Business Owners

Different Kinds of Business Loans

If you’re considering a loan for your business, here is a short guide on what options may be available to you. If you own your property, you may want to forgo debt and access the capital tied up in your existing asset.

Kelly Anne Tully

Kelly Anne Tully

Different Kinds of Business Loans

If you’re considering a loan for your business, it’s absolutely crucial that you do your research and due diligence before embarking on any application. Since the process can be long and detailed, you don’t want to go through the pain of it without knowing the loan itself is aligned with your goals and plans. 

You’ll want to start by clearly identifying your specific purpose for the loan. Are you growing and looking to hire more people or open another location? Maybe you need to invest in a new technology to get ahead of the market? Then, make a solid plan that includes the specific dollar amount you’re seeking to make these dreams a reality. You’ll also need to think about the timeline you need to pay back the money you’re borrowing. Once you have this in place, review these different kinds of business loans to discover what might best suit you and your business.

Business Line of Credit

Business lines of credit are super flexible and typically available within a week or so. The nice thing about this type of loan is it’s revolving, so you can access the funds more than once as you pay it down (and you only pay interest on what you spend). Business lines of credit usually range in the ballpark of $1,000 to $500,000. You’re likely looking at an interest rate of about 8-24% and a year or two maturity period.

Small Business Administration Loan (SBA)

The Small Business Administration (SBA) is a federal agency that assists small businesses that can’t get help elsewhere in finding needed funds and resources. These types of loans go from $50,000 to as much as $5,000,000 and terms are often 10-25 years. You’ll need to plan for a lengthy process and time frame before accessing funds from this loan. 

Short Term Loan

If you’re under a time crunch, in a high-pressure situation, basically in need of funds yesterday, a short term loan could be your saving grace, provided you don’t need more than about $500,000. Once your application is submitted, you could have a low-interest (think 8% or so) loan as quickly as 24 hours. Keep in mind, as the name says, these are meant for the short term, so they need to be paid off quickly — usually within three years.

Business Term Loan

For decades, businesses looking to borrow money have used business term loans as a very reliable, quick, popular, and cheap method (fixed interest rates go as low as 6%). These loans are used for anything from expansion to working capital acquisition to equipment purchases, range from about $5,000 to $2,000,000, and can span anywhere from 1-5 years.

Other Types of Business Loans

The table below outlines some other types of business loans you might want to explore, along with their approximate amounts, interest rates, and terms.

Loan type

Loan amount

Interest rate

Term

Business credit card

Up to $500,000

8-24% (sometimes with a 0% introductory rate)

Revolving

Merchant cash advance

$5,000-$20,000

18%

Equipment financing

Up to $5,000,000

Starting at 7.5%

Startup loan

$500-$750,000

Interest-free up to 17%

Up to 25 years

Business acquisition loan

$5,000-$5,000,000

As low as 5.5%

Revolving or for 10-25 years

Accounts receivable financing

Potentially up to 80% of your receivables

Starts at about 5%

Up to a year

Commercial mortgage

$250,000-$5,000,000 

As low as about 4.25%

20-25 years


If you own your commercial property, another option is to enter into a sale-leaseback with Keyway. In a sale-leaseback, you would sell your property, get cash for your growth needs, and remain as a long-term renter in the same location. Contact us to learn more!