However, how you go about securing the funds can make a big difference to the success or failure of your business, so you must consider all your options very carefully. It’s about taking public transport to meetings rather than taxis and reducing costs where you can. You need to keep a constant eye on the situation and take steps to prevent debt from snowballing out of control.

  • In general, business credit cards can be useful for all types of entrepreneurs because they allow you to earn rewards (e.g., cash back, miles, points) for everyday spending on your business purchases.
  • For example, Navy Federal Credit Union is a national credit union that offers membership to members of the U.S. armed forces, Department of Defense and National Guard as well as their families.
  • Seller financing is a term that originally came from the real estate industry where the seller handles the mortgage instead of a financial institution.
  • You can start a search for a certified CPA that’s a good fit for your business using this online directory.
  • Investors can give you funding to start your business in the form of venture capital investments.

These loans typically range from $30,000 to $5 million and come with low interest rates and extended repayment terms—up to 25 years. That said, qualification requirements are more demanding than for other loans not backed by the government, and the application process typically takes longer. We picked OnDeck for its variety of business lending products and same-day funding. OnDeck offers a term loan from $5,000 to $250,000 with repayments terms of up to 24 months.

Review Small Business Financing Options

In fact, small business loan amounts can range from $1,000 to $5 million. Among all funding methods, $25,001 to $55,000 was the most commonly reported funding amount used to start a business. Thirty-seven percent of entrepreneurs who chose business loans and 21% who drew from personal savings relied on this amount to fund their venture. Equity funding, unlike debt funding, does not always require repayment if your business fails. However, you will likely have to grant your funders a seat at the decision-making table. Venture capitalists, angel investors and equity crowdfunding are all forms of equity funding.

If you can qualify, however, your business might be able to borrow up to $5 million. Repayment terms can stretch out as long as 30 years with some SBA loans, and you might get financing with a down payment as small as 10% of the loan amount. Some Acquisition Entrepreneurs are able to access equity funds, which can help fund their business acquisition by providing a cash injection toward the down payment. That’s because banks usually require substantial physical assets belonging to the company as collateral for the loan. If you want to go for seller financing, be aware that such loans are issued at competitive interest rates. The advantages of seller financing include quick purchase and the option of tying the payment of the loan with business performance.

A merchant cash advance may be a good option for businesses that experience a high volume of sales and need to access cash quickly—without qualifying for a traditional business loan. Through debt financing, you can quickly access capital that you might not otherwise be able to get for weeks or even months. Bank loans, government loans, merchant cash advances, business credit lines and business credit cards are all forms of debt financing, which you must repay even if your company fails. In addition to SBA loans, credit unions can offer a range of funding options, including lines of credit, traditional term loans and business credit cards.

Types of business loans

From business to marketing, sales, design, finance, and technology, we have the top 3 percent of freelance experts ready to work for you. From August 2021 to August 2023, commercial credit card interest rates saw a 46% increase, moving from 14.54% to 21.19%. Some experts predict the Fed may start cutting rates in the second half of 2024, which could mean more competitive credit card interest rates are on the horizon. The cost of credit has soared over the last few years after multiple Fed Fund rate hikes, making credit card borrowing more expensive and likely less appealing. In this article, I’m going to look at five easy ways entrepreneurs can get a handle on their finances and mitigate the potential for financial disaster.

What can you do if you’re denied a small business loan?

You can apply for business loans, lines of credit, SBA loans, equipment financing, merchant cash advances (MCAs), commercial mortgages, invoice factoring and business acquisition loans. However, because Lendio is a marketplace and not a lender, it gross income definition doesn’t publish specific terms. Instead, you’ll have access to its lending partners, and it will help you find the best offer for your specific needs. Among business loan recipients, 46% opted for loans due to the flexible repayment timeline.

Small-business grants

• Consider taking advantage of tax-advantaged retirement accounts for yourself and your employees. In 2023, you can contribute up to $22,500 to your 401(k) and $6,500 to your IRA. Plus, if you’re 50 or older, you can make “catch-up” contributions of $7,500 and $1,000, respectively. However, with a bit of strategic planning, you can legally minimize your tax burden. Understanding the tax code and taking advantage of deductions and credits that are available to you can make a big difference to your bottom line. Look, you may be an expert in your field, but when it comes to financial expertise, we can all use someone with expertise to guide us and hold us accountable.

Manage cash flow

However, Funding Circle doesn’t specify its line of credit repayment terms. You can also apply for Funding Circle SBA loans, which range from $25,000 to $500,000 with terms up to 10 years. BlueVine is a financial technology company that provides financing solutions to small businesses nationwide. As of December 2021, BlueVine no longer offers invoice factoring as one of its financing methods. Seventy-three percent of entrepreneurs who opted for business loans found increased capital availability to be the biggest advantage. Availability of financing was the biggest benefit for the 60% who utilized savings and the 72% who borrowed from friends and family.

Off-Balance Sheet Financing

However, invoice factoring is best used as a short-term solution if you need money quickly since the fees can be exorbitant. At some point you may need to inject outside cash into your business, whether to cover a short-term cash flow problem or to invest for future growth. At that point, it’s good to know the range of financing options available.

Not only do you get to retain full control of your company, but if your plan fails, you’re typically under no obligation to repay your crowdfunders. Every crowdfunding platform is different, so make sure to read the fine print and understand your full financial and legal obligations. The creditworthiness of your customers matters more than your own business’ credit scores when it comes to this type of financing.