Types of Business Loans in 2026: Nine Ways to Fund a Business, Compared
The types of business financing, and what each one is for. Not every one is a loan.
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Nine structures, each built for a different job
Every option is on the small business loans page, starting with business term loans.
- Funding as fast as 6 hours with some providers
- SBA loans: several weeks to a few months
- Compare on total repaid
Rates, factor rates, fees and terms are set by the funding provider that makes your offer and are disclosed in that provider's agreement. Figures on this page are illustrative ranges from providers in our network, not offers. Funding times depend on the funding provider and are subject to provider approval and document turnaround. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders. A home equity line of credit is consumer credit secured by your home, issued by a third-party lender; Capital Gurus only refers.
Part 1. What counts as a business loan, and what does not?
A business loan is money a provider lends to a business, repaid with a cost over an agreed schedule. Several common kinds of business funding are not loans at all, and the difference changes how they are priced.
Installment
Repaid on a fixed schedule
Term loans, equipment financing and many bank loans: one amount, funded once, repaid on a schedule set in the agreement.
Revolving
Drawn, repaid and drawn again
A business line of credit: a limit you draw against, paying for the balance drawn. A home equity line of credit revolves too; it is consumer credit secured by your home, issued by a third-party lender, and Capital Gurus only refers.
Not a loan
Priced as a purchase or a fee
A merchant cash advance is a purchase of future receivables rather than a loan, priced with a factor rate. With invoice factoring, a factoring company advances against unpaid invoices for a factoring fee.
Is a small business loan installment or revolving?
It depends on the structure. A term loan is installment credit: the amount is fixed, and paying it down does not free it up again. A line of credit revolves: what you repay becomes available to draw again. Line of credit vs term loan sets the two side by side.
Part 2. What are the types of business loans?
Product follows purpose. Start from what the money has to do, and the structure that usually fits is on the same row.
| What the money has to do | The structure that usually fits | What it waits on |
|---|---|---|
| Bridge a gap between revenue that has landed and costs that have not | Working capital financing | Bank statements |
| Fund a short, revenue-producing need quickly | A business cash advance, a purchase of future receivables rather than a loan, priced with a factor rate | Bank statements |
| Stand ready for a recurring gap you cannot put a date on | A business line of credit | A credit review, and more documents than an advance |
| Buy one defined thing with a known payment | Business term loans | Statements, and often one financial statement |
| Buy a specific machine or vehicle | Equipment financing | A written vendor quote |
| Release cash tied up in unpaid invoices | Invoice factoring | Verification of your customers |
| Buy a building or a business, over years | SBA loans from a participating lender | A full package, then the lender and the SBA |
| Fund a business too young for many providers' guidelines | Startup business funding | Deposits, the owner's credit and the use of funds |
| Borrow against the equity in your home | A home equity line of credit as a second path: consumer credit secured by your home, issued by a third-party lender; Capital Gurus only refers | The lender's own review |
Bridge a gap between revenue that has landed and costs that have not
Waits on: Bank statements
Fund a short, revenue-producing need quickly
A business cash advance, a purchase of future receivables rather than a loan, priced with a factor rate
Waits on: Bank statements
Stand ready for a recurring gap you cannot put a date on
Waits on: A credit review, and more documents than an advance
Buy one defined thing with a known payment
Waits on: Statements, and often one financial statement
Buy a specific machine or vehicle
Waits on: A written vendor quote
Release cash tied up in unpaid invoices
Waits on: Verification of your customers
Buy a building or a business, over years
SBA loans from a participating lender
Waits on: A full package, then the lender and the SBA
Fund a business too young for many providers' guidelines
Waits on: Deposits, the owner's credit and the use of funds
Borrow against the equity in your home
A home equity line of credit as a second path: consumer credit secured by your home, issued by a third-party lender; Capital Gurus only refers
Waits on: The lender's own review
Amounts, costs and terms depend on the funding provider and are disclosed in that provider's agreement, or for a home equity line, in the lender's. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders.
Part 3. What do providers check first, whatever the type?
Many types are read against the same short list first. Where they differ is in how much paperwork sits behind it.
| time in business | 12 mo |
|---|---|
| monthly revenue | $15K |
| credit considered from | 525 |
| bank statements plus a government ID | 3 mo |
Some providers consider applications at these minimums. Meeting a minimum does not guarantee an offer. Bank statements: four in CA, NY, FL and GA with some providers.
Bank-statement types: advances, lines, small term loans
- Three months of bank statements (four in CA, NY, FL and GA with some providers)
- ID and a voided check
Also asked for
- A vendor quote, for equipment
- An accounts-receivable aging report, for factoring
Larger term loans, equipment above $500,000 and SBA add
- Filed business and personal tax returns
- A year-to-date profit and loss and balance sheet
Also asked for
- Entity documents
The $500,000 line applies depending on the funding provider. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders.
Decisions from some providers the same day, depending on the provider. Subject to provider approval and document turnaround.
Part 4. Business term loans: one amount for one defined purchase
A business term loan is one lump sum, funded once and repaid on a fixed schedule to a known end date.
It suits a purchase with a cost you can write down and a return you can date: a build-out, a vehicle, an acquisition, a bulk order, or existing obligations refinanced into one schedule. Providers in our network price term loans with an interest rate or a fixed cost of funds plus any origination fee, all disclosed in the loan agreement.
Term loans in our network
- $10K–$10M, depending on the funding provider
- Some providers write terms up to 10 years
- Short-term versions raise the payment and shorten the exposure
Part 5. Business lines of credit: standby for a gap that comes back
A business line of credit is a limit you draw, repay and draw again, paying for the balance drawn rather than for the limit.
It suits a recurring gap of unknown size: payroll before receivables land, stock before a season, a supplier deposit. Depending on the provider, a line may have no draw fees; some charge a draw fee or a maintenance fee, all disclosed in your offer before you sign. A revolving limit rests on trading history, so it is usually harder to open than a term loan.
Lines of credit in our network
- $10K–$5M, depending on the funding provider
- You pay for what is drawn, while it is drawn
- The facility renews rather than maturing
Part 6. SBA loans: long terms, a full package and a longer wait
SBA loans are made by SBA-participating lenders; the SBA guarantees part of the loan to the lender, not to you. Four programmes cover most needs.
SBA 7(a)
General purposes
Working capital, equipment, eligible refinancing, buying a business. Up to $5 million.
SBA 504
Property and heavy equipment
Owner-occupied property and major equipment, through a Certified Development Company. SBA-backed portion up to $5 million.
SBA Express
Smaller files, faster
A faster 7(a) variant with a smaller guarantee. Up to $500,000.
SBA Microloan
Small amounts
Smaller amounts through non-profit intermediaries. Up to $50,000.
These are SBA programme rules, not Capital Gurus figures. The lender sets the rate within SBA maximums; a 7(a) runs up to 10 years for working capital and up to 25 years for real estate, set by the lender under SBA rules. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders.
The trade is time and paperwork: tax returns, financial statements, a business plan and several weeks to a few months from a complete package, subject to provider approval and document turnaround. Check it against your deadline. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders.
Part 7. Equipment financing: the asset secures the deal
Equipment financing pays for a specific machine or vehicle, and the equipment usually secures the financing.
Because the asset carries much of the risk, it can reach files a general-purpose loan of the same size does not. Cost depends on the provider, the equipment, your credit profile and the term, and is disclosed in the financing agreement. Section 179 or bonus depreciation may apply to financed equipment; consult your tax advisor.
Equipment financing in our network
- Up to $500K on the application alone, depending on the funding provider
- Up to $5M with full documentation
- A written vendor quote starts the file
Part 8. Working capital, cash advances and invoice factoring: fast money for short gaps
These three routes read your bank statements or your invoices more than your financials, and can move quickly. They are priced differently, and two of them are not loans.
Umbrella
Working capital financing
Short-term business funding for a gap between revenue and costs. It comes in several forms, each with its own cost structure, explained on its own page.
Not a loan
Merchant cash advance
A purchase of future receivables rather than a loan, priced with a factor rate: the provider pays an advance now for a fixed payback, collected as daily or weekly remittances.
See the business cash advance
Not a loan
Invoice factoring
A factoring company advances a share of your unpaid invoices for a factoring fee, and releases the reserve, less fees, when your customer pays.
Advances from providers in our network run $10K–$500K, with remittances over an estimated 3 to 18 months; factoring advance rates commonly run 70–90% of invoice value. All depending on the funding provider. The payback exceeds the advance: the difference is its cost, expressed as a factor rate.
Part 9. Startup funding and home equity: routes outside the usual lines
Two routes exist for owners whose business is too young for many providers' guidelines, or who would rather draw on their home equity.
Startup business funding
Under the 12 months in business some providers consider: smaller amounts, shorter terms. Meeting a minimum does not guarantee an offer.
A home equity line of credit
Credit secured by your home, issued by a third-party lender that decides, funds and services it. Capital Gurus only refers.
Startup funding is read from deposits and the owner's credit; a HELOC is consumer credit, and Capital Gurus does not lend it.
Personal funds, grants and other routes
Owners also fund a business from savings or from grants. Your own money avoids an application but puts personal savings at risk; grants do not need repaying but are competitive and slow. Neither is something Capital Gurus arranges. Financing with no revenue yet covers the earliest stage.
Part 10. Which type should I choose, and how do I compare the cost?
Five questions narrow the nine types to one or two. Then compare offers in dollars, because the cost is written differently on each.
- 1
What does the money have to do?
One defined purchase, a recurring gap, a machine, unpaid invoices or a building each point to a different row of the table.
- 2
When do you need it?
Advances and lines read from bank statements usually move fastest; a loan that needs a full package of financials takes weeks rather than days.
- 3
What does your file show?
Time in business, monthly revenue, credit and the documents you can produce narrow the list before preference does.
- 4
Can the payment clear your weakest month?
Test it against your weakest month of deposits, not your average one.
- 5
What will it do to the next application?
A fixed payment and any general filing are counted by the next provider who reads the file.
Why the rate does not compare across types
The cost word changes with the structure: an interest rate, a fixed cost of funds, a factoring fee, a factor rate. The four do not convert cleanly into one another, so compare offers on the total repaid in dollars and on what the payment does to a bad month. Capital Gurus sets none of these terms; the provider that makes the offer sets all of them.
Capital Gurus is not a lender. One application, with a soft credit pull only, is presented to the providers in its network whose guidelines fit, and the offers come back side by side.
Key takeaways
- 1
Choose the structure from what the money has to do, then the provider.
- 2
Term loans, equipment financing and SBA loans are repaid on a fixed schedule; lines of credit revolve.
- 3
A merchant cash advance and invoice factoring are not loans, and are priced differently.
- 4
SBA loans are made by participating lenders, not by Capital Gurus, and take weeks or months.
- 5
A home equity line of credit is consumer credit from a third-party lender; Capital Gurus only refers.
- 6
Compare offers on the total repaid in dollars, not on the rate.
Frequently asked questions
In short
Business financing comes in nine types: term loans, lines of credit, SBA loans, equipment financing, working capital financing, merchant cash advances, invoice factoring, startup funding and home equity lines of credit. Not every one is a loan: a cash advance is a purchase of future receivables, priced with a factor rate. Choose by what the money has to do.
What are the different types of small business loans available?
The main types are business term loans, lines of credit, SBA loans from participating lenders, equipment financing and working capital financing. Alongside them sit merchant cash advances, a purchase of future receivables rather than a loan, priced with a factor rate; invoice factoring; startup funding; and home equity lines of credit, issued by a third-party lender. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders.
What factors should I consider when choosing a bank for a business loan?
Start with the structure and the timeline rather than the name. Banks typically take weeks and require two years of financials and strong credit. Compare what each asks for, how long its decision takes against your deadline, the total cost in dollars and the fees, the collateral and personal guarantee it wants, and whether it offers the structure your purpose needs. Terms are set by the lender and disclosed in its agreement.
What is the process for obtaining an SBA loan?
You apply to an SBA-participating lender with a full package: tax returns, financial statements, a business plan and the SBA forms. The lender underwrites and decides; the SBA then reviews eligibility and guarantees part of the loan to the lender, not to you. Expect several weeks to a few months. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders. Capital Gurus can refer you and help prepare it.
What are the benefits of using personal funds to loan money to your business?
Lending your own money to the business avoids an application, a credit check and a provider's terms, and you set the repayment yourself. The trade is risk: savings put into the business are exposed if it struggles, and money tied up there is not available for anything else. Document it as a loan with a written note, and consult your tax advisor on how it is treated.
What are the key factors lenders consider when evaluating loan applications for business ideas?
Providers read cash flow first: deposits, time in business and existing obligations, then the owner's credit, the documents and the use of funds. Some providers consider 12 months in business and credit from 525; meeting a minimum does not guarantee an offer. A business still at the idea stage usually needs startup business funding, a clear plan and the owner's credit.
What are the eligibility requirements for SBA loan guarantees?
Under SBA programme rules the business must be a for-profit U.S. business inside the SBA size standard, owners with 20% or more sign a personal guarantee, and there must be no unpaid federal debt. On a 7(a) the lender also certifies that credit is not available elsewhere on reasonable terms. Credit, revenue and time-in-business minimums belong to each participating lender. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders.
Do SBA loans have lower interest rates compared to traditional bank loans?
Not necessarily, and no general comparison holds. An SBA loan's rate is set by the participating lender within SBA maximums, and the SBA guarantee fee and lender fees are disclosed by the lender. Whether that comes out lower than a conventional bank loan depends on the lender, the programme and your file. Compare offers on the total repaid in dollars. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders.
Are there specific industries that the SBA focuses on when guaranteeing loans?
No single industry. The SBA guarantees loans across many sectors, and what changes by industry is the size standard: the limit under which a business counts as small. Some business types are not eligible under SBA rules, so the participating lender confirms eligibility early. SBA loans covers the programmes. Capital Gurus is not an SBA lender; SBA loans are made by SBA-participating lenders.
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