Small business financing: what each option costs

Merchant cash advances, term loans, lines of credit, SBA and EIDL loans, with what each costs and who can get it. Start here if you have not taken an advance yet, or if you are working out what comes after one.

Cost per year, side by side

The cheapest money is the slowest to get. Everything below is explained in its own section on this page.

Merchant cash advances

An advance funds in 24 to 48 hours and is approved for thin credit files and seasonal businesses. It is also the most expensive option on this page: a 1.40 factor rate repaid over nine months is about 95% APR. The details are on its own page.

Term loans

A term loan gives you a fixed sum repaid on a fixed schedule. Bank and SBA-backed loans are the cheapest: with the prime rate at 7.00% in October 2026, the SBA’s ceiling on a variable-rate 7(a) loan is 10% to 13.5% depending on size. Bank term loans move slowly, often two to eight weeks to fund, and banks generally want at least two years in business and decent personal credit. Online lenders fund faster, often within a week, and charge more than a bank but usually far less than a merchant cash advance.

Term loans suit a planned expense such as equipment or a buildout. They are a poor fit for an emergency, because qualifying takes underwriting: expect to hand over tax returns and bank statements, plus a business plan for larger amounts.

Related: startup business loans, no-collateral options and private lenders · turned down by a bank

Lines of credit

A business line of credit gives you access to a set credit limit you can draw against as needed, paying interest only on what you use, much like a credit card but usually at a lower rate. It suits short-term gaps, such as covering payroll in a slow month or waiting on an unpaid invoice, better than one large purchase.

Qualification sits between a term loan and a merchant cash advance: online lenders will extend smaller lines to businesses with six months to a year of revenue history, while banks want more history and better credit for larger limits.

Related: loans and credit checks · credit card financing

SBA and EIDL loans

SBA loans are issued by private lenders but partially guaranteed by the U.S. Small Business Administration, which lets lenders offer longer terms and lower rates than they could otherwise justify for a small or newer business. The tradeoff is paperwork and time: a standard SBA 7(a) loan can take four to twelve weeks to close, sometimes longer, and requires substantial documentation.

EIDL (Economic Injury Disaster Loan) programs are issued directly by the SBA following a declared disaster and carry their own separate terms and eligibility windows that change with each program; the COVID-era program stopped taking applications on January 1, 2022, so check the SBA’s site for a current disaster declaration before assuming you are eligible.

Related: SBA loans vs. MCAs · are EIDL loans personally guaranteed?

State-specific rules that affect all of the above

Loans and lenders

SBA and EIDL

Before you sign an advance

Beyond debt