Top Small Business Loans in the USA and How to Apply
Access to funding is one of the most crucial factors for the success and growth of small businesses. Whether you are launching a new business, expanding operations, or managing day-to-day expenses, small business loans can provide the financial support you need. In the United States, there are several types of small business loans available, each with its own benefits, requirements, and application processes. This guide explores the top small business loans in the USA and provides a detailed look at how to apply for them.
1. SBA Loans (Small Business Administration Loans)
Overview:
SBA loans are partially guaranteed by the U.S. government, making them less risky for lenders and more accessible for small businesses. These loans are known for their low interest rates and long repayment terms.
Popular Types:
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SBA 7(a) Loan: Ideal for working capital, expansion, and equipment purchases.
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SBA 504 Loan: Best for purchasing real estate or large equipment.
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SBA Microloan: Offers smaller amounts (up to $50,000) for startups and micro-businesses.
Loan Amounts:
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Up to $5 million (7a)
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Up to $5.5 million (504)
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Up to $50,000 (Microloan)
Interest Rates:
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Typically 5.5% – 11%, depending on loan type and lender.
Pros:
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Low interest rates
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Long repayment terms (up to 25 years)
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Easier approval for newer businesses
Cons:
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Lengthy application process
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Requires strong credit and documentation
How to Apply:
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Visit an SBA-approved lender or use the SBA Lender Match tool.
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Prepare a solid business plan, financial statements, and tax returns.
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Fill out the SBA loan application form and provide collateral (if applicable).
2. Term Loans from Traditional Banks
Overview:
Term loans from banks offer a lump sum of money that is repaid over a set period with fixed or variable interest rates. These loans are great for established businesses with a strong financial track record.
Loan Amounts:
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Typically $25,000 to $500,000 or more
Interest Rates:
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Usually 6% – 13%, depending on credit and bank
Pros:
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Competitive interest rates
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Structured repayment terms
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Trusted institutions
Cons:
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Strict eligibility requirements
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Lengthy approval process
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May require collateral
How to Apply:
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Visit a bank branch or their online loan portal.
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Submit detailed business financials, tax returns, and a business plan.
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Provide credit history and possibly personal guarantees.
3. Online Business Loans
Overview:
Online lenders provide fast and accessible funding options. These are ideal for businesses needing quick access to cash without going through a bank’s rigorous process.
Popular Online Lenders:
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OnDeck
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BlueVine
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Lendio
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Funding Circle
Loan Amounts:
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Varies from $5,000 to $500,000+
Interest Rates:
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Often 10% – 40% APR, depending on the lender and borrower profile
Pros:
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Fast approval (as little as 24 hours)
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Easy online application
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Less paperwork
Cons:
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Higher interest rates
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Shorter repayment terms
How to Apply:
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Visit the lender’s website.
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Complete a simple online form with business and financial details.
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Upload bank statements and identification documents.
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Receive approval and funding, often within 1–3 days.
4. Business Lines of Credit
Overview:
A business line of credit allows you to borrow up to a set limit and only pay interest on the amount you draw. It’s a flexible solution for managing cash flow or covering short-term expenses.
Loan Amounts:
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Typically $10,000 to $250,000
Interest Rates:
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Usually 7% – 25% APR
Pros:
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Pay interest only on what you use
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Reusable credit line
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Ideal for seasonal or fluctuating cash flow
Cons:
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Can be expensive if used improperly
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May require strong credit history
How to Apply:
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Choose a bank or online lender offering lines of credit.
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Provide business financials, tax returns, and credit history.
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Some lenders may offer instant approval online.
5. Equipment Financing
Overview:
Equipment financing helps businesses purchase machinery, vehicles, or other equipment using the equipment itself as collateral.
Loan Amounts:
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Based on equipment value (typically up to 100% of cost)
Interest Rates:
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Typically 8% – 20%
Pros:
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Easy approval process
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Preserves working capital
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Equipment often serves as collateral
Cons:
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Limited to equipment purchases
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Depreciation of equipment may affect loan value
How to Apply:
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Choose a lender (banks, credit unions, or online platforms like Crest Capital or National Funding).
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Provide quotes or invoices for equipment.
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Submit business credit information and financials.
6. Merchant Cash Advances (MCA)
Overview:
A merchant cash advance provides a lump sum in exchange for a percentage of daily credit/debit card sales. It’s not technically a loan but can be useful for businesses with strong sales but poor credit.
Loan Amounts:
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Typically $5,000 to $250,000
Interest Rates:
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Factor rates range from 1.1 to 1.5 (can translate to 40% – 100% APR)
Pros:
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Fast funding (same day in some cases)
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Minimal documentation
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No collateral required
Cons:
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Very expensive
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Daily repayment can strain cash flow
How to Apply:
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Submit application through an MCA provider (e.g., Rapid Finance, Square Capital).
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Provide bank statements and credit card transaction records.
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Approval is often based more on cash flow than credit score.
7. Invoice Financing
Overview:
Also known as accounts receivable financing, this option lets businesses borrow against unpaid customer invoices to improve cash flow.
Loan Amounts:
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Up to 90% of invoice value
Interest Rates:
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1% – 5% per month
Pros:
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Quick access to working capital
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No collateral besides invoices
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Great for B2B companies
Cons:
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Fees can add up
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Customers must pay their invoices on time
How to Apply:
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Partner with lenders like Fundbox or BlueVine.
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Connect accounting software or upload invoices.
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Receive funds based on approved invoices.
Final Thoughts
Choosing the right small business loan depends on your business needs, credit profile, and how quickly you need funding. For businesses that qualify, SBA loans and term loans offer the best rates and terms. If speed is more critical, online lenders, lines of credit, or MCAs might be more suitable—though they come with higher costs.
Tips for a Successful Loan Application
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Check Your Credit Score – Both personal and business credit scores matter.
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Organize Financial Documents – Lenders often require tax returns, income statements, and balance sheets.
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Create a Strong Business Plan – Especially for SBA and bank loans.
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Know Your Numbers – Be ready to discuss your revenue, profit margins, and growth projections.
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Compare Offers – Don’t settle for the first offer; shop around for better terms.
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Seek Help – Organizations like SCORE and Small Business Development Centers (SBDCs) offer free mentoring and loan prep assistance.