Apply for a Small Business Loan: Complete 2025 Guide for U.S. Owners

What Is a Small Business Loan?

A small business loan is financing that gives owners access to a lump sum or revolving credit to cover expenses like:

• Payroll & staffing

• Inventory & supplies

• Equipment & vehicles

• Expansion or renovations

In exchange, lenders charge interest and/or fees, and you repay over time.

Who offers them?

• Banks & credit unions

• Online lenders

• Community development financial institutions (CDFIs)

• The Small Business Administration (SBA) via partner lenders

Types of Small Business Loans

Not every business needs the same kind of financing. Understanding the different types of small business loans available in the U.S. helps you choose the best option for your situation. Below are the most common categories and what they’re best for.

SBA 7(a) Loans

Small businesses across the U.S. choose the SBA 7(a) program more than any other government-backed loan. It gives you long repayment terms, relatively low interest rates, and flexibility to use the funds for working capital, equipment purchases, or real estate. Because the SBA guarantees the loan, lenders approve more applications—even from businesses that can’t qualify for traditional bank loans.
👉 [Read More About SBA 7(a) Loans]

SBA 504 Loans

The SBA 504 program helps you purchase major fixed assets such as commercial real estate or heavy equipment. You lock in long repayment terms and low interest rates, making this loan ideal for companies that want to invest in long-term growth.
👉 [Read More About SBA 504 Loans]

SBA Microloans

Through the SBA Microloan program, you can access up to $50,000 to grow or start your business. Nonprofit organizations administer these loans, making them a strong option for startups and very small companies that need only a modest amount of capital.
👉 [Read More About SBA Microloans]

Microloans (General)

Nonprofit lenders, credit unions, and global microfinance institutions offer microloans outside of the SBA program. These small loans—often just a few hundred to several thousand dollars—give entrepreneurs who lack access to traditional banks the capital they need to launch or sustain their businesses.
👉 [Read More About Microloans]

Equipment Financing

With equipment financing, you secure funding by using the equipment itself as collateral. This option lets you purchase or lease machinery, vehicles, or technology while preserving working capital. Lenders usually set repayment terms to match the equipment’s useful life.
👉 [Read More About Equipment Financing]

Business Lines of Credit

A business line of credit works like a credit card. You draw funds up to your limit, pay interest only on what you use, and reuse the credit as you repay it. This flexibility makes it perfect for managing cash-flow gaps, seasonal costs, or unexpected expenses.
👉 [Read More About Business Lines of Credit]

Invoice Financing (Factoring)

With invoice financing, you borrow against your unpaid customer invoices to free up cash quickly. This improves your cash flow when clients pay slowly, but you must watch out for fees that reduce your profit margin.
👉 [Read More About Invoice Financing]

Merchant Cash Advances (MCAs)

An MCA gives you a lump sum of cash in return for a share of your future credit- or debit-card sales. You get funding fast, but you also face high costs—often equal to 30%–99% APR. Many businesses treat MCAs as a last resort when they can’t qualify for other loans but still need immediate funds.
👉 [Read More About Merchant Cash Advances]

Online Term Loans

Online lenders offer term loans with fast applications and flexible requirements. You can apply completely online, often receive quicker approval than banks, and get funding faster. However, you usually pay higher interest rates. These loans work best if you need quick funding and can handle shorter repayment terms.
👉 [Read More About Online Term Loans]

Working Capital Loans

Working capital loans give you short-term funding to cover payroll, rent, or seasonal slowdowns. They help you manage daily expenses during a cash crunch, but they usually carry higher interest rates and shorter repayment periods.
👉 [Read More About Working Capital Loans]

Commercial Real Estate Loans

Use commercial real estate loans to purchase, build, or refinance property for your business. These loans provide large amounts and long repayment terms at competitive rates. The property itself serves as collateral, which raises the stakes if you default.
👉 [Read More About Commercial Real Estate Loans]

How to Apply for a Small Business Loan (Step-by-Step)

Step 1: Check Credit & Pre-Qualify

• Review personal + business credit scores

• Use pre-qualification tools (no hard inquiry)

Step 2: Gather Documents

• Tax returns, bank statements, financials, licenses

• Business plan or purpose statement

Step 3: Compare Lenders & Loan Types

• Consider APR, repayment terms, fees, and funding speed

Step 4: Submit Your Application

• Apply online where possible

• Double-check documents before submitting

Step 5: Approval & Funding

• Online lenders: 24–72 hrs

• Banks & SBA: 2–8 weeks

💡 Pro Tip: Apply to multiple lenders within 30 days to minimize credit impact.

• Review the likely requirements
• Use our Small Business Loan Calculator
• Step-by-step application process.

Fast, Online, and Bad-Credit Loans

• Fast Approval: OnDeck, BlueVine, National Funding (funding in 24–72 hrs).

• Online Loans: Entirely digital applications, faster decisions.

• Bad Credit Loans: CDFIs, microloans, and some online lenders consider revenue > credit score.

Expect higher rates, lower amounts, and shorter terms if your credit is < 600.

Alternatives if You’re Not Approved

• Business Credit Cards – Revolving credit, 0% intro APR offers

• Microloans – Nonprofits like Kiva, Accion, Opportunity Fund

• Grants – Free money (federal, state, private)

• Crowdfunding – Kickstarter, Indiegogo, equity platforms

• Peer-to-Peer Lending – Borrow from investors (LendingClub, Prosper)

• Supplier Financing – Vendor credit terms (net-30, net-60)

• Friends & Family – If formalized with an agreement

Tips to Boost Approval Odds

1. Strengthen Credit – Pay down debts, resolve errors

2. Organize Financials – Clean statements = lender confidence

3. Show Cash Flow – Deposit sales consistently into the business account

4. Lower Debt-to-Income – Consolidate/pay off high-interest debt

5. Offer Collateral or Guarantee – Lowers lender risk

6. Apply to the Right Lenders – Match criteria (credit, revenue, years in business)

7. Consider a Co-Signer – Stronger profile = higher approval odds

If denied, always ask for feedback — it’s your roadmap to improve before reapplying.

Resources & Related Guides

• Best Small Business Loans for Startups

• SBA Loans vs. Merchant Cash Advance

• Business Loan Rates by Region and State

• SBA Loans vs. Merchant Cash Advance Loan

• California Small Business Startup Loans

• Start-up Business Loans with no Collateral

• Best Short-Term Bank Loans in the U.S

• Business Debt Consolidation Loans

• Best Startup Loans in Texas