Sit through enough funding pitches and every product starts to sound identical: money now, paid back later, fees somewhere in the paperwork. Underneath the sales language, though, small business financing comes in nine basic shapes, and those shapes behave very differently when revenue dips, when you want to pay early, or when the same need comes back next year.
This guide is the map. For each of the nine, you get the mechanics (how the money actually moves), the cost structure (how the price is calculated, which matters more than the price itself), the realistic speed from application to funded, and, most usefully, who the product genuinely fits. No product here is good or bad in the abstract. Each one is the right answer to a specific situation and an expensive mistake outside it.
We arrange several of these products as a broker, so we watch them land on real bank accounts every week. Individual links below go deeper on each product; treat this page as the place to shortlist the two or three worth pricing for your own situation, and keep the final judgment for yourself.
1. Term loans: the classic lump sum
The mechanics are the ones everyone pictures first: a lender sends one fixed amount, and you repay it in equal installments, monthly on the traditional versions, over a term that can run from a few months to ten years. The balance only goes down, and when it reaches zero the relationship ends.
The cost structure is interest on a declining balance, usually plus an origination fee taken at funding. Because interest accrues over time, paying a term loan off early genuinely saves money unless a prepayment penalty is written in, which is worth checking before signing.
Speed depends entirely on who is lending. Online term lenders can decide in a day or two from bank statements. Banks want financials and tax returns and take weeks. The product fits an owner making one defined investment with a payback period they can actually name: a buildout, an acquisition, a big one-time purchase. The short-term versus long-term question, matching the loan's clock to the purpose's clock, is its own decision and its own article.
2. Business lines of credit: standing permission to borrow
A line of credit is not a payment of money; it is an approved ceiling you can draw against, repay, and draw again. Interest accrues only on what is actually drawn, which makes a line dramatically cheaper than a lump sum for needs that are short-lived and hard to time: a tax bill in April, an inventory buy in October, a customer who pays forty days late in between.
Costs are interest on drawn balances, sometimes joined by an annual fee, a monthly maintenance fee, or per-draw fees, and the line comes up for periodic review where the lender can renew, shrink or freeze it. Bank lines are the cheapest and slowest to get; online lines approve in days at higher pricing and lower limits.
The line fits owners whose cash needs recur unpredictably, and, crucially, owners who apply before the emergency, because line underwriting reads distress badly. The full comparison against its nearest neighbor lives in line of credit versus term loan.
3. SBA loans: government-backed patience
An SBA loan is a bank loan wearing a federal guarantee. The U.S. Small Business Administration does not send the money; a participating lender does, and the SBA promises to absorb part of the loss if the borrower defaults. That guarantee lets lenders say yes to files they would otherwise decline, at some of the lowest pricing and longest terms available to small businesses, with 7(a) loans reaching up to $5 million.
The trade is time and paperwork. Two layers of rules mean weeks to months from application to funding, and a document stack that dwarfs anything else on this list. Eligibility is set by the program and the lender, not by anyone writing articles about it.
SBA money fits strong-file owners financing something big and slow: expansion, acquisition, real estate, or refinancing expensive shorter-term debt. It does not fit a deadline measured in days. The mechanics, programs and honest timeline expectations get a full treatment in our SBA guide, and the speed-versus-cost tension is worked through in MCA versus SBA loan.
4. Equipment financing: the machine secures the money
Equipment financing ties the debt to a specific asset: the lender pays for the machine, holds a lien on it until payoff, and sizes the term to the machine's working life, commonly two to seven years. Because the collateral does the heavy lifting in underwriting, a strong asset can carry a middling credit file.
Cost behaves like secured credit: fixed payments, interest on a declining balance, pricing meaningfully below unsecured alternatives. Speed is days to a couple of weeks, since the lender wants the invoice or quote and, for used gear, sometimes an appraisal.
It fits any business buying a revenue-producing hard asset: trucks, ovens, lifts, chairs, diagnostic machines. Whether to finance, lease, or pay cash is a genuine three-way decision covered in buying versus leasing, and the case against using fast general-purpose money for a five-year machine is made in equipment loan versus working capital.
5. Merchant cash advances: speed, priced like speed
A merchant cash advance is not structured as a loan at all. The funder purchases a slice of your future revenue: you receive a lump sum today and remit a fixed, larger payback amount through automatic daily or weekly debits, or through a holdback percentage of card sales. The price is set by a factor rate, a one-time multiplier rather than an interest rate, so the full cost exists the moment you sign regardless of how fast you finish.
This is the fastest product on the list, with decisions in hours and funding in days, and it is generally the most expensive per dollar. Underwriting reads recent bank deposits more than credit history, which is why advances say yes to businesses that lines and term loans decline.
The advance fits an owner with strong deposits, an urgent and specific need, and a use for the money that generates revenue quickly enough to justify a premium for speed. It deserves respect, not fear, and it rewards arithmetic: read the plain-English MCA guide, then run any real offer through the MCA calculator before signing anything.
6. Revenue-based financing: repayment that breathes
Revenue-based financing advances a lump sum repaid as a fixed percentage of your actual revenue until a set total is delivered. The dollar payment rises in strong months and falls in weak ones, so the term flexes instead of the payment. That single design choice makes it the rare fast product that bends with a seasonal business rather than against it.
The cost structure is a repayment cap, a multiple of the advance, that behaves like a factor rate: fixed at signing, indifferent to how quickly you finish. The paradox worth knowing in advance is that fast growth makes the money more expensive on an annualized basis, because the same fee is paid over fewer months.
It fits businesses whose revenue swings, e-commerce and seasonal trades especially, and owners who fear a fixed daily debit more than they fear a longer tail. The mechanics and the honest math live in our revenue-based financing guide.
7. Invoice factoring: selling what you are already owed
Factoring is not borrowing against the future; it is converting the past. You sell unpaid B2B invoices to a factoring company, receive most of the face value now, and get the remainder, minus the factor's fee, when your customer pays. The factor's underwriting cares about your customers' reliability at least as much as yours, which makes factoring reachable for young companies with creditworthy clients.
The fee typically scales with how long the invoice takes to pay, so slow customers cost more, and agreements split between recourse and non-recourse versions depending on who eats a customer default.
Factoring fits businesses whose money is trapped in 30, 60 or 90-day payment terms: trucking, staffing, construction subcontractors, wholesale. It does nothing for a business paid at the register. The step-by-step mechanics are in invoice factoring explained.
8. Business credit cards: revolving convenience with a float
A business credit card is a revolving limit like a line of credit, with two differences that decide everything: it is built for card-rail purchases rather than cash, and it carries a grace period. Pay the statement in full each month and the card lends you money for free, indefinitely, while paying rewards on the spend.
Carry a balance and the picture inverts: card interest sits above almost every other product on this page, and cash advances on a card are priced worse still. Limits are also modest next to dedicated financing.
Cards fit everyday operating spend, thin or young files building a credit history, and owners disciplined enough to treat the grace period as the product. Where the card ends and a true line begins is mapped in business credit card versus line of credit.
9. Bridge financing: short money with a named exit
Bridge financing is less a product than a purpose: short-term money, from a short-term loan, an advance, or a line draw, taken to cover a defined gap between now and a known incoming event. The SBA loan that funds in sixty days, the insurance payout in review, the receivable due on the 30th, the construction draw after inspection.
What separates a bridge from ordinary borrowing is that the exit, not the business, is the real underwriting. Sound bridges have a named source, a dated arrival and a written basis; hopeful bridges have a feeling that things will pick up. The cost logic, the honest risks and the rules for bridging safely are in bridge financing for small businesses.
How to narrow nine products to a shortlist
Three questions do most of the sorting. First, what is the money for, and how long does that need actually last? Long-lived assets point to long structures (term loans, SBA, equipment financing); short gaps point to short structures (lines, advances, factoring, bridges). Second, what does your file look like? Strong credit, documented financials and time in business open the cheap end of the list; strong deposits with a bruised file open the fast end. Third, when is the deadline? A real answer in days eliminates half the list by itself.
It also helps to think in sequence rather than in single choices. Most businesses graduate through this list over their lifetime: a card and a microloan in year one, an advance or short-term loan through the scrappy middle years, then a line, a bank term loan and eventually SBA money as returns, history and credit accumulate. Where you are on that ladder matters more than where you wish you were, and taking the rung you can actually reach, then refinancing upward later, is a strategy rather than a defeat.
Then get numbers instead of adjectives. The funding estimator turns revenue, time in business and industry into an estimated range in about a minute, free, with no login, and the offer comparison tool puts any two real quotes on the same footing. Estimates are not approvals, no page can promise terms, and providers decide independently; what this map can do is make sure you walk in knowing which product you are actually shopping for.
Frequently asked questions
Can a business use more than one of these at the same time?
Yes, and many do sensibly: a term loan on the buildout, a card for daily spend, a line for timing gaps. The caution is overlapping short-term obligations, especially multiple advances, where each new position claims the same future revenue. Before adding any product on top of another, total the combined payments and test them against your weakest recent month, not your best.
Which type of financing is easiest to get approved for?
Accessibility and cost sit on the same slider. Merchant cash advances and revenue-based financing approve the widest range of files because they underwrite recent deposits rather than credit history; factoring approves based largely on your customers' strength. Bank term loans, bank lines and SBA loans sit at the strict end. Easier approval is real value when you need it, and you pay for it in price.
Which type of financing is cheapest?
Per dollar borrowed, SBA loans, bank term loans and bank lines of credit are usually the low end, followed by equipment financing, with short-term online products and advances at the high end. But cheapest per dollar is not the same as cheapest for the situation: a line you cannot get approved for costs infinity, and a cheap loan that arrives three weeks after payroll was due solved nothing.
Does going through a broker change which products I can get?
A broker's honest job is matching your file to funders who actually approve files like yours, across several of these product types, which can widen the realistic menu rather than narrow it. Brokers are paid by commission, so the fair questions are how the broker is compensated and whether a cheaper product was considered; how brokers get paid answers the first in detail, and a broker who resents the second is telling you something.
Do all of these require a personal guarantee?
Most small business financing involves one, including most products on this list, meaning you personally back the obligation if the business cannot pay. Some advances market themselves as no-personal-guarantee but still include performance guarantees with real teeth. What the signature actually commits you to is worth reading twice; our personal guarantee guide walks through it.