Most small business owners face the same funding decision: how do you find capital quickly without borrowing at a rate that kills your margins?
Quick Answer: Cost and speed run in opposite directions. SBA loans are cheapest at 9.75–13.25% APR but take 45–75 days. MCAs fund in hours but cost 60–200% annualized. Everything in between — online term loans, lines of credit, invoice factoring — involves trading some speed for lower cost. The right choice depends on how much you need, how fast, and what your financials look like today.
All 8 Options at a Glance
| Funding Type | Typical Cost | Funding Speed | Min. Credit Score | Best For |
|---|---|---|---|---|
| SBA 7(a) Loan | 9.75–13.25% APR | 45–75 days | 680+ | Long-term growth capital |
| Equipment Financing | 6–25% APR | 3–10 days | 620+ | Buying equipment |
| Business Line of Credit | 8–35% APR | 1–5 days | 600+ | Recurring cash flow gaps |
| Online Term Loan | 20–45% APR | 1–5 days | 580+ | One-time medium-term need |
| Invoice Factoring | 1–5% per invoice | 1–3 days | No minimum | B2B with slow-paying clients |
| Revenue-Based Financing | 1.2–3× total repayment | 3–7 days | 550+ | High-revenue, fast-growing businesses |
| Merchant Cash Advance | 60–200% eff. APR | 24–72 hours | 500–550 | True emergency or fast-ROI opportunity |
| Business Credit Card | 0–27% APR | Immediate | 660+ | Purchases under $50K |
SBA 7(a) Loans
SBA loans don’t come from the government directly — approved banks lend the money with a government-backed guarantee, which is what keeps rates low. In 2026, 7(a) loan rates are set at Prime + 3–6.5% (size-tiered per SOP 50 10 8), putting most loans in the 9.75–12.75% APR range. Maximum loan amount is $5 million; most small businesses receive $50,000–$500,000.
Minimum requirements:
- Personal credit score: 680+
- Time in business: 2+ years
- No active bankruptcies or tax liens
- 2–3 years of business financials, personal tax returns, detailed business plan
The catch: 45–75 days from application to funded, and the paperwork is substantial. SBA loans reward businesses that apply before they’re desperate — not when they need capital next week.
Best for: Expansion capital, purchasing commercial real estate, or long-term investment in equipment or infrastructure where waiting 60 days is workable.
Equipment Financing
When the purchase is a specific piece of equipment — a restaurant oven, a delivery van, a commercial printer — equipment financing uses the asset itself as collateral. That security keeps rates lower than unsecured alternatives: 6–9% APR for prime-credit borrowers, 8–25% for alternative lenders. Terms run 12–72 months, and most lenders require a 10–20% down payment.
Because the equipment is the collateral, businesses with weaker credit (620+) often qualify here when they’d be declined for a term loan. Funding typically takes 3–10 days.
Best for: Any capital purchase where the specific asset secures the loan. Not suitable for working capital, payroll, or inventory.
Business Lines of Credit
A business line of credit works like a revolving account: draw what you need, repay it, draw again. Online lenders like Bluevine and Fundbox offer limits from $1,000 to $250,000 at 8–35% APR, with approvals in 1–5 days.
The real advantage over a term loan: you only pay interest on what you draw. A $50,000 line at 25% APR costs nothing when unused. A $20,000 draw for 30 days costs about $417 in interest — versus an MCA on the same amount, which might cost $4,000–$6,000 in factor-rate fees.
Minimum requirements are typically 600+ credit score, 1 year in business, and $50,000+ in annual revenue.
Best for: Recurring working capital needs — covering payroll gaps, buying inventory before a busy season, or bridging payment delays. Far more efficient than a term loan for businesses with cyclical cash needs.
Online Term Loans
Online lenders like OnDeck, Bluevine, and Credibly have made approval fast: applications take minutes, decisions arrive in hours, and funds clear within 1–5 business days. That speed comes at a cost — APRs run 20–45% for most borrowers (OnDeck can reach 99% APR for higher-risk profiles).
Typical minimums: 580–640 credit score, 6–12 months in business, $50,000–$100,000 in annual revenue.
Online term loans sit in the middle of the cost/speed spectrum. They’re substantially cheaper than MCAs and considerably faster than SBA loans, making them the practical default for businesses that have decent credit but can’t wait two months.
Best for: One-time capital needs (a marketing push, an inventory purchase, a renovation) where you need funding in under a week and can service fixed monthly payments.
Invoice Factoring
If your business sells to other businesses (B2B) and extends 30–90 day payment terms, your outstanding invoices represent cash you’ve already earned but haven’t collected. Invoice factoring converts those invoices to immediate cash.
A factoring company advances 70–90% of the invoice value upfront (typically within 1–3 days), then collects from your customer directly. When your customer pays, you receive the remaining balance minus a 1–5% factoring fee. On a $50,000 invoice with an 85% advance and a 2.5% fee: you get $42,500 upfront, and once your customer pays the full $50,000, the factor returns the held-back $7,500 minus its $1,250 fee — a $6,250 rebate. Net, you collect $48,750 on the invoice.
No credit score minimum — the factoring company evaluates your customers’ creditworthiness, not yours. This makes factoring one of the most accessible options for new or credit-challenged businesses.
One trade-off: the factoring company takes over collections, which means your customers now deal with a third party. Some businesses handle this easily; others prefer to maintain those relationships directly.
Best for: B2B businesses with reliable customers and chronic cash flow gaps caused by slow payment cycles. Not available for B2C businesses (retail, restaurants) without invoice-based revenue.
Revenue-Based Financing
Revenue-based financing (RBF) advances a lump sum repaid as a fixed percentage of monthly revenue until a total cap is reached — structurally similar to an MCA, but typically cheaper and aimed at higher-revenue businesses.
The cost is expressed as a repayment cap: a 1.2× cap on a $100,000 advance means total repayment of $120,000. Most providers fall in the 1.2–3× range, with repayment periods of 6–18 months depending on revenue. Minimum requirements are typically $30,000–$100,000 in monthly revenue and a 550+ credit score.
RBF is materially cheaper than most MCAs when you compare total repayment amounts. A $100,000 MCA at a 1.35 factor rate costs $35,000 in fees; the same advance via RBF at a 1.2× cap costs $20,000 — a $15,000 difference.
Best for: SaaS companies, subscription businesses, and high-revenue retail or service businesses that want speed and revenue-tied repayment without MCA-level costs.
Merchant Cash Advances
MCAs are the fastest option on this list — funded in 24–72 hours with minimal documentation (typically 3–6 months of bank statements and a basic application). Approval requirements are the most lenient: credit scores as low as 500–550, 3–6 months in business, $5,000–$10,000 in monthly revenue.
The cost is the trade-off. Factor rates of 1.10–1.50 translate to effective APRs of 60–200% depending on how quickly your holdback repays the advance. Daily or weekly holdbacks of 10–20% of gross card sales or bank deposits can put real pressure on operating cash flow, especially in slow months.
MCAs can be the right tool in specific scenarios: a genuine revenue emergency where the cost of not having cash exceeds the MCA fee, a supplier deal that saves more than the advance costs, or a situation where every cheaper option has been exhausted and timing is critical.
For a full cost breakdown and a clear YES/NO checklist for your situation, read Is a Merchant Cash Advance Worth It? The Honest 2026 Verdict →. Use the MCA Cost Calculator → to run the numbers on a specific advance amount and factor rate.
Business Credit Cards
Business credit cards are the most overlooked working capital tool for smaller needs. Multiple cards offer 0% intro APR for 6–20 months — effectively an interest-free loan for purchases you can pay off before the promotional period ends. After the intro period, rates jump to 16–27% APR (average ~21.5%).
Best for: Purchases under $25,000–$50,000 that you can pay back within 12–18 months. Not suitable for large capital needs, payroll, or rent.
The main requirement: most 0% APR cards need a 660+ personal credit score. If you’re building business credit and can manage the balance, this is one of the cheapest tools available for everyday purchases.
How to Choose: A Quick Decision Framework
Work through these questions in order:
- Can you wait 45–75 days? → Pursue an SBA 7(a) loan first (lowest cost).
- Is it a specific equipment purchase? → Equipment financing (uses the asset as collateral, 6–25% APR).
- Do you have outstanding B2B invoices? → Invoice factoring (no credit minimum, 1–3 days).
- Do you need recurring draws, not a one-time lump sum? → Business line of credit (8–35% APR).
- Do you need funds in under a week? → Online term loan (20–45% APR, 1–5 days).
- Is it under $50K and can you repay within 18 months? → Business credit card (0% intro APR).
- Is it a true emergency and all other options are closed? → MCA or RBF (fastest, most expensive).
For a deeper comparison of MCA alternatives specifically, see 7 MCA Alternatives: Costs, Requirements & When to Use Each →.
Frequently Asked Questions
What is the cheapest type of small business loan? SBA 7(a) loans at 9.75–13.25% APR (size-tiered), then equipment financing at 6–25% APR. Both require strong credit and take days to weeks. Merchant cash advances are the most expensive, with effective APRs of 60–200%.
What’s the fastest way to get business funding? Merchant cash advances fund in 24–72 hours. Invoice factoring follows at 1–3 days. Online term loans typically take 1–5 business days.
Can I get business funding with bad credit? Yes. Invoice factoring has no credit minimum. Equipment financing accepts 620+. MCAs accept 500–550. SBA Microloans are specifically designed for businesses that don’t qualify for conventional loans.
How much revenue do I need to qualify for a business loan? Online term loans typically require $50,000–$100,000 in annual revenue and 6–12 months in business. SBA loans need 2+ years of financial history. Invoice factoring and MCAs assess transaction volume rather than annual revenue.
Is revenue-based financing the same as a merchant cash advance? Structurally similar — both repay as a percentage of future revenue — but RBF typically costs less (1.2–3× cap vs. 1.10–1.50 factor rate), targets higher-revenue businesses, and repays over a longer period. MCAs are more accessible and faster, but carry higher effective APRs.