Small business loans can range from a few thousand dollars and reach into the millions, while funding times can be as soon as the next day or take as long as three months.

Make sure to research the different types of loans such as term loans, Small Business Administration loans, business lines of credit, invoice financing, and microloans as well as their providers in order to find the financing option that’s right for your business.

 1. Term Loans

About: With high maximum amounts and online accessibility, term loans have become one of the most widely used methods to finance a business.

Similar to a personal loan, borrowers receive the entire amount of the loan at one time, and repay the amount with interest over a fixed period. Additionally, because term loans are often provided by online lenders, they have the potential to fund faster than through a traditional bank.

Recommended Use: Term loans are best to use for large purchases where it’s ideal for the borrower to spread the payments out across a period of time.

Best For: New machinery for a construction site, Factory or other production line, Real estate expansion, Vehicle purchases

Pros: 

• Fast funding with an online lender, with funding times of of just a few days instead of a few months with a traditional lender
• Entire amount is disbursed at once which assists with immediate investments
• If you need to borrow more than $250,000, you may be eligible for an amount of up to $1 million
• Can be repaid over a fixed period of time

Cons:

• Higher rates and fees with online term loan lenders than with traditional banks
• May have higher interest rates than other forms of loans
• Some term loans require a personal guarantee or collateral, putting your assets at risk in case you default

Compare small business term loans

 2. Business Lines of Credit

About: Instead of borrowing one lump sum all at once, you can also choose to use a business line of credit. This type of small business loan allows you to use funds as you need them, as long as they’re within your given credit limit. Because you only use what you need, you only pay interest on the money you’ve used.

To take out a business line of credit, you should have excellent credit, a high and verifiable income and an established credit report with no recent derogatory remarks.

Recommended Use: A line of credit can be a good option for managing large and recurring expenses.

Best For: Financing recurring material expenses, Making regular payroll payments, Paying for consistently ongoing operations or projects, Seasonal businesses

Pros:

• Use funds as you need them as opposed to borrowing one lump sum
• Only pay interest on what you use
• Typically unsecured so no collateral necessary

Cons:

• High eligibility requirements including good credit and source of income
• Possible additional costs including withdrawal and maintenance fees

Compare business lines of credit