Which Loan Products Are the Best For Small Businesses?

Whether you are starting a new business or looking to expand into new markets, a loan can help you foot bills and keep your operations on track. There are several lenders and financial institutions offering loan products to small businesses. Although finding one should not be a problem, not all lenders have a suitable deal for your business. Reputable platforms like Thinking Capital can offer quick access to fixed and flexible business loans. However, you still need to review various aspects before submitting your application. There is no single loan for everyone’s needs. As such, your choice will depend on your unique business needs. Here is a brief look at some of the popular loan products your business can qualify for.

SBA loans

Small business administration loans are among the most popular loan products you will come across. You can easily qualify for a government-backed SBA loan. Although their structure is according to government requirements, SBA loans are not any different from commercial business loans. The government guarantees that you will repay the loan. They have low minimum requirements and interest rates. You can invest the loan in fixed assets such as real estate and machinery. If you are new to business loans, an SBA is a great place to start.

Term and line of credit loans

Traditional termed business loans and line of credit loans are other popular options for small business owners. These loans work in a very straightforward manner. The lender offers you a loan for a specified period. The interest can either be fixed or variable depending on the lender’s policy. Line of credit loans allows you to make purchases on credit and then pay at the end of the billing cycle. These loans work similarly to regular credit cards as you can draw money, repay and redraw depending on your available limit. You also pay interest on the outstanding balance, instead of fixed installments like traditional termed loans. 

Invoice financing loans

Invoice financing is another loan option you can consider if you own a small business. This type of loan allows you to borrow the maximum amount your invoices are worth. The lender then charges a small fraction of your invoices. It refers to selling your invoices at a discount. You can consider this type of loan if you have pending invoices but need cash urgently. They are short term business loan to be paid back within a few weeks. 

Equipment financing loans

As the name suggests, equipment financing is a type of small business loan that finances your equipment acquisition. Most lenders allow you to borrow the exact cost of the equipment while others will enable you to borrow periodic amounts, especially if you are leasing. You must, therefore, provide adequate documentation for the lender to determine how much the equipment will cost. The equipment also serves as collateral, and you can continue using it as you make installments towards the loan. Although you can still use traditional loans to purchase equipment, it is recommendable to choose dedicated equipment financing. 

Merchant cash advance loans

If you are in the market for non-traditional business loans, you can consider a merchant cash-advance credit. This loan does not offer a fixed interest rate or repayment period. Instead, the lender charges a small percentage on all your daily credit card transactions. This can translate into an APR of around 15% or more depending on your transactions and amount you borrowed. However, you pay no outright interest on the credit you receive. Merchant cash advance loans are straightforward to qualify for as long as you have an operational business. It suits small business owners who want to expand their venture, and there are no restrictions on where you can invest the loan.  


There are several other types of small business loans you can qualify for. However, most of them fall within the above categories. When looking for a small business loan, it is essential to read through the terms and policies of your lender carefully. It is also recommendable to compare several loan products and offers before making your final decision. The best business loan is that which meets your unique business needs. Nevertheless, aspects such as APRs, penalties, other fees, customer support, and loan limits still play a crucial role when choosing a business loan.