Small Business

Ways to get a small-business loan

Jacob Lund/Shutterstock

At Bankrate we strive to help you make smarter financial decisions. While we adhere to strict , this post may contain references to products from our partners. Here’s an explanation for

There are many reasons small businesses choose to borrow money, especially during tough economic times. For example, some businesses use their loan funds to invest in new equipment, make structural upgrades or hire new employees that could help their business grow.

Small-business loans are easier than ever to access; some of the most popular ways to get a small-business loan are bank loans, SBA loans and loans from online lenders.

Different options for small-business loans

All business loans work in the same general way: They let small-business owners and entrepreneurs borrow money and pay it back over time. However, different kinds of lenders can work better for different types of businesses.

Bank loans

If you have business accounts with a brick-and-mortar bank and you like working with it already, then a bank loan may be the best option. Bank loans are offered by major players within the banking industry, and they may come in the form of a fixed-rate loan or a business line of credit.

Either way, your best bet is taking the time to compare lenders in terms of the business loan rates and terms they offer. Shopping around will help you determine which lender can offer you the best deal.

SBA loans

Another way to find a bank loan is through the Small Business Administration, or SBA. The SBA can direct you to banks that offer loans guaranteed by the agency. This way, you’ll have the advantage of approaching banks specifically interested in lending to small businesses.

The benefits of SBA loans can be substantial, since these loans come with competitive rates and terms and unique benefits like lower down payments and flexible overhead requirements. Many SBA loans are also offered without any collateral required, and SBA loan limits can be as high as $5 million if you use a popular program like the SBA 7(a) Loan Program.

Online opportunities

The internet is also a treasure trove when it comes to finding the best small-business loans, and it’s common for online lenders to offer better rates and terms than you can find elsewhere. Websites like Funding Circle can help you shop around and compare multiple business loans in one place, and you might even be able to get prequalified online before you apply.

Also keep in mind that some online business lenders offer unique borrowing opportunities other than traditional small-business loans. For example, you can find small-business lenders that let you borrow against unpaid invoices using a process called invoice factoring, as well as those that offer loans for bad credit.

How to calculate your business loan payment

In order to calculate your small-business loan payment, you can use a loan and amortization calculator. To figure out how much you may need to pay each month, you’ll need to know how much you plan to borrow, the length of your loan repayment terms and the interest rate you can qualify for.

A loan calculator can also be helpful if you’re trying to compare business loan options from different lenders. When you use a calculator to compare loans, you may find that one option is significantly less expensive than another due to a lower interest rate or a shorter repayment timeline.

The bottom line

The best way to get a small-business loan is to compare all of your options to find one that suits your needs. A brick-and-mortar bank in your area could offer a loan with the capital you need, but it’s possible that an online lender could offer a lower interest rate or more flexible repayment terms. Try to borrow only the amount you need and nothing more, and do your best to select a business loan with the lowest total costs you can find.

Learn more:

Written by
Holly D. Johnson
Author, Award-Winning Writer
Holly Johnson writes expert content on personal finance, credit cards, loyalty and insurance topics. In addition to writing for Bankrate and, Johnson does ongoing work for clients that include CNN, Forbes Advisor, LendingTree, Time Magazine and more.
Edited by
Student loans editor