Access to capital is one of the biggest challenges facing entrepreneurs in the United States. Whether you are launching a startup, expanding operations, purchasing equipment, or managing cash flow, small business loans play a critical role in business growth and sustainability.
In the U.S., lenders—from traditional banks to online fintech platforms—offer a wide range of financing solutions tailored to small businesses. However, each loan type comes with different eligibility requirements, interest rates, repayment terms, and risks.
This in-depth guide explains everything you need to know about small business loans in the USA, including types of loans, qualification criteria, interest rates, and how to compare lenders effectively using conversion-focused comparison tables.
What Are Small Business Loans?
Small business loans are financing products designed to help businesses cover expenses, invest in growth, or stabilize cash flow. These loans are issued by banks, credit unions, government-backed institutions, and online lenders.
Businesses typically use loans to:
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Start a new business
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Expand operations
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Hire employees
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Buy equipment or inventory
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Manage seasonal cash flow
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Refinance existing debt
Unlike personal loans, small business loans often require business documentation, proof of revenue, and sometimes collateral.
Types of Small Business Loans in the USA
Understanding loan types helps you choose financing that aligns with your business goals and financial position.
1. Term Loans
A term loan provides a lump sum of capital repaid over a fixed period with interest.
Best for
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Business expansion
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Large purchases
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Long-term investments
Loan Amounts
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$5,000 to $5 million
2. SBA Loans (Small Business Administration)
SBA loans are partially guaranteed by the U.S. government, making them attractive to lenders and borrowers.
Popular SBA Loan Programs
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SBA 7(a)
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SBA 504
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SBA Microloans
Best for
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Businesses with limited collateral
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Lower interest rates
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Longer repayment terms
3. Business Lines of Credit
A business line of credit allows you to borrow up to a limit and only pay interest on the amount used.
Best for
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Cash flow management
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Emergency expenses
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Seasonal businesses
4. Equipment Financing
Equipment loans are used to purchase business equipment, with the equipment itself serving as collateral.
Best for
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Manufacturing
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Construction
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Healthcare
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Transportation businesses
5. Invoice Financing (Invoice Factoring)
Invoice financing allows businesses to borrow against unpaid invoices.
Best for
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B2B companies
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Businesses with slow-paying clients
6. Merchant Cash Advances (MCA)
A merchant cash advance provides upfront cash in exchange for a percentage of future sales.
Best for
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Businesses with strong daily sales
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Short-term funding needs
⚠️ Note: MCAs are expensive and should be used cautiously.
Comparison Table: Types of Small Business Loans
Affiliate Tip: Add “Check Rates” or “Apply Now” buttons for each loan type.
| Loan Type | Interest Rates | Repayment Term | Best For | Funding Speed |
|---|---|---|---|---|
| Term Loans | 6%–30% | 1–10 years | Expansion | 1–4 weeks |
| SBA Loans | 5.5%–11% | Up to 25 years | Low-cost funding | 2–8 weeks |
| Business Line of Credit | 7%–25% | Revolving | Cash flow | 1–7 days |
| Equipment Financing | 6%–20% | 1–7 years | Asset purchase | 3–10 days |
| Invoice Financing | 10%–50% APR | Short-term | Unpaid invoices | 1–3 days |
| Merchant Cash Advance | Very high | Daily/weekly | Quick cash | Same day |
How Small Business Loan Interest Rates Work
Interest rates vary significantly depending on the lender, loan type, and borrower profile.
Factors That Affect Interest Rates
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Credit score (personal and business)
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Business revenue
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Time in business
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Debt-to-income ratio
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Collateral
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Loan term length
Borrowers with strong credit and steady revenue qualify for the lowest rates.
Interest Rates by Credit Score (Estimated)
| Credit Score | Estimated APR Range |
|---|---|
| 750+ | 6%–10% |
| 700–749 | 8%–14% |
| 650–699 | 12%–20% |
| 600–649 | 18%–30% |
| Below 600 | 25%+ |
Eligibility Requirements for Small Business Loans
While requirements vary, most lenders evaluate the following:
Common Qualification Criteria
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Minimum credit score (usually 600+)
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At least 6–12 months in business
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Annual revenue ($50,000+ for many lenders)
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Business bank statements
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Tax returns
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Proof of ownership
SBA and bank loans typically have stricter requirements than online lenders.
Comparison Table: Loan Approval Requirements
| Lender Type | Credit Score | Time in Business | Revenue Required |
|---|---|---|---|
| Banks | 680+ | 2+ years | High |
| SBA Lenders | 650+ | 1–2 years | Moderate |
| Credit Unions | 650+ | 1+ year | Moderate |
| Online Lenders | 550–600+ | 3–6 months | Low–Moderate |
| MCA Providers | 500+ | 3 months | Sales-based |
Secured vs Unsecured Small Business Loans
Secured Loans
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Require collateral
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Lower interest rates
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Higher approval amounts
Unsecured Loans
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No collateral required
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Higher interest rates
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Faster approval
Secured vs Unsecured Loan Comparison
| Feature | Secured Loan | Unsecured Loan |
|---|---|---|
| Collateral | Required | Not required |
| Interest Rate | Lower | Higher |
| Approval Amount | Higher | Lower |
| Risk to Borrower | Asset loss | Credit impact |
How Much Can You Borrow?
Loan amounts depend on your business profile and lender type.
| Loan Type | Typical Loan Amount |
|---|---|
| SBA 7(a) | Up to $5 million |
| Term Loans | $5,000–$2 million |
| Line of Credit | $10,000–$500,000 |
| Equipment Financing | Equipment value |
| Invoice Financing | 70%–90% of invoice value |
Costs and Fees Associated With Small Business Loans
Beyond interest rates, businesses should account for additional costs.
Common Fees
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Origination fees
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SBA guarantee fees
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Late payment fees
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Prepayment penalties
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Processing fees
Always review the APR, not just the interest rate.
Cost Breakdown Example
| Loan Amount | APR | Monthly Payment | Total Cost |
|---|---|---|---|
| $100,000 | 8% | ~$2,028 | ~$121,700 |
| $100,000 | 15% | ~$2,379 | ~$142,700 |
| $100,000 | 25% | ~$2,935 | ~$176,100 |
How to Choose the Best Small Business Loan
Ask yourself:
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What is the loan purpose?
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How fast do I need the funds?
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Can I handle the repayment schedule?
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Do I need flexibility or long-term stability?
Choosing the wrong loan can strain cash flow and slow growth.
Best Places to Get Small Business Loans in the USA
Comparison Table: Small Business Loan Providers
| Provider Type | Speed | Rates | Best For |
|---|---|---|---|
| Banks | Slow | Lowest | Established businesses |
| SBA Lenders | Slow–Moderate | Very low | Long-term funding |
| Credit Unions | Moderate | Low | Member businesses |
| Online Lenders | Fast | Moderate–High | Quick access |
| Alternative Lenders | Very fast | High | Poor credit |
Common Mistakes to Avoid
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Borrowing more than needed
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Ignoring total loan costs
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Using short-term loans for long-term needs
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Not comparing multiple lenders
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Overlooking cash flow impact
FAQs About Small Business Loans
Can startups get small business loans?
Yes, but options are limited. SBA microloans and online lenders are more accessible.
Do I need collateral?
Not always. Many online lenders offer unsecured loans.
How fast can I get funding?
Online lenders can fund within 24–72 hours.
Are small business loans tax deductible?
Interest is typically tax-deductible. Consult a tax professional.
Final Thoughts
Small business loans are powerful tools for growth when used strategically. By understanding loan types, interest rates, eligibility requirements, and repayment structures—and by using comparison tables to evaluate options—business owners can secure funding that supports long-term success without unnecessary financial strain.
Always compare multiple lenders, calculate total costs, and choose a loan that aligns with your business goals.