Learn more about your small business financing options, APR, term length, qualifications and more.
Financing for small businesses comes in many forms. The options you have available are as unique as your business, so it’s important that you know what’s available and what works best for your cash flow.
The Paycheck Protection Program (PPP) provides eligible small businesses impacted by COVID-19 with loans that can be up to 100% forgiven. First and second draw loans have been made available for the most recent round of PPP funding that was enacted as a part of the CARES Act and Consolidated Appropriations Act, 2021. To be eligible for a first draw loan, your business (including sole proprietorships, self-employed individuals, and independent contractors) must have been in operation on or before February 15, 2020, and have 500 or fewer employees. To be eligible for a second draw PPP loan, your business (including sole proprietorships, self-employed individuals, and independent contractors) must have been in operation on February 15, 2020, have 300 or fewer employees, have used the full amount of your first PPP loan before the disbursement of the second PPP loan, and be able to demonstrate at least a 25% reduction in gross receipts in the first, second, or third quarter of 2020, relative to the same quarter in 2019. For any portion of your PPP loan that is not forgiven, the remaining balance will be converted into a loan with a non-compounding and non-adjustable 1% interest rate with a 5-year loan term. Funds are limited and will be disbursed until March 31, 2021, or until funds have been exhausted (whichever comes first). Apply for PPP loan amounts between $5,000 to $2,000,000 through Funding Circle.Learn more
The 7(a) is the SBA’s most widely used loan program. While the loan is partially guaranteed by the Small Business Administration, the financing is delivered through an approved SBA lender. This way, you can borrow anywhere between $20,000 and $5 million for as long as a 10-year term. The SBA’s 7(a) loan program is attractive to many small business owners for its below-market interest rate. If you apply through Funding Circle’s network of lending partners, you’ll see that the interest rate is currently set at Prime + 2.75% (currently 6%).1 Payments are made monthly and you won’t face any fees for early repayment. Your business should have an operating history of at least three years to qualify. Use the proceeds for working capital, refinancing debt, making major purchases, and more. Learn more about applying for an SBA 7(a) loan through Funding Circle.Learn more
Term loans are one of the most popular types of small business loans. If you’ve ever taken out a mortgage or financed a vehicle purchase, then you’re probably familiar with the mechanics of a term loan. Term loans are delivered via a lump-sum of capital from a lender and paid off in fixed installments according to a schedule until you pay back the principal plus any applicable interest (and any fees). Repayment periods can vary from short term (12 months or less) to medium term (1 -3 years) to long term (3+ years). Term loans are typically secured by a lien on your business assets (a right for the lender to seize those assets if you default on the loan) and may require a personal guarantee, which means your personal assets may be liable if your business defaults on the loan. One of the perks of a term loan is that the interest rate, which could be either fixed or variable, tends to be competitive and lower than other types of small business financing. This is especially true when you consider that you may be repaying the loan over a number of years. Business owners have flexibility with regards to how they can use the funds. For instance, one could use a small business term loan to expand to a new location, replenish inventory, or hire new employees.Learn more
Merchant cash advances (MCAs) aren’t exactly small business loans. Instead, they’re a cash advance against your future credit card revenue delivered to you in a lump-sum. The advanced amount, which can be anywhere from $2,500 to $400,000 is determined by the issuer and based on your average monthly credit card sales. For example, through Funding Circle’s network of lending partners, this amount is between $5,000 and $500,000. Because the cash advance is repaid as a percentage of your daily credit card revenue, it may take anywhere from 90 days to two-and-a-half years to repay. One of the key risks of MCAs is piling on too many of them - known as stacking - which may completely deplete your cash flow. You should also be aware that interest rates (often expressed as a factor rate) can be very high, ranging between 40-350%. Learn more about applying for a merchant cash advance through Funding Circle.Learn more
A working capital loan is a short-term loan meant to help a business cover its everyday operations needs. It can be directed toward expenses such making payroll, paying rent, or making debt payments. A working capital loan is not meant to buy long-term assets or investments. You can apply for a working capital loan through Funding Circle and receive a decision in as little as 24 hours.2 The speed of approval is one of the best aspects of this small business loan. Learn more about applying through Funding Circle.Learn more
A line of credit is a flexible form of short-term financing. You have a set amount of available credit which you can access as you need. With a business line of credit, you do not make any payments or pay any interest until you actually use the funds. A line of credit is ideal for unexpected expenses so that you don’t have to rely on cash flow when emergencies arise. For instance, having to replace a major piece of equipment or offsetting a seasonal decline in revenue. A line of credit could be in the range of $5,000 to $500,000 or more. When you apply through Funding Circle’s network of lending partners, this range is $6,000 to $250,000. With a line of credit, you’ll only pay interest on the funds you draw. However, there may be other fees attached to lines of credit like monthly maintenance fees, draw fees, and late payment fees. Learn more about applying for a line of credit through Funding Circle.Learn more
Invoice factoring is more similar to an MCA than it is to a business loan. Invoice Factoring works by selling your accounts receivables to an invoice factoring company (also called a ‘factor’) at a discounted rate in exchange for two lump-sum payments. The first payment is the advance (which represents the discounted invoices) - an upfront payment of 70-90% of the factored invoices, and the second payment is for the remaining balance (minus any fees) once your customers pay the invoices in full. The first lump-sum through Funding Circle’s network of lending partners is between 85-90%. Invoice factoring is best for businesses that need to cover inventory costs or upfront expenses but have delayed payment terms with their customers. The benefit of invoice factoring is that your account receivables are quickly turned into cash rather than having to wait months for customers to pay. Learn more about applying for invoice factoring through Funding Circle.Learn more
Small business owners often don’t believe they have good enough credit to receive small business financing, but you shouldn’t give up just because traditional banking institutions rejected you. Every lender weighs qualifying factors differently, so you have a good chance of being approved even if you’ve been rejected in the past.
There are certain financing options, like invoice factoring, that don’t consider your credit score but your clients’ ability to pay their invoices.
If you apply for a small business loan and are able to offer collateral for the loan, you can often get better interest rates as lenders will see you as less of a risk. Borrowers with all kinds of credit and entrepreneurial histories can qualify for small business loans with competitive interest rates.
Business owners can look for small business loans with shorter or longer terms based on their financial needs. The best one for you depends on a few factors. You should consider how you’ll use the money, how much you need, and how much you’ll pay in interest with each option.
If you’re not sure what kind of financing option (loan, line of credit, or anything else) you want, consider talking to a financial expert (like your accountant) about your situation. They’ll be able to talk you through your choices, helping you find the best small business loans for you and your business.
By applying for a small business loan through Funding Circle, you’ll get a dedicated loan specialist - while they are not a financial advisor, they’ll be here to walk you through the entire funding process. Your dedicated loan specialist will be able to walk you through your options and work with you to find the best option(s) for your business.
There is no shortage of options when it comes to gaining access to small business loans and financing. The product that works best for you will depend on a combination of factors. These range from how you plan to use the funds to how quickly you need the funds, and the length of time you’d like to repay the financing. Here’s a breakdown of small business financing options you’ll find in the market:
|Loan Type||Speed to Funds||Average Financing Cost3||Term Length||Best for Small Businesses|
|Business term loan||Typically as few as five days||Typically 7%-30% Fixed or Variable interest rate||Less than 12 months to 20 years||With established credit and looking for affordable financing quickly.|
|SBA 7(a) Loan||Typically more than 60-90 days||Prime rate +2.25% to Prime rate+4.75 (Currently 6%-8% interest rate1)||Up to 10 years||With excellent credit, looking for best possible rates, and can afford a longer application process.|
|Merchant Cash Advance||As quickly as minutes||Typically 1.1-1.5 factor rate4||90 days-30 months||Who are developing their credit history and looking for a fast cash injection.|
|Working Capital Loan||Less than a week||Typically 1.1-1.5 factor rate4||6 months-5 years||Who are developing their credit history, looking to cover operational costs but don’t want to take on long-term debt.|
|Line of Credit||Same-day (in some cases instantaneously)||Typically 7-25% APR||Payments and interest don’t begin until you draw on the capital. Repayment could be anywhere between 6-12 months.||Who want to keep funds on reserve and need to get financing quickly.|
|Invoice Factoring||One to three business days||Typically 10-60% APR||Payment is due when the invoice is due.||Who are developing their credit history and looking to smooth uneven cash flow.|
Over $12 billion lent to 90,000 small businesses globally.
Some business owners use personal loans to fund their companies, but using dedicated small business loans and financing allow you to keep your personal finances separate from your business endeavors. We’ve helped thousands of established businesses in the US grow, create new jobs, and stimulate economic growth in their local communities with the best small business financing options for their needs.
Boost your cash flow
Cash flow is often one of the top challenges for growing businesses. Get small business financing to free up cash for immediate reinvestment in your company. You’ll have more flexibility in financial decisions and be able to prioritize expansion rather than worrying about day to day expenses.
Buy New Equipment
Buying equipment for a growing company can add up quickly, especially if you’re looking for the most advanced models. It’s important to find the most powerful tools in order to provide the best possible service to your clients. Never underestimate the value of good equipment. We can work with you to find the best small business finance option for the items you need.
Refurbish your premises
Renovating your company’s facilities can be a significant expense, especially if you’re still in the early stages of growth. You need a clean and modern work environment to succeed and attract talent, so think of this as an investment in the business. Get small business term loans or another type of small business financing to cover some or all of the costs involved in renovations.
Hire Extra Staff
Hiring the top talent puts your business ahead of the competition, but it can be hard for growing companies to put together enough money to bring on more staff. If you need to add someone to your team but don’t have the cash to do it, an option like a small business loan with competitive interest rates could be the way to get funding.
It’s impossible to predict when a variety of one-off costs will come up for your business, and you don’t want to miss out on an opportunity just because you don’t have cash on hand. A small business loan or line of credit can help allow you to take advantage of any opportunities that come your way.
Grow Your Business
Every small business owner wants to grow their company, but you sometimes need an initial investment in order to achieve any worthwhile returns. Get funds that allow you to invest in your company without giving up equity or becoming responsible to shareholders. In addition to the costs above, you can get enough funding that can help you grow by paying for many other important additions.
Gain access to flexible, short-term funding to help with surprise expenses such as having to replace a major piece of equipment or offsetting seasonal dips in cash flow.Learn more
Find out what all the buzz is about surrounding MCAs and how they differ from business loans to determine if this type of future revenue-based financing is right for you.Learn more
One thing every business has in common is a need for cash flow, and invoice factoring gives you a way to quickly access funds from yet-to-be-paid invoices.Learn more
The Small Business Administration partially guarantees SBA loans, but they don’t issue the loans themselves. SBA loans are issued by SBA approved lenders. Check out the SBA 7(a) loan offered through Funding Circle’s network of lending partners, which can be directed towards a wide range of use cases.Learn more
Get fast, affordable business funding and join the 90,000 other small business owners getting their financing through Funding Circle today.Learn more
Learn why it might be worth consolidating your business debt into a single monthly payment.Learn more
1 Based on WSJ prime as of 4/13/20. Prime is 3.25%.
2 Approval and funding times may vary by lending partner(s).
3 Please note that the Average Financing Cost is the average cost of taking out the particular type of funding and does not include costs to apply or maintain accounts/lines such as: maintenance fees, account opening fees, closing fees, processing fees, termination fees, advance fees, or monthly minimum fees.
4 Your merchant cash advance’s factor rate will determine how much you repay for your advance. For example, with a 1.3 factor rate, for every $1,000 you receive, you’ll need to repay $1,300. Factor rates generally range from about 1.1 to 1.6, depending on your business’s creditworthiness and finances.