5 Types of Business Loans to Consider in 2018


Contributed by Fundera

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Small business lending is expected to pick up pace in 2018, with everyone from big banks and the Small Business Administration (SBA) to alternative lenders predicted to give out more loans. If you’re in need of business financing, this is a good year to consider your options.

But with so many types of business loans available, it can be hard to know where to start. This guide summarizes five popular types of business loans so that you can start applying for the funding you need to grow your business in 2018.


1. Term loans

Suitable for a wide range of uses, a term loan provides a lump sum of capital that you pay back, including interest, over a set period of time. Term loans are what most people think of when talking about business loans.

Term loans are best for those who want access to capital over the long term for their business needs, as the money can be used for everything from payroll and inventory to equipment and real estate.

Traditional banks and alternative online lenders provide term loans. Interest rates usually range from 7–30 percent.

What are the qualifications?

To qualify, you must typically meet the following requirements:

  • At least one year in business
  • A credit score of at least a 600
  • $90,000+ in annual revenue


2. A personal loan for business

Can you get a business loan with no credit check?

If your business hasn’t been around for very long, doesn’t have high revenues, and/or doesn’t have much of a credit history, a personal loan for business is a popular alternative. Often, the APR may be lower than a business loan and you can use the money any way you wish.

Personal savings and credit are the most common source of funding for startups, according to data collected by Fundable. That means many small business owners are actually using their own money, along with credit cards and other forms of leverage, to fund their entrepreneurial dreams.

In some cases, personal loans come with higher credit limits (typically up to $35,000) and reasonable APRs (5.99–36 percent) in comparison to credit cards. This makes personal loans a great option if you’re funding the business yourself.

What are the qualifications?

To qualify for a personal loan, you generally need a personal credit score of at least 580. The higher your credit score and annual business revenue, the better rates and terms you’ll get. For instance, a credit score greater than 700 and revenues exceeding $50,000 may enable you to land a great offer from lenders.


3. Equipment financing

You need equipment, such as vehicles, commercial stoves, computers, or machinery, to run your business. However, you don’t want to put up collateral and/or can’t meet the strict requirements that SBA and term loans have.

This is where equipment financing can help. With equipment financing, you get a loan up to 100 percent of the equipment’s value, with the term being the expected lifespan of that equipment.

Interest rates range from 8–30 percent. This is competitive with many other business loan options.

What are the qualifications?

Most businesses qualify since the equipment itself serves as collateral. To qualify for favorable rates, you generally need to meet the following criteria:

  • 11+ months in business
  • A credit score of at least 600
  • $100,000 or more in annual revenue


4. A business line of credit

A business line of credit ensures you never run out of cash. A business line of credit solves cash flow needs for daily operation, in addition to coming with flexible payment terms, flexible usage, access to cash on demand, and the ability to build business credit.

A business line of credit works a lot like a credit card. It’s revolving capital, meaning that your credit limit replenishes as you repay.

Credit limits can range from $10,000 to $1 million and interest rates span from 7–25 percent. In short, a line of credit gives you a comparatively affordable way to consistently meet day-to-day and long-term capital needs. You can use the money for payroll, marketing, equipment, bills, and more.

What are the qualifications?

It’s easier to qualify for a business line of credit than many other options. Typically, you need at least $50,000 in annual revenue and at least six months in business.


5. Invoice financing

5 invoicing tips and how to actually get paid.

You have money trapped in an invoice, as a client has been slow to pay. Other options, like getting a business line of credit or term loan, aren’t possible at this point. Invoice financing companies can provide you with money upfront as you wait for your customer to pay. This ensures you don’t run into a cash squeeze.

Sixty-four percent of small businesses report having unpaid invoices longer than 60 days. So, clearly, many could use invoice financing.

With this sort of loan, the invoice financing company pays you 50–90 percent of the invoice value upfront, charging a fee of 3 percent as well. When the customer pays, you get the remaining balance, minus the fees. There’s usually about a 1 percent fee for each week the invoice goes unpaid, which can make this sort of loan costly (keep that in mind).

What are the qualifications?

Invoice financing is a popular choice because approval for funding depends largely on the credit of the company that was invoiced. Qualifications you should meet are six months in business and at least $50,000 in annual revenue.


Get the right loan and set yourself up for the future

No matter what your situation is, you can find a loan that matches exactly what your business needs. As long as you do your research, run the numbers, and compare options, you can find a favorable loan.

Get the capital you require in 2018 to push your business forward.


  1. Jack says:

    Thanks for providing detailed and updated information on various types of taxes

  2. Bethany Birchridge says:

    It was helpful that this mentioned that you may want to take out a personal loan for your business if it hasn’t been around for a long time. My friend is actually thinking of starting a small business, so I think he’d love to learn about this. Is there anything else he should keep in mind?

  3. Amrita Agarwal says:

    I am staring a new business looking for a fund to start my business, As you said personal loan is one of the best alternative to get a fund for my business. Thanks for a information.

  4. Angelita Hahn says:

    Good Article!!
    nice explanation about types of business loan. thanks for sharing this information

  5. Taylor Anderson says:

    I thought it was interesting that a lot of equipment financing counted the equipment as collateral itself. My uncle wants to start his own construction business, but he needs to get the equipment. I’ll share this article with him, so he understands how to do that with financing. Where can he learn even more about it?

  6. Mark says:

    Thanks for given all the details.These five types of different business loans,its a very good way for me.Now we can easily get loans and i am very happy and i will share all information with the friends.

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