show that your business will be a success, so spend some time writing a business plan to help you secure funding.

3. Review SBA Loan Qualifications

All your hard work will be for nothing if you start the loan application process only to realize you won’t qualify. First, review the standard SBA loan requirements. You’ll need to:

• Be a for-profit business operating in the U.S.
• Meet the Small Business Administration’s definition of a small business.
• Be able to show your ability to repay the loan.
• Have tried to find alternative forms of funding before trying to get an SBA loan.

Because SBA loans are issued through lenders, you’ll also need to review common requirements for underwriting loans to improve your chances. Your personal credit score and business credit score should be improved as much as possible before pursuing a loan, and you’ll need to gather cash flow, sales projections and any available collateral you may have for the loan.

4. Choose a Loan and Lender for Your Startup

After reading some of the available options above, you probably have an idea of which SBA startup loan option will meet your needs. From there, you’ll need to find the best SBA lender for your startup..

The SBA provides a Lender Match tool to help you find a bank, credit union, or community-based lender that participates in your chosen loan program. You can always double check with a financial institution you’ve previously had a relationship with to see if they participate in the loan program you’re searching for.

You can also apply through Lendio to be matched with funding options that best suit your business needs. It takes 15 minutes to complete the application, and you’ll be put in front of 75+ lenders, including those who offer SBA loan options.

5. Prepare Your Loan Application

After you’ve chosen a lender, you’ll be ready to start your SBA loan application. You’ll need a lot of documentation to support your application, but there may be some variations on specific documents you need based on your loan program and lender.

Prepare all your business and personal documentation, including tax returns, financial statements, certificates and licenses, business history, business plan, contracts and more. 

You’ll also need to complete some SBA forms, such as SBA Form 1919 Borrower Information Form, SBA Form 912, Statement of Personal History, and SBA Form 413, Personal Financial Statement.

Thankfully, your lender will be able to help you through the application process and make sure you have all the required documentation.

Online Business Loans

Many online lenders have flexible qualifications and multiple loan products for startups. If you’re looking for funding fast, exploring these options can be a great way to get funding, sometimes in as little as 24 hours. Curious what kind of loan options might be best for your business? Visit the Lendio Industry funding resource center to select your industry and see loan type recommendations for your business.

Small-Business Grants

Grants for small businesses are a way to avoid accumulating debt by offering capital that you don’t have to repay. The application process may be time-consuming, but if you can secure funds this way it may be worth it for your business.

Business Credit Cards

If you need help with everyday expenses while launching your business, business credit cards for startups are a great way to build your business credit score with responsible management and earn rewards that benefit your business.  

Get Funding for Your Startup

Now that you know the SBA loan options for your startup, as well as how to apply and some alternatives to consider, it's time to figure out which loan option you’re going to pursue. Let Lendio take some of the guesswork out of funding your startup with the Lending Marketplace.

Simply fill out an application, and receive offers from our network of 75+ lenders to compare your funding options. There’s no impact to your credit score, and once you accept an offer, you could receive the funds you need for your startup in as little as 24 hours.

*All information included in this article was current on its publication date and is subject to change.

Because business credit cards don’t require collateral and are easy to use and apply for, they’re a very common way for small businesses to secure a boost of funding. If you’ve ever applied for a personal credit card, you know you need to input your Social Security number (SSN), a unique 9-digit number that identifies you as an individual with the United States government, including the Internal Revenue Service.

For small business owners, there are other ways to identify yourself and your business when applying for credit cards—most commonly, businesses have an Employer Identification Number or EIN. You can apply for some corporate business credit cards using an EIN only.

EIN-only Corporate Business Credit Cards

In general, it's rare for individuals to apply for a credit card without providing their Social Security Number (SSN), even if they have an Employer Identification Number (EIN). This is because most credit card companies require a personal guarantee, which necessitates an SSN. 

However, some business credit cards only require an EIN. These are largely corporate cards created for businesses with large revenue streams, where approval is based more on your company's financials rather than your personal credit history.

If your business qualifies, here are some options from Stripe, Brex, and Ramp.

Stripe Corporate Card

This card is only available to current Stripe users who have received an invitation. The credit limit is based on the business's payment processing and bank history. The card comes equipped with custom spend controls, real-time expense reporting, and integrations with Quickbooks and Expensify. Additionally, it offers 1.5% cash back on every business purchase.

Brex Corporate Card

The Brex Corporate Card is designed for startups, e-commerce, and tech companies. It offers higher credit limits, rewards on key business spending categories, and streamlined expense management tools. It doesn't require a personal guarantee or credit check and offers up to 7x points for cash back or credits, depending on the expense type.

Ramp Corporate Card

Ramp offers a charge card for small businesses with unlimited 1.5% cash back. Applying requires no personal credit check or personal guarantee. The card comes with a dashboard for managing expenses and integrates with major accounting software. Ramp will accept applications from any incorporated business in the U.S. with at least $75,000 in a U.S. business bank account.

EIN-only Business Fuel Cards

Fuel cards are another option for companies with large fleets of trucks or equipment, like the transportation and trucking industry.

AtoB

AtoB’s fleet fuel card is accepted at 99% of gas stations nationwide and can be used for expenses beyond fuel such as repairs or road tolls. The card comes with an average fuel discount of 46¢ per gallon on truck diesel. Monthly card fees start at $15. While you only need an EIN to apply, the card will help you build business credit.

Alternatives to EIN-Only Business Credit Cards

If you’re looking for an alternative to a corporate card, or business credit card using only your EIN, the following business credit cards will require a social security number to apply.

Capital One Spark 2% Cash Plus

The Capital One Spark 2% Cash Plus is a straightforward option with 2% cash back on everything you spend. This is a charge card, so the full balance must be paid back in full each month. There is a $150 annual fee that will be refunded if you spend $150,000 or more each year.

Chase Ink Business Cash Credit Card

Featuring no annual fee, the Chase Ink Business Cash Credit Card is a popular option because of its competitive rates of 18.24% to 24.24%* and $750 bonus cash back.

Capital on Tap

Capital on Tap offers up to a $50K credit limit with unlimited 1.5% cash back and no annual fee. They review your credit history but use a soft pull that won’t impact your credit.

Why is a social security number usually required for business credit cards?

In most cases, you’ll have to provide an SSN on a business credit card application—even if you provide an EIN. Because credit cards are unsecured, credit card companies want to ensure someone is liable for the card’s debt, even if a business is dissolved. This personal guarantee is a layer of security for the credit card issuer.

Compare financing options with Lendio.

Lendio simplifies the process of finding the right funding option for your business. Our platform allows you to compare financing options from over 75 lenders, each with unique funding options and requirements. Compare options.

If you're a small business owner looking for financing options, you may have come across the term “SBA loan.” But what exactly is an SBA loan?

In this blog post, we’ll dive into the details of what SBA loans are, the pros and cons, and how to apply, while helping you understand if getting an SBA loan is the right option for your business.

SBA Loans

1. What is an SBA loan?

2. How do SBA loans work?

3. Types of SBA loans

4. Pros of SBA loans

5. Cons of SBA loans

6. What is required to get approved for an SBA loan?

7. Is it hard to get approved for an SBA loan?

8. How long does it take to get approved for an SBA loan?

9. How to get an SBA loan

What is an SBA loan?

Small Business Administration (SBA) loans are government-backed loans designed to help small businesses access the funding they need to start, grow, or expand their business.

SBA loans are partially guaranteed by the SBA, making them less risky for lenders, and therefore, more accessible to small businesses. These loans are not directly provided by the SBA, but rather through participating lenders such as banks and credit unions.

What does SBA stand for?

SBA stands for the Small Business Administration, a U.S. Government agency that supports small businesses by giving them access to capital, counseling, and other community resources.

How do SBA loans work?

Unlike traditional loans where the lender assumes all the risk, an SBA loan is backed by the government.

This means that if a borrower defaults on their loan, the SBA will partially reimburse the lender for their losses.

This guarantee reduces the risk for lenders and encourages them to provide loans to small businesses, even if they have lower credit scores or less established financial histories.

What can you use an SBA loan for?

Types of SBA loans

There are several types of SBA loans available, each designed for different purposes and needs of small businesses. Here are the most common types:

SBA 7(a) loans

SBA 7(a) loans are the most common and flexible type of SBA loan. They can be used for a wide range of purposes, including working capital, equipment purchases, real estate, and refinancing existing debt.

Visit the SBA website to read more about SBA 7(a) loans.

SBA 504 loans

SBA 504 loans are specifically designed to help small businesses purchase major fixed assets such as machinery or real estate. These loans are provided through Certified Development Companies (CDCs), private, nonprofit corporations set up to contribute to the economic development of their communities. 

The benefit of an SBA 504 loan is that it offers long-term, fixed-rate financing, making it a more affordable option for businesses looking to make major investments.

Read more about SBA 504 loans here.

SBA microloans

The SBA microloan program provides smaller loan amounts for businesses that need just a small injection of funds. These loans are designed to help startups, microbusinesses, or non-profit child care centers with their various needs, whether it's working capital, inventory, supplies, or equipment. The maximum loan amount under the microloan program is $50,000, but the typical loan size is much smaller, often averaging around $13,000. 

The exact terms of the loan depend on how much you borrow, what you'll use the loan for, and your own financial circumstances. This type of SBA loan is unique in that it is provided through non-profit community lenders who also offer business training and technical assistance, making it a comprehensive package for first-time entrepreneurs and small business owners.

Learn more about microloans and see a list of microlenders here.

SBA disaster loans

SBA disaster loans are designed to provide financial support to businesses, homeowners, and renters affected by declared disasters. Unlike other types of SBA loans, disaster loans are directly funded by the SBA, not through lenders. They offer low-interest, long-term loans for physical and economic damage caused by a declared disaster. 

Businesses of all sizes, homeowners, and renters can apply for a physical disaster loan to repair or replace damaged property, while businesses and non-profit organizations can apply for an economic injury disaster loan to help meet working capital needs caused by the disaster. The SBA will determine the loan amount and term based on each borrower's financial condition.

Read more about SBA disaster loans here.

SBA loans vs. conventional loans

Since SBA loans are government-backed, there are a few specific differences to call out relative to conventional loans.

1. You can qualify with a much younger, riskier business profile. Conventional loans typically require at least 6 months of time in business, whereas SBA loans work with eligible startups. Since lenders shoulder less risk from the actual loan, they’re willing to take on more risk from the lender.
2. SBA loan amounts are capped at $5.5 million. Conventional loans don’t have defined limits, and can vary more greatly.
3. SBA loans have a longer approval time. Since you have to meet requirements for both the lender and the government, approval can take more than 30 days. For conventional loans, approval can happen in just a few days.
4. SBA loans have capped interest rates. While SBA loans may not offer the lowest possible interest rates, they keep the ceiling of interest lower than conventional loans. See current SBA loan rates here.

Eligibility requirements for an SBA loan

Is it hard to get approved for an SBA loan?

Given the combination of personal and business requirements, it’s moderately difficult to get approved for an SBA loan—not easy, but not overly difficult. A large part of the approval process revolves around your personal history and available financial resources.

To qualify for an SBA loan, you must meet the following requirements:

• Your business must operate in the US and be legally registered
• Your business must fall under the SBA's definition of a small business
• You must have invested your own time and money into your business before seeking outside funding
• You need to have a good credit score (typically above 680) and a solid financial history
• Collateral may be required, depending on the type of loan you apply for

Pros and cons of SBA loans

Application process for an SBA loan

Applying for an SBA loan requires you to know a lot about your business, and requires a combination of personal and business-specific paperwork to submit successfully.

1. Understanding the numbers behind your business:

To qualify for an SBA loan, it’s important to note that your business should have been operational for a reasonable period of time. Many lenders prefer businesses to have been in operation for at least two years.

This is to ensure that your business has a proven track record and demonstrates stability and the ability to generate consistent revenue.

In terms of credit score, a personal score of at least 680 is generally preferred by most lenders. This high credit score showcases your reliability and ability to repay the loan.

Otherwise, you need to know your business down to the dates and dollars its comprised of. Are you able to prove profit and loss and cash flow for your business? Can you show both historical numbers and future projections to prove you’re generating revenue?

You should be prepared to show all money in and out, taxes, and any existing debt.

2. Making sure you have the proof:

Do you have all the documentation needed to prove the dates and dollars mentioned above?

This includes fundamental business and financial documents, such as your business plan, personal and business income tax returns, personal and business bank statements, and a balance sheet. You’ll also need to provide financial projections, ownership and affiliations, business license, loan application history, and business lease.

3. Finding an SBA-approved lender in your area:

Your next step is to find an SBA-approved lender in your area. This could be a traditional bank, a Community Development Company (CDC), or a microlender, depending on your needs.

The SBA has a free online Lender Match tool that can connect you with participating SBA-approved lenders within 48 hours. They also provide lists of CDCs and microlenders.

When choosing a lender, consider factors such as their SBA loan expertise, the types of businesses they typically work with, and their understanding of your industry. Building a relationship with your lender can be beneficial, as they could provide valuable guidance throughout the loan application process.

4. Submitting your application.

After you’ve gathered all necessary documentation and found an SBA-approved lender, you’ll need to package your paperwork together alongside SBA forms 1919 and 413.

Your lender will guide you through the application process and help you submit all required documents.

How long does it take to get approved for an SBA loan?

The timeline for approval can vary depending on the type of loan you apply for and the lender's processing times.

Typically, the application process can take anywhere from one to three months (30 to 90 days), while the funds can take an additional one to two weeks to be disbursed.

What happens to an SBA loan if your business closes?

Sometimes it happens—your business closes. In that case, what happens to your SBA loan?

Like any other loan, you need to continue making payments, or else you’ll go into default, where lenders can begin to seize collateral.

The SBA does compromise in some cases. Via their Offer in Compromise (Form 1150), businesses that default on their loan are able to apply for a settlement of a lower amount if paid in full more immediately. In this case, the loan is considered paid off.

Generally, the most important thing to keep in mind—you’re responsible for the money owed to the lender no matter what.

SBA loans can be an excellent financing option for small businesses looking to grow or sustain their operations. With an understanding of your requirements, you can begin to search for an SBA lender today.