Small Business Funding: Compare Options & Plan Your Budget

Choosing between a credit line, an equipment loan and a term loan? Compare business loan types and repayment terms.

Still planning your launch? See funding routes for a new business.

What will the money pay for?

Compare the cash you receive with the cash you owe

Ask for a written offer that makes these points clear:

• Money available to use: the amount deposited after any fees or deductions.
• Total payment: how much you must pay in total, including fees.
• Payment timing: the amount and frequency of withdrawals, and when they begin.
• Product and obligations: whether the offer is a loan, an equipment agreement or an advance against future revenue, and any collateral or personal guarantee.
• Changes in your business: what happens if sales fall, you miss a payment or you pay early.

A quoted factor rate is not an annual percentage rate. Some financing collects payments daily or weekly, so compare the timing as well as the total cost. The FTC explains why small-business financing products can be difficult to compare.

Before choosing an offer, you can also ask your business bank or credit union about available products and review SBA loan programs.

Work out the gap before choosing an amount

Slow customers can create the gap even when work is selling. Our slow-payment comparison by industry shows which business groups reported this problem most often in the Federal Reserve Banks’ payments survey.

List the bills due before the project starts paying you. Subtract the cash you have set aside for those bills and customer payments you reasonably expect to receive in time. Then check whether your budget can support the proposed financing payments alongside ordinary expenses.

For a staffed cleaning job, try the cleaning hiring-cash calculator. For other service contracts, use our guide to cash needed before taking a commercial contract.

Have your business start date, requested amount, purpose and current revenue information ready for the provider. Ask which documents it needs and whether the application involves a credit inquiry before you submit it.

Funding routes for a new business

When you have not started trading, look for a program that specifically supports your stage. The SBA microloan program supports eligible businesses starting up or expanding, with loans up to $50,000 through intermediary lenders. Each intermediary makes credit decisions and sets its terms; ask about startup eligibility directly.

You can also reduce the initial project size: rent equipment before buying it, start with a smaller route, or phase hiring around signed work. A cash plan helps you compare these choices before committing to financing.

Common questions