Question 1

How do I know which type of business loan is right for me?

Accepted Answer

Start with two questions: how fast do you need the money, and what is it for? If you need cash this week, look at merchant cash advance, lines of credit, or equipment financing. If you can wait 4–12 weeks for the lowest rate, the SBA 7(a) program is almost always the answer. Use the decision tool above for a personalized recommendation, then check eligibility in minutes.

Question 2

What's the difference between a business loan and a line of credit?

Accepted Answer

A business loan is a one-time lump sum repaid on a fixed schedule — best for a known expense like buying a vehicle or refinancing debt. A business line of credit is revolving: you draw what you need, only pay interest on the outstanding balance, and the limit replenishes as you repay. Lines fit recurring or unpredictable needs like payroll, inventory restocks, or seasonal cash flow.

Question 3

Are business loans tax deductible?

Accepted Answer

The interest you pay on a small business loan is generally tax deductible as a business expense, while the principal is not. The same applies to interest on business lines of credit, equipment loans, SBA loans, and most commercial debt. Always confirm with your CPA — IRS rules can differ for partner buyouts, owner-occupied real estate, and mixed-use borrowing.

Question 4

How much can I borrow for my small business?

Accepted Answer

Most online lenders cap working capital loans and lines of credit at 10–15% of your trailing 12-month revenue. SBA 7(a) loans go up to $5M, SBA 504 up to $5.5M, and equipment financing up to $5M depending on the asset. Merchant cash advances size to monthly card volume, typically 80–125% of one month's processing.

Question 5

What credit score do I need to qualify for a small business loan?

Accepted Answer

It varies by product. SBA 7(a) loans typically require a personal FICO of 680+. Working capital loans and business lines of credit through online lenders accept scores starting at 600. Merchant cash advances and invoice factoring evaluate business cash flow more than personal credit and can fund with FICOs in the 500s.

Question 6

Can I get a business loan with bad credit?

Accepted Answer

Yes, but the product set narrows. Merchant cash advances, invoice factoring, and some equipment financing programs lend to owners with FICOs in the 500s by relying on business revenue or collateral instead of personal credit. The cost is higher, so use these only when faster, cheaper options aren't available.

Question 7

Can I get a startup business loan with no revenue?

Accepted Answer

True startup loans without revenue are limited. Most online business lenders require 6+ months in business and at least $10K/month in revenue. For pre-revenue startups, look at SBA microloans (up to $50K), business credit cards, equipment financing with strong personal credit, or 0% personal-to-business funding programs.

Question 8

Will checking my eligibility hurt my credit score?

Accepted Answer

No. The initial eligibility check is a soft credit pull — it does not impact your credit score. A hard inquiry only happens later, after you accept a specific lender's offer and choose to move forward with a full application.

Question 9

Do I need collateral for a small business loan?

Accepted Answer

Not always. Working capital loans and business lines of credit under $100K are typically unsecured (no specific collateral, but a personal guarantee). SBA 7(a) loans over $50K usually require collateral when available. Equipment financing is automatically collateralized by the equipment itself, and invoice factoring is secured by the invoices.

Question 10

What's the difference between an SBA 7(a) and a 504 loan?

Accepted Answer

Both are government-backed, but they fund different things. The SBA 7(a) is the general-purpose program — working capital, debt refinance, partner buyout, real estate. The 504 is specifically for major fixed assets like commercial real estate or large equipment. 504 loans use a two-lender structure and typically have lower fixed rates for real estate.

Question 11

What are current SBA 7(a) loan rates?

Accepted Answer

SBA 7(a) rates are tied to the WSJ Prime Rate plus a lender spread capped by the SBA. As of 2026, fixed and variable 7(a) rates run roughly 11%–16% APR, depending on loan size and term. The smallest loans carry the highest spreads; loans over $350K with 10-year terms see the lowest pricing.

Question 12

How long does it take to get an SBA loan?

Accepted Answer

Standard SBA 7(a) loans typically close in 30–90 days because of underwriting, documentation, and SBA approval. SBA Express loans (up to $500K) close faster, often in 2–4 weeks. SBA Working Capital Pilot lines can fund in 2–3 weeks once paperwork is complete.

Question 13

Is a merchant cash advance a loan?

Accepted Answer

Technically no — a merchant cash advance is the purchase of a portion of your future receivables at a discount. You repay via a fixed percentage of daily card sales (a holdback) or fixed daily/weekly ACH. Because MCAs aren't loans, they aren't quoted as APR; they're priced as a factor rate (e.g. 1.25x means $25K returns $31,250 total).

Question 14

How does equipment financing work?

Accepted Answer

An equipment loan or lease pays for a specific business asset — truck, oven, dental chair, machinery — and the equipment itself serves as collateral. Terms typically match the useful life of the asset (3–7 years), down payments range from 0–20%, and approval is faster than unsecured loans because the lender can recover the asset if you default.

Question 15

What is invoice factoring and how is it different from a loan?

Accepted Answer

Invoice factoring isn't borrowing — you sell unpaid B2B invoices to a factor at a discount (typically 1–5% per month) and receive 70–90% of face value upfront. The factor collects from your customer. Because it's based on your customer's credit (not yours), factoring is accessible to newer businesses and owners with weaker personal credit.

Question 16

How long does it take to get a business loan?

Accepted Answer

Funding speed runs from 24 hours to 90+ days depending on the product. Merchant cash advances and invoice factoring fund in 24–72 hours. Working capital loans, lines of credit, and equipment financing typically fund in 1–7 business days. SBA loans take 30–90 days because of the government underwriting and documentation requirements.

Question 17

Is SmarterLends a lender?

Accepted Answer

No. SmarterLends is a discovery and matching platform. We help you understand your funding options, then connect you with vetted U.S. small business lenders. We do not make underwriting decisions or set rates — specific approvals, rates, and terms are determined by the lender based on your application.

Question 18

What documents do I need to apply for a business loan?

Accepted Answer

For most online business loans you'll need: a government ID, your most recent 3–6 months of business bank statements, a voided business check, and basic business info (EIN, entity type, time in business, monthly revenue). SBA loans add tax returns (business + personal, 2–3 years), a debt schedule, P&L, balance sheet, and use-of-funds memo.

Loan type	Typical amount	Speed	Best fit
Working Capital Loans	$10K - $1.5M	1-3 days	Payroll, inventory, cash-flow gaps
Business Lines of Credit	$6K - $250K	1-3 days	Recurring or unpredictable expenses
Equipment Financing	$5K - $5M	1-7 days	Buying trucks, machinery, or equipment
SBA Loans	$50K - $5M	30-90 days	Lowest rates when you can wait
Merchant Cash Advance	$5K - $500K	24-72 hrs	Card-heavy businesses needing cash now
Invoice Factoring	70-90% of invoice	24-48 hrs	B2B with slow-paying customers

Small business loans, matched to your needs

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Which funding fits your business?

Six types of small business loans at a glance

Working Capital Loans

Business Lines of Credit

Equipment Financing

SBA Loans

Merchant Cash Advance

Invoice Factoring

Compare loan types side by side

Business loan rates by type (APR)

Business loans by industry

Business loans by state

Business loan FAQs

Choosing a business loan

Qualifying & credit

SBA loans

Merchant cash advances & equipment financing

About SmarterLends & next steps

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