Best Small Business Loans in 2025

SBA (Small Business Administration) loans typically offer the most favorable terms because they're backed by the government, reducing risk for lenders. These loans often come with lower interest rates and longer repayment terms, making them ideal for long-term capital needs. The SBA guarantees a portion of the loan, which encourages lenders to offer more favorable conditions to businesses. SBA 7(a) loans are the most common type, and they can be used for various purposes, from working capital to equipment purchases and real estate. These loans are a strong choice for established businesses with a solid credit history and a comprehensive business plan.

Traditional bank loans are offered by conventional financial institutions. They are often a solid option, particularly if your business has a strong relationship with a bank and a well-established financial history. Bank loans typically provide larger loan amounts. The terms and rates can vary based on the bank and the business's profile. The application process can be more rigorous than that of online lenders, demanding extensive financial documentation. This can create a balance between favorable terms and accessibility.

Merchant cash advances are designed for businesses that process a significant volume of credit card transactions. Unlike traditional loans, a merchant cash advance (MCA) provides a lump sum of money that is then repaid through a percentage of your future credit card sales. Funding is often very quick, making these advances suitable for businesses needing rapid access to capital. However, MCAs generally come with higher fees and can be more expensive compared to term loans; the repayment structure can impact cash flow. Review the terms and costs very carefully before using an MCA, and compare it with other lending options to verify it's the best choice given the costs.

Business lines of credit provide flexible funding because they function like business credit cards, allowing a business to borrow, repay, and borrow again up to a credit limit. They are ideal for managing short-term cash flow needs, covering unexpected expenses, or taking advantage of short-term opportunities. Interest is only charged on the amount you borrow, offering an advantage compared to drawing down full-term debts. The interest rates are usually variable, so they can fluctuate with the market. Securing a line of credit often demands a strong financial performance and may require a personal guarantee, though terms will vary among lenders.

Online business loans offer a more streamlined application process and faster funding than traditional lending options. They're provided by online lenders, fintech companies, and alternative financing platforms. Online lenders are especially beneficial for businesses which may not necessarily be deemed 'bankable' or are looking for financing quickly. These loans often come with quicker approval times and flexible eligibility requirements. Nonetheless, interest rates generally are higher and repayment terms can be shorter compared to bank loans. Comparison shopping by getting quotes from multiple online lenders is crucial to secure the most advantageous rates. In terms of online loans, it is imperative to look at the APR and, if you need funds quickly, also the speed of funding.