Choosing the Right Small Business Loan for You

Loans are an effective way to acquire capital to perform various business needs. A business owner may need equipment to stock up and upscale the business. Some loans are tailored for small businesses, and these loans offer favorable interest rates and benefits for small business owners.

Importance of a Business Loan

Business loans are a lifesaver and can keep businesses afloat in the tempest of odds. A business owner may require short-term liquidity to boost cash flow or want money to expand and acquire a new business. Sometimes, business owners may have some high-interest loans that need retiring using cheaper small business loans.

Loans offer benefits such as:

Fast Funding

Compared to venture capital, loans provide funding at lightning speed. Some lenders can offer capital in less than a week, and loans from online lenders may only take minutes to be processed.

Lower Interest Rates

When compared to credit card overdrafts, loans offer much cheaper capital. The cheap capital is easier to pay off, and as illustrated by Lantern by SoFi, the right funding option offers much more flexibility to each business owner.

No one Dictates on Expenditure

Cash from investors is very likely to come with strings attached. However, a loan lender has no interest in what the money is used for. Other than some interest and fees, loans ask for nothing more. However, investors may want a stake in the business.

Questions to Consider Before Settling on a Business Loan

All business owners should have a clear idea of what they want before seeking out a loan. The business’s needs come first and understanding all needs clearly allows the entrepreneur to have a more decisive process when picking out a loan option. Questions to consider include:

  • How much funding is necessary and what is it for?
  • How much collateral is available?
  • Is the necessary funding expected to be short-term or long-term?
  • How long will it take to pay back the money?
  • Are there any outstanding loans on the business?
  • What financial state is the enterprise in?
  • The borrower’s credit score

The Types of Loans Available to Small Businesses

According to Lantern by SoFi, business loan lenders can offer:

Equipment Financing

Equipment financing is ideal for acquiring necessary equipment for the business. Whatever the equipment is when choosing a loan for acquiring equipment, go for equipment financing.

Merchant Cash Advance

Even with a terrible credit score or no collateral, merchant cash advance allows business owners to get an advance. An advance may be the silver bullet to improve cash flow.

Invoice Financing

Invoice financing offers 85% of the value of the business’s invoices.

Startup Financing

Startup financing is for aspiring business owners who need funding to get their ideas off the ground.

Term Loans

Term loans can be used for all business needs.

Personal Loans

Personal loans are for entrepreneurs and upstarts who are starting.


  1. What Loan is the easiest to get?

With a good credit score and when in need of cash fast, consider online lenders. SBA loans are also an option, especially for those with a not-so-good credit score.

  1. What do lenders look at when approving a loan application?

While different lenders may consider different things, the standard items include the applicant’s credit score, the duration the applicant has been in business, and the business’s turnover.

Loans are an excellent way to finance small businesses. Before getting a loan, get proper financial advice and stick by it.

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