4 Useful Financing Options for Small Businesses

4 Useful Financing Options for Small Businesses

Every small business can benefit from additional sources of funding. There are many options out there for business owners to choose from. Here are four useful financing options for small businesses.

1. Small Business Administration (SBA) Loans

The first step in your small business financing journey should be checking your eligibility for SBA loans. The SBA doesn’t provide loans directly, but many banks and other traditional lenders offer them with SBA approval. There are three main types of SBA loans:

  • SBA microloans
  • SBA 504 loans
  • SBA 7(a) loans


An SBA microloan provides business owners with small amounts of money to use as working capital or to make purchases such as equipment. SBA 504 loans must be used for large equipment or commercial real estate purchases. SBA 7(a) loans provide business owners with the largest amounts of money and can be used to fund several types of purchases and cash flow needs.

2. Grants

Not every business is eligible for grants, but it’s a good idea to check if your company is. Most organizations that are eligible for grants are capable of stimulating the economy or assisting the government. Grants are similar to loans, but the recipient typically does not need to repay what he or she borrows. Businesses can receive grants from local, state and federal governments.

3. Term Loans

A term loan is one of the most common options available for business financing. They include several advantages, including regular repayment plans and interest rates that are relatively low. You can apply for loans that have short or long terms, according to your reasons for taking out a loan. Term loans may be unsecured or secured and their interest rates may be variable or fixed.

4. Business Lines of Credit

Another popular business financing choice is a business line of credit. Lines of credit are similar to credit cards because they involve revolving funds that you can borrow as you need them. You will have a credit limit but will only need to repay what you borrow. Lines of credit typically don’t offer payment grace periods the way credit cards do, but they do usually include comparatively low interest rates and high credit limits.

No two small businesses are the same, which means every small business will have different financing needs. Make sure you research available financing opportunities and understand your financing needs so you can determine which option or options are best for your business.

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