Lending Library

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

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

Current commercial real estate rates.

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

Key elements of commercial real estate rates.

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

Market conditions

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

Economic factors

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

Interest rates

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

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

Property-specific factors

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

Property type

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

‍

Location

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

Borrower's creditworthiness

Your creditworthiness and general financial situation will impact your rate.

Credit score

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

Business financials

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

Loan-to-value (LTV) ratio

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

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

Loan term and amortization period

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

Loan term

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

Amortization period

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

Lender's policies and competition

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

Lender policies

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

Competition

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

Fixed vs. variable rates

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

SBA 504 loan rates: An option for small businesses.

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

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

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

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

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

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

Wrapping up

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

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

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

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

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

Fastest types of business loans.

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

1. Business term loan

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

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

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

Compare business term loan lenders.

2. Line of credit

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

Features of a business line of credit can include:

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

Compare line of credit lenders.

3. Revenue-based financing

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

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

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

Compare revenue-based financing companies.

4. Equipment financing

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

Features of equipment financing are as follows:

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

Compare equipment financing companies.

5. Invoice factoring

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

Features of invoice factoring are as follows:

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

Compare invoice factoring companies.

When to get a fast business loan.

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

Some common reasons to get a fast business loan include:

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

Fast Small Business Administration (SBA) loan options.

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

SBA Express Loans

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

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

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

How to get a fast business loan.

Follow these steps to obtain fast business funding:

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

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

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

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

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

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

Pros and cons of fast business loans.

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

Pros of fast business loans:

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

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

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

Cons of fast business loans

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

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

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

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

How to compare fast business loans.

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

Understand your urgency

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

Know your numbers

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

Read the fine print

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

Review the repayment terms

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

Evaluate the total cost

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

Shop around

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

Secure or unsecured?

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

Understand credit score repercussions

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

‍

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

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

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

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

Getting a startup loan with no money or revenue.

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

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

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

Equipment financing

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

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

SBA microloans

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

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

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

Decide how much you need

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

Determine your timeline

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

Determine your budget

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

Alternative forms of financing for your startup.

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

Here are a few alternative business funding options to consider. 

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

Are you an active-duty service member, National Guard member, Reservist, or the spouse or surviving spouse of one? Do you also want to start or grow a small business? You may qualify for the Veteran’s Advantage Program, a specialized program for SBA loans offered by the U.S. Small Business Administration (SBA). This SBA program is designed to reduce obstacles for veteran entrepreneurs and help them access affordable, secure funding.

The SBA has committed to improving the application experience, but you still need to do some things to qualify. Here’s what you should know about the process, the benefits offered by the program, and what to expect when approved.

What SBA loans are available through the SBA Veterans Advantage Program?

The SBA offers two types of financing to qualifying applicants under the SBA Veterans Advantage Program— SBA 7(a) loans, and SBA Express loans. 

SBA 7(a) loans are general purpose loans that can be used for many business needs, including working capital, real estate, and equipment. Read our guide to the SBA 7(a) program for specifics.

SBA Express loan is a smaller loan with faster approval time, and can be used for working capital and other immediate business needs. Read our guide to the SBA Express loan for maximum dollar amounts, use of proceeds, and more.

It’s important to note that there isn’t a specific veterans loan under the SBA program. Rather, prioritization and benefits are given to qualifying applicants on the existing SBA loan programs mentioned above.

Requirements for the SBA Veterans Advantage Program.

Beyond the general eligibility requirements that applicants must meet to qualify for an SBA loan, to qualify for the benefits of the Veterans Advantage Program, applicants are at least 51% owned by military members, veterans, or surviving spouses. This means they serve people who may not have success through other loan programs.

Here’s how the SBA defines an eligible veteran:

• A person who served in the active military, naval, or air service (United States Army, Navy, Marine Corps, Air Force, and Coast Guard, or reserves for any).
• Was discharged or released under conditions other than dishonorable. This includes retirement, and/or satisfactory completion of the period of active service for which the person was obligated at the time of entry.
• If a person, due to enlistment or reenlistment, was not awarded a discharge or release from the period of service at the time of completion, would have been eligible for the award of a discharge or release other than dishonorable.

Also eligible are:

• Service-disabled veterans
• Active duty military service member participating in the Transition Assistance Program (TAP)
• Spouse of a veteran, Active Duty service member, or widowed spouse of a service member who died while in service, or of a service-connected disability.

Core benefits of the SBA Veterans Advantage Program.

The core benefits of the Veterans Advantage program on SBA loans is lower costs. While SBA 7(a) loans are subject to guarantee fees, qualifying veterans, widows, or spouses enjoy waived guarantee fees on 7(a) loans under $150,000, and a smaller percentage on upfront guarantee fees for higher amounts compared to regular small business applicants.

The SBA also makes every effort to give special consideration to veterans in its loan programs. 

“SBA will prioritize processing applications from businesses that are owned by veterans when those loans are processed by SBA under non-delegated procedures. For loans processed under delegated procedures, SBA encourages Lenders to give special consideration to veterans during application processing.” - SBA SOP 50.10.8

Veterans also have the option to apply for an SBA Express loan, granting faster approval, no upfront fee, and potentially no collateral for smaller amounts. Like other SBA 7(a) loans, the Veterans Advantage loan program grants amounts of up to $5 million with repayment terms of up to 25 years (for real estate) and up to ten years for other uses.

Considering that these loan rates are very competitive compared to non-SBA loans, the program may be an excellent way for veterans to level up their businesses without incurring expensive interest costs.

Why lenders value veteran borrowers.

Veteran applicants may seem appealing for many reasons, in addition to any low financial risk or proven experience they may bring to the table. This group can be seen as having strong leadership backgrounds and a mission-driven mindset, which can lead to a disciplined financial approach, especially when running their businesses.

Well-documented military experience can help a loan application stand out and add context to the section that explains how the money will be used. That’s why it’s especially important to offer service history from the very beginning of the lender relationship.

How to prepare your application.

Knowing the SBA application process in advance gives you the chance to come fully prepared with all the information needed to complete forms quickly. Steps to take include:

1. Gather service documentation.

This includes the DD214 (Certificate of Release or Discharge from Active Duty) or equivalent. If you are still in service, provide a Statement of Service or other relevant proof. Spouses may want to ask the lender or SBA center for the exact qualification requirements.

2. Organize your supporting business documents.

These generally include:

• Three years of personal and business tax returns, profit and loss statements, balance sheets, and cash flow projections
• Copies of business licenses, registrations, and legal documents such as articles of incorporation or property leases
• A comprehensive business plan that shows market analysis, revenue projections, overall operational strategy, and how you’ll use the loan money

Not only do these documents meet the requirements of the loan application, but they also show your readiness to partner with the lender. For some business owners, it’s also a wise strategy to get last-minute updates on the health of the business and how the loan funds can be spent wisely.

3. Check your personal and business credit scores.

Then, do what you can to clean them up. If you see any errors, have them corrected by contacting the credit reporting bureau or using their online dispute resolution form. Lenders naturally prefer higher scores, so consider paying down any debt you can or resolving any outstanding collections before you apply. Begin the process a few months ahead of meeting with a lender.

How these steps secure an SBA loan under the Veterans Advantage Program.

Each part of the process helps demonstrate your eligibility for the loan you’re applying for. For example, showing your service paperwork or discharge orders lets the lender know you have service member or veteran status, one of the most important parts of qualifying for this specific SBA loan program.

Having your documentation updated, organized, and in a format that’s easy for the lender to accept and review ensures they don’t have to ask for it again. It also demonstrates your ability to follow procedures and adhere to lender follow-ups after the loan has been paid to you.

With an eye on your credit, you won’t be surprised going into the application. It’s unlikely that you’ll waste time and energy collecting all the vital info just to learn that you fall far below what’s required for a loan approval. Remember, healthy credit scores reduce underwriting risk for the lenders, and they’ll be more likely to say, “yes” when the time comes!

How to use veterans' small business financing.

The SBA lays out rules for how the money can and can’t be used. The most common approved uses include:

• Starting a business or purchasing a franchise
• Expanding an existing business to new locations or through new product lines
• Using it as working capital to pay vendors, maintain payroll, and hire new employees
• Refinance high-interest loans so you can save money on interest each month

The SBA loan funds can be flexible, but you should still be very clear in your application on how you’ll use them. Lenders want to see that you have plans for the money, as it means you’ve considered it carefully and understand the best ways to grow your unique business.

Find the right SBA loan for you.

There are many lenders out there ready to partner with veterans for business expansion and economic growth. Could one be the right option for you? While these loans level the playing field for service-connected entrepreneurs, it can still take some time to complete the process. Apply through Lendio to find the right fit, and explore your funding options well in advance of your need.

Are you a small business owner looking to buy new equipment? If so, then you may already know that purchasing equipment can be a costly endeavor. Fortunately, the Small Business Administration (SBA) offers SBA loan programs specifically designed to help small businesses purchase necessary equipment. 

In this blog post, we’ll discuss the programs available for equipment lease or purchase, basic eligibility requirements, and key differences between the loan programs to keep in mind. We’ll also discuss what repayment of these loans looks like, and where to find an SBA lender—including in the Lendio Marketplace!

What qualifies as equipment when it comes to SBA loans?

If you’re considering pursuing SBA financing to purchase or lease equipment for your business, it’s helpful to know what type of assets qualify under SBA guidelines. Typically, the SBA considers a broad range of tangible assets as machinery or equipment, particularly if they’re important for operations or efficiency.  Some examples include:

• Operational equipment - Machinery and equipment such as manufacturing equipment, construction tools, commercial ovens, or medical devices.
• Vehicles - Delivery trucks, company vans, and specialty vehicles are eligible, provided that they are used primarily for business purposes and increase operational efficiency.
• Technology - Technology infrastructure, such as computers, servers, point-of-sale systems, and software. This also includes AI-related expenses.

In order to qualify, the equipment or machinery financed must be durable, have a useful life greater than one year, and serve a defined business function. If you’re looking into SBA financing for equipment, it’s best to have a list with descriptions of the assets you want to finance or lease, to help with clarity during the application process.

Understanding SBA equipment loans: the role of 7(a) and 504 programs.

When researching SBA loans options for equipment, most opportunities will come from either the 7(a) or 504 loan programs.

SBA 7(a) loans for equipment

The SBA 7(a) loan program is the most popular SBA loan and can be used for a variety of business purposes, including acquiring and installing purchased or leased equipment.

• Maximum loan amounts: $5 million.
• Repayment terms: 10-25 years.
• Interest rates: 3-8% above base rate.

The SBA 7(a) loan program also includes the SBA Express Loan option. This subset of the program offers expedited loan approval and funding, typically within 36 hours of application submission. While the maximum loan amount is lower, capped at $500,000, the accelerated timeline can be especially beneficial for small businesses requiring immediate access to funds for equipment purchase.

SBA 504 loans for equipment.

The SBA 504 loan program is specifically designed for fixed asset financing, such as real estate, buildings, or long-term equipment purchases. 

• Maximum loan amounts: $5.5 million.
• Repayment terms: 10-25 years.
• Interest rates: typically 3% of the loan amount. 

Using 504 loan proceeds for equipment financing comes with more stringent requirements than a 7(a) loan. In order to be eligible, the asset:

• Must have a useful life of at least 10 years.
• Be at a fixed location.

In some cases, short-term financing for equipment, furniture, and furnishings is allowed where essential, and if it’s a minor portion of a 504 project.

Comparing eligibility requirements for 7(a) and 504 loans.

In order to qualify for an SBA loan, you must meet certain eligibility requirements. It might be helpful to review our complete guide to eligibility requirements for SBA loans both generally and for specific programs.

Some general eligibility requirements for both programs are:

• A for-profit business operating in the United States or its territories.
• The business must be small according to SBA size requirements
• The business cannot be an ineligible business
• Business owners must have 100% direct or indirect owners and guarantors who are U.S. citizens, U.S. nationals, lawful permanent residents, or other eligible persons.
• The business must have sought and used other financial resources, including personal assets, before applying for an SBA loan.
• The business has no owners incarcerated, on parole, or probation. Some criminal history may also prevent qualifying.
• The business must also be current on any existing government debt obligations, and can’t have defaulted on any federal debt that resulted in a loss to the government.

Both 7(a) and 504 programs have specific eligibility requirements on top of general requirements regarding uses, equity injection, economic development objectives, and net worth and income limits. These are also covered in our guide to SBA loan eligibility requirements.

How repayment works: Amortization and loan terms.

Repayment for SBA equipment loans is structured to support the day-to-day realities of small business cash flow. Both SBA 7(a) and 504 loans use amortization schedules, which break your payment into predictable monthly installments over a set term.

For 7(a) loans used to purchase equipment, the term of the loan is usually 10 years, or 15 if the useful life estimate supports this term. More involved machinery, such as farm machinery is 15 years, plus one year for installation.

For 504 loans used to purchase machinery or equipment, the minimum term of the loan is 10 years, but depending on the specific asset being financed, could be 20-25 years.

With these set terms, you’ll pay down the loan’s principal and interest gradually over the life of the loan with predictable monthly payments calculated from interest rates, term, and principal amount.

504 loans generally come with fixed interest rates, giving borrowers stable monthly payments and long-term predictability for budgeting. 7(a) loans may offer fixed or variable interest rates. Variable rates can adjust with market conditions, which is helpful if rates decrease, but potentially more expensive if they rise. If you plan to choose a variable rate, make sure you plan ahead to absorb any payment fluctuations with your monthly payment. Check our guide to see the most current SBA interest rates.

If you’d like to estimate your monthly payments and amortization schedule, visit our SBA loan calculator to get an estimate of what your monthly payments could look like.

Where to get an SBA loan to buy equipment.

SBA loans are not directly provided by the government. Instead, they are administered through partnering banks and financial institutions. This means that you can apply for an SBA loan at any bank or credit union that participates in the program.

It’s important to note that the application process for an SBA loan may be more involved compared to traditional loans. Your SBA lender will require detailed financial information and may also ask for a business plan, personal credit score, and collateral. However, with the right documentation and a solid business plan, you can increase your chances of getting approved for an SBA equipment loan.

The first step is to research and find SBA participating lenders in your area. You can also use the SBA website to search for lenders based on your location and preferred loan program. Once you’ve identified potential lenders, it’s important to compare their rates, terms, and requirements before deciding on the best option for your business.

Lendio is proud to partner with multiple SBA lenders. If you’re interested in starting your SBA journey, fill out our application to compare financing offers from multiple lenders in our network, including SBA lenders, to finance your equipment.

Accessing the right funding for your business with a shaky credit score isn’t always easy—especially if you’re interested in a business line of credit. But it’s not an impossible task either. Plenty of successful business owners start out with bad credit and still manage to qualify for financing options (business credit lines included) that help their companies grow, solve cash flow problems, and create momentum to move forward. 

The trick is to understand how lenders view risk and show them a full picture of your company’s strength (not just your credit score). Of course, credit history and credit scores matter. But lenders consider other details, too. Lenders weigh factors like your company’s annual revenue, cash flow, and time in business before deciding whether to approve your application. So, you may still be able to secure funding if you know how to position your business, document its performance, and choose the right lender and financing solution.

In this guide, learn how to get a business line of credit for bad credit and what to expect from lenders in the process. You’ll also find tips on how to strengthen your application before you apply, how to compare financing options, and how to build and manage good business credit after you open a new business credit line.

What “bad credit” means for your business.

Lenders usually define “bad credit” using your personal credit score, especially for small businesses and startups that lack well-established business credit history. FICO® Scores below 580 typically fall into the poor credit range, while most lenders consider scores between 580-669 to be fair. Any score below 600 may cause traditional banks to hesitate. But some alternative and online lenders might still approve funding if your cash flow is strong.

5 steps to get a business line of credit with bad credit.

In ideal circumstances, it’s wise to improve your credit before you apply for financing. But if you’re searching for a new business line of credit with bad credit, the following steps may help.

1. Review your credit.

Before you apply for a new business credit line (or any other small business loan), find out where your credit stands. Although no-credit-check loans exist, they’re rare. Most lenders will review your credit when you apply for a new business line of credit or business loan. So, check your credit first to avoid surprises. 

Consider reviewing all three of your personal credit reports and scores from Equifax, TransUnion, and Experian. Checking your business credit reports and scores (if you have established business credit) can be smart, too. Understand your credit score range and how it might impact your financing options. Also, look over your credit reports for any potential errors. Remember, if you discover incorrect information on a credit report, you can dispute those items with the appropriate credit reporting agency.

2. Find the right lender.

Traditional banks often cater to borrowers with higher credit scores, more time in business, and those seeking larger loan amounts. But if you have fair or bad credit (e.g., a FICO Score under 600), you’ll often have more success with online lenders or fintech companies that use revenue-based underwriting. 

After checking your credit, review the minimum requirements for a business line of credit of different lenders to help narrow down your choices. Although the credit score a lender accesses may not be identical to the one you check yourself online, it can still be a useful tool during the initial loan shopping process.

3. Prove financial stability.

Even with bad credit, steady cash flow could strengthen your financing application. Gather the last six months of business bank statements, merchant processor reports, and accounts receivable summaries. When lenders see that your business consistently generates enough income to handle its repayment terms, they may be more comfortable lending your company money. 

4. Borrow strategically.

Applying for large amounts of business capital can be tricky. Yet if you seek a realistic credit limit to meet your company’s financial goals, it could increase your approval odds.

You can use Lendio’s business line of credit calculator to estimate the amount of money your company can afford to comfortably borrow and repay. The online tool can also help you estimate monthly payment amounts and predict the credit limit your business might be eligible for on a new credit line. 

5. Consider secured financing.

If your credit score is low, applying for a secured business line of credit might be worth considering. With this option, you back your company’s credit line with collateral such as inventory, equipment, or real estate. When you pledge collateral, there’s less risk for the lender, and your chances of qualifying may improve along with the pricing and terms of your offer.

Typical credit score minimums and lender expectations.

Many online lenders accept personal credit scores as low as 600, and some may work with applicants who have scores as low as 550. Traditional banks, by comparison, sometimes require minimum FICO Scores as high as 700 and at least two years in business.

On a positive note, the Federal Reserve’s Small Business Credit Survey showed that companies with medium or high credit risk still saw approval rates around 50% for loans and lines of credit (even with less-than-perfect credit scores). So, it’s important to remember that credit isn’t the only determining factor lenders consider when you apply for business financing. 

Strong cash flow, proper documentation, and realistic borrowing terms could improve your chances of approval. When you do a good job presenting your company’s performance, show an ability to repay, and match your credit limit request to your actual business needs, you’re more likely to join the half of applicants who are successful despite credit score weakness. 

Navigating minimum credit score requirements and alternatives.

It’s true that borrowing money for your business tends to be more difficult when you have bad credit. However, there’s no such thing as a universal minimum credit score when it comes to qualifying for a business line of credit. Credit score cutoffs vary by lender and can change over time. If you’re looking for guidance, below are some general guidelines that may make it easier to shop for funding options.

Some lenders may also weigh factors like your annual revenue, time in business, profit margins, and payment history as heavily (or sometimes more heavily) than your actual credit score.

Line of credit financing options for bad credit.

A business line of credit can be one of the most flexible financing tools available to small business owners. But if you’re dealing with bad credit, you may need to get creative when it comes to exploring funding sources. On a positive note, some lenders work with borrowers who have less-than-perfect credit and use factors like cash flow, annual revenue, and more (not just credit scores) to make approval decisions.

Lenders open to bad-credit borrowers.

While approval criteria can vary, several online lenders in the Lendio marketplace work with entrepreneurs who are rebuilding their credit. The following options highlight a mix of business lines of credit that might work for borrowers with bad credit, fair credit, along with different business profiles and funding needs.

Alternative financing solutions.

If a revolving credit line isn’t the right fit for your business, there are other funding options you can also consider. Even with bad credit, some of the solutions below might help your business bridge short-term capital gaps or fund upcoming projects while you work to establish or rebuild better credit over time.

• Short-term lines of credit: This type of business credit line typically features a smaller credit limit and shorter repayment terms. Interest rates also tend to be higher, but the approval process can be easier as well—a potential relief if you’re struggling with credit challenges. Short-term credit lines can be useful for covering day-to-day expenses or short term projects, and they might also help you build business credit for the future if you manage the account responsibly. 
• SBA Microloans: An SBA Microloan is a special type of loan backed by the Small Business Administration (SBA). Eligible borrowers can finance up to $50,000, but the average loan amount is $13,000. Good credit is helpful, but not a requirement to borrow. However, it is important to demonstrate a solid business plan and community impact to qualify for funding. 
• Revenue-based financing: This type of funding offers your business fast access to cash by letting you borrow against money your company will earn in the future. It’s not technically a loan, but a type of advance against future sales or invoices. Typically, your business must repay through fixed daily, weekly, or bi-weekly payments. In addition to the rapid repayment structure, revenue-based financing can be expensive—especially if you have poor credit. 

Comparing secured vs. unsecured lines of credit.

If you decide a business line of credit for bad credit is the best path for your company, compare secured credit lines vs. unsecured credit lines before you fill out an official financing application. Both financing options have their advantages and disadvantages. The table below provides a side-by-side overview of their key differences. 

Each type of credit line can work for different goals. The key is to compare the features and figure out which option makes the most sense for your business.

Strategies to strengthen your application and increase approval odds.

Trying to open a new business line of credit (or any other type of business loan) when you have bad credit can be stressful. Yet there are steps you can take to try to improve your chances of approval now while you work on building better credit for the future. 

1. Show consistent cash flow. Good cash flow with regular deposit history and steady revenue streams can work in your favor when you apply for credit. These actions may help demonstrate financial stability and an ability to handle new debt. 

2. Organize financial documentation. Keep your financial records in order. Maintain clean profit-and-loss statements, balance sheets, tax returns, and bank statements so you’ll have everything you need for your next financing application.

‍3. Provide a detailed repayment plan. Spell out how much you plan to draw, how you’ll use the money you borrow, and when you’ll repay based on your cash flow timing. Include best and worst case projections and contingency plans. Depending on the lender, providing this document along with your application might tip the scales in your favor when you apply for a new credit line.

4. Offer collateral or a co-signer. Collateral reduces a lender’s risk when you apply for a business line of credit. A co-signer with good credit could help accomplish the same goal (though that co-signer would be accepting significant risk instead).

5. Pay existing debts on time. A history of on-time payments builds trust and could help improve your credit score over time.

‍6. Compare offers. Shop around to make sure you find the best offer available. The Lendio marketplace can help you compare financing offers without unnecessary hard credit inquiries.

Managing and building credit after opening a business line of credit.

Opening a new business line of credit with bad credit can be a major win. But your next steps matter just as much. Here’s how to manage your new credit line to build good business credit. 

• Pay on time, every time. Better yet, make a habit of paying your bill early each month. (Some business credit scoring models actually reward you for early payments.) A single missed payment has the potential to lower your business and personal credit scores. And late payments could remain on your credit reports for up to seven years. 
• Use revolving credit strategically. Borrow only what your business can afford to repay within its repayment terms (ideally by the due date on your next statement).
• Monitor your credit. Keep an eye on your business and personal credit reports on a regular basis. Watch for signs of fraud, errors, or negative activity. ‍
• Plan to refinance. Make a plan to refinance your business line of credit in the future once your credit improves. Doing so has the potential to save you a bundle on interest rates and fees.

Final thoughts.

Bad credit doesn’t have to shut the door on your financing goals. Many small business owners find ways to open business lines of credit despite past setbacks by finding the right lender and  highlighting other strengths like reliable revenue and collateral.

If you need to seek financing while you still have bad credit, treat this phase like a rebuild instead of a roadblock. Get the working capital you need now, then aim to stack early payments and other good credit management habits to put yourself in a better position to refinance later. When you show lenders how your business runs (not just what your credit score says), you have a better chance of turning a bad credit chapter into a better rate, and a stronger company in the long run.

Business lines of credit are one of the most widely used types of financing when it comes to small businesses. According to findings from the Federal Reserve Banks’ 2024 Small Business Credit Survey, 34% of small businesses surveyed regularly used or carried a balance on lines of credit.

This type of small business financing is a great solution for short-term funding and covering operating expenses. But what is it, and how exactly does it work? We’ll break down everything you need to know about business lines of credit in this guide.

What is a small business line of credit?

A small business line of credit is a flexible financing option for businesses that allows business owners access to a predetermined amount of money that they can draw from as needed. With a line of credit, the owner has access to the money, but doesn’t receive it all in a lump sum upfront. This structure makes a line of credit more similar to a credit card than a traditional term loan.

How a business line of credit works.

When you’re approved for a small business line of credit, your lender gives you access to an amount of money to use for business purposes up to the limit agreed upon. You can then use amounts you need from the line of credit at any time, up to the limit. 

Think of it like an envelope of cash the bank gives you for rainy day expenses. You don’t have to ask the bank for money every time you need it, since you’ve already been approved for that amount. You also don’t have to use all the funds if you don’t need to, giving small businesses more control over expenses, interest, and paying back on the loan.

To use the line of credit, generally you’ll transfer the funds you need into your bank account from the line of credit, or use special checks to draw directly from the line. 

Depending on the type of line of credit you have, the funds you borrow and repay may or may not become available again to borrow up to your limit. Let’s talk about these categories of lines of credit next, so you know the difference.

Revolving vs. non revolving line of credit.

Your line of credit will typically fall into two categories: revolving, or non-revolving. With a revolving line of credit, you can borrow repeatedly up to the credit limit as you repay the balance—similar to a credit card.

A non-revolving line of credit is a fixed limit. Each time you borrow from the line, and repay, that amount is not available for use again. Once you use all of the approved funding up to the limit, the account can’t be reused, and you’ll need to apply for a new loan. This makes a non-revolving line of credit more similar to a traditional loan.

Paying back a line of credit.

Business lines of credit are a short-term funding solution. Most lines of credit will need to be repaid within 1-2 years. Similar to any other loan, you’ll make regular payments on your balance towards the principal, as well as interest charges on the funds you have used. 

Read our guide to business line of credit interest rates to learn about average rates and what influences the rate you get.

Financing your business with an SBA loan can help you grow your business with long term, low interest financing. SBA loans are one of the most sought after forms of financing for small businesses, but come with their share of requirements to get approval. One of those lesser-known requirements is hazard insurance, particularly if you’re securing your loan with collateral such as commercial property or equipment.

What is hazard insurance?

Hazard insurance is a type of business property insurance that covers damage to the physical property caused by accidents, damage, weather, and some natural disaster-related incidents. Your specific insurance policy will outline “covered events”. These are the types of events that may occur and cause damage to your property. When that happens, your hazard insurance kicks in and covers the damage within the limits of your policy.

Most hazard insurance policies typically cover the following events that cause damage to the physical property, or significant business property inside such as furniture, equipment, tools, and inventory:

• Theft and vandalism
• Fire or explosions
• Weather and storm damage
• Vehicle damage
• Water damage (such as damage caused by burst pipes)

Hazard insurance doesn’t extend over every type of event. Typically, these types of events are not covered under a hazard insurance policy, and require additional coverage policies:

• Personal belongings
• Liability for the property
• Natural disasters, such as floods, earthquakes, and landslides
• Damage as a result of lack of maintenance, or maintenance issues

When is hazard insurance required?

Hazard insurance isn’t only required for business loans. The most common scenario when a hazard insurance policy is required is for a mortgage on a home. However, most lenders will require a hazard insurance policy on any property—personal or commercial—used to secure a loan, or on the commercial property you are financing with your loan. 

The reason why hazard insurance is required by lenders is straightforward. Your lender has a significant financial stake in your property or equipment. If that property is damaged or destroyed, hazard insurance means they can recoup their investment. Plus, it also protects you from the loss of what is undoubtedly an expensive purchase! 

This also applies to property or commercial equipment used as collateral. If your collateral is destroyed or damaged, lenders are exposed to risk if you default on your loan. With hazard insurance on the property, they can mitigate that risk.

SBA hazard insurance requirements.

Like most lender policies on hazard insurance, the SBA hazard insurance requirement applies to property that is used as collateral. Most SBA loans, including 7(a) and 504 loans, require some type of collateral in order to be approved. 

Because it’s used as collateral, the property must be properly insured. That way, if there’s any damage done that’s out of your control, the building can be repaired or replaced and still maintain its value.

Here’s the breakdown on hazard insurance requirements for each type of SBA loan:

Hazard insurance vs. other insurance policies.

Hazard insurance is often confused for other types of business insurance. And, not all insurance companies refer to property insurance as hazard insurance. Instead, they may call it commercial property insurance. Here are some other types of small business insurance to know as you look for coverage required by the SBA.

Commercial Property Insurance

Commercial property insurance is the same thing as hazard insurance. Any covered events provide reimbursement for building repairs, as well as damaged items within the building. With this type of insurance, you would need to file a claim for your business. Then an insurance adjuster would assess the damage and provide you with reimbursement accordingly.

Flood insurance

Anytime your commercial property is located in a flood zone and used as SBA loan collateral, you’ll need a flood insurance policy as well. That’s because damage caused by flooding is not typically included in most hazard or property insurance policies. 

To see if you need flood insurance, first visit FEMA’s online flood map tool to see if your property’s address is located in a flood zone, and then check your need for insurance when you apply for an SBA loan. If you do, you will need to pay an extra premium, but it will be worth the investment, if you’re in an area at risk of flooding. 

Earthquake insurance

Similar to floods, earthquake damage is not covered in most hazard insurance policies, but is instead covered under a specialized insurance. This insurance is usually optional, unless your business is located in a high-risk zone, such as near a fault line.

You can check whether you’re located near a fault line with the U.S. Geological Survey’s interactive map and speak to your insurance agent to learn more.

Business interruption insurance

While a hazard insurance policy protects your commercial property from physical damage caused by hazards, it doesn’t usually cover business interruption, or lost income due to being unable to operate due to a covered hazard. This type of insurance can be a separate policy, or in some cases, added onto your hazard insurance policy.

General liability insurance

As mentioned before, hazard insurance doesn’t cover liability. This is a separate policy, called general liability insurance, which covers bodily injury, legal defense, and property damage to others, not your own property.

Limitations of hazard insurance.

Hazard insurance policies don’t give your business an automatic blank check when a covered event occurs. Each policy comes with a coverage limit for both the building and the property within. So it’s important to get a policy large enough to cover a worst-case scenario, such as a total loss.

Your hazard insurance policy will also come with a deductible—the amount you’re responsible to pay before your coverage kicks in.

Satisfying your SBA lender’s hazard insurance requirements.

When you apply for an SBA loan, your lender has to confirm that you carry the right hazard insurance on any assets pledged as collateral. Here’s what that means in practice, and what you need to do to stay compliant.

1. Make sure you’re insuring the right assets.

For SBA 7(a) and 504 loans over $50,000, hazard insurance is required on:

• Any real estate pledged as collateral
• Any business personal property used as collateral (equipment, inventory, fixtures, etc.)

If the property cannot be insured, the SBA will not allow the loan to be approved. This is why lenders almost always ask for proof of hazard insurance early in the process.

2. Verify you have enough coverage.

The SBA requires coverage, or replacement cost, at:

• Full replacement cost whenever possible
• Maximum insurable value if a full-replacement policy isn’t available.

This ensures the lender’s collateral can be completely restored after a covered loss.

 3. Add the required lender clauses to your policy.

This is one of the most important steps, and easy to overlook. Depending on what your collateral is, you’ll need to add the following:

• If the collateral is real estate - Your policy must have a Mortgagee Clause naming the SBA lender for 7(a) loans, or CDC/SBA for 504 loans.
• If the collateral is business personal property - Your policy must have a Lender’s Loss Payable Clause, naming the SBA lender for 7(a) loans, or CDC/SBA for 504 loans.

These clauses essentially say:

• The lender's interest cannot be invalidated by the borrower’s actions
• The insurer must give the lender at least 10 days written notice before cancelling the policy. 

4. Secure any additional hazard-related policies required

Some states or localities require separate policies for things like:

• Wind or hail
• Earthquakes
• Named storms

If your business is in one of these states, the SBA requires you to carry those additional policies. If your property also is in a FEMA-designated Special Flood Hazard Area, you’ll also need to secure flood insurance to move forward with your loan.

5. Provide proof of insurance to your lender.

Lenders will typically require a declaration page listing coverage amounts, evidence of the required clauses naming the lender, contact information for the insurance provider, and confirmation of policy dates. 

6. Maintain your coverage throughout the life of the loan.

The hazard insurance requirement doesn’t end once your SBA loan closes. You must:

• Keep the policy active
• Keep the required lender clauses in place
• Notify the lender if you switch carriers
• Maintain replacement cost or maximum insurable coverage

Lenders may periodically ask for updated proof of insurance, so keep these documents on hand to provide your lender with current copies.

Getting proper hazard insurance is just one step in obtaining an SBA loan. Lendio’s team of experts can help you throughout the entire process. Apply for an SBA loan now!