Compare funding options
Eight ways to fund a business on one table: typical cost, speed, term, what each needs and what it is best for. Categories, not companies. Ranges reflect what qualified applicants see in the current market; the terms that apply to you are only those in an agreement you sign.
| Option | Typical cost | Speed | Term | What it needs | When it fits |
|---|---|---|---|---|---|
| Merchant cash advance | Factor 1.15–1.45 → roughly 40–150% APR-equivalent | 1–3 days | 3–12 months, daily or weekly remittance | Steady deposits, bank statements and at least 6 months operating | Urgent, high-profit needs a bank can't move fast enough for; owners already turned down by banks |
| Revenue-based financing | Cap of 1.2–1.6× the amount | 3–7 days | 6–24 months, a fixed % of revenue | Recurring revenue, 12+ months, clean statements | Businesses with seasonal swings or rapid growth that need payments to rise and fall with sales |
| Credit lines for businesses (bank) | Prime + 1–5%, roughly 9–14% APR | 1–4 weeks | Revolving, annual review | 2+ years, 680+ FICO, financials | For gaps that keep coming back; no flexible money a qualified business can hold costs less |
| Online line of credit | Roughly 20–60% APR | 1–3 days | Revolving, 6–12 month draws | 6–12 months, 600+ FICO, statements | A line of credit for when the bank's minimums or timeline don't work |
| Bank term loan | Roughly 8–14% APR | 2–8 weeks | 1–10 years, monthly | At least 2 years in business, a 680+ FICO, tax returns, and collateral in many cases | For planned spending when there's time to qualify; nothing but SBA costs less |
| The SBA 7(a) loan | Prime + 2.25–4.75%, roughly 10–14% APR | 30–90 days | 7–25 years, monthly | At least 2 years in business, a 680+ FICO, a complete package and a personal guaranty | When the timeline works, the biggest, longest and cheapest capital a small business can get |
| Equipment financing | Roughly 7–20% APR | 2–10 days | 2–7 years, monthly | The equipment quote, 1+ year, 600+ FICO | Equipment purchases: because the asset backs the deal, pricing runs far lower than unsecured capital |
| Invoice factoring | 1–5% of the invoice per month outstanding | 1–3 days after setup | Per invoice, 30–90 days | B2B invoices to creditworthy customers | Companies whose reliable customers take 30–90 days to pay |
Costs are typical ranges for U.S. small businesses as of this page's update date, not offers. APR-equivalents for advances assume a daily remittance over the stated term; see the factor rate calculator for the arithmetic.
How to read the table
Is a merchant cash advance a loan?
No. With an MCA, the funder buys a set amount of your future receivables at a discount and pays you a lump sum up front, and you then remit a fixed daily or weekly sum, or a share of card sales, until the full purchased amount has been delivered. An advance is not a loan, so it carries no interest rate; what it costs is the gap between the money you get and the money you pay back, stated as a factor rate, and you can only line that factor rate up against a loan after converting it to an APR-equivalent over the same term.
What's the right way to compare a factor rate to an interest rate?
Put both in dollars across the same number of months, and then express each one as an APR. A $50,000 advance priced at 1.30 and repaid over six months carries $15,000 in cost, which works out to about 109% APR-equivalent with daily remittance. Borrow the same $50,000 from a bank for six months at 12% APR and the cost comes to roughly $1,770. An advance can still make sense for a short, high-margin purpose the bank won't fund in time, as long as you compare both numbers before you pick.
When is a bank the better choice?
Whether its yes arrives before you need the money. An advance costs many times more than a bank term loan or line of credit, and an The SBA 7(a) loan costs even less than those. Begin there if your business is at least two years old, your score is 680 or higher, and your financials are clean. The extra cost of an alternative makes sense when a bank has already turned you down, or when the opportunity or shortfall can't wait.
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