Table of Contents
Small Business Administration (SBA) Loans
Online Term Loans
Business Lines of Credit
Merchant Cash Advances
Invoice Financing or Factoring
How to Get a Small Business Loan
Now that you know your business loan options for 2022, how can you go about actually getting one?
In most cases, the process can be boiled down to five essential steps:
- Calculate your needs.
- Locate your funding source.
- Review and compare your options.
- Get qualified for your chosen loan.
- Prepare the necessary documents.
How to Decide Which Small Business Loan Is Right for You
Still not sure which type of small business loan to pursue? This might help you narrow down your choices.
A bank or SBA loan could be a good fit for you if:
- You have a great credit score (high 600s or more).
- Your business has been up and running for about one year or more.
- You have strong and well-documented revenue.
- You don't need your funds in less than a month's time.
- You need a loan with a low interest rate.
- You need a loan of about $100,000 or more.
An online term loan or business line of credit could be the best option for you if:
- You have a minimum credit score of 500 to 600.
- You've been in business for at least six months to a year.
- You need funds in about two days' time.
- You're willing to pay a higher interest rate.
- You need a loan of about $20,000 to $80,000.
A startup loan might be best for you if:
- You have a credit score of 600 or higher.
- You're looking for a loan with low business age requirements.
- You can offset your business' young age with either cash, collateral or an exceptional credit score.
- You're prepared to pay an interest rate of anywhere from 5 percent to 30 percent.
- You need a loan of $20,000 to $80,000.
Equipment financing might be right for you if:
- You have a credit score of at least 550 to 600.
- You need up to 100 percent of your equipment expenses covered.
- You've been in business for at least one year.
- You need to own your equipment outright.
- You can pay an interest rate ranging from 2 percent to 30 percent.
Finally, a merchant cash advance or invoice financing could be your best bet if:
- You have a credit score of 500 or more.
- Your business has been around for a few months or longer.
- You receive most of your money from customers via invoices (if applying for invoice financing) or credit card payments (if applying for a merchant cash advance).
- You need a lump sum of cash ASAP.
- You're prepared to pay an interest rate of 10 percent to 80 percent (for invoice financing) or 40 percent to 350 percent (for merchant cash advances).
- You need a loan alternative with requirements that are as flexible as possible.
Ultimately, there's no such thing as a one-size-fits-all small business loan. But by carefully evaluating your needs and each potential lender's requirements, you can find one that works for your timeline, budget, and business style alike.
And if you determine that an alternative loan is the way to go, check out our loan partner, Kabbage. With speedy application and approval times, flexible requirements and state-of-the-art security, Kabbage makes it easy to get the funding your small business needs to grow.