When searching for capital, look for credit sources that are well suited for your business, risk profile, and future growth.
Considering all your options—rather than jumping at the first possibility—will help you discover financial backing that gets your company the capital it needs when you need it.
Explore the financing options below and find one that’s right for you.
- Guaranteed by the Small Business Administration (SBA) and designed to expand the pool of capital for businesses who don’t meet traditional lending criteria
- Offer preferred rates, longer terms for repayment, and lower down payments (as low as 10% compared to 25–30% required by most conventional loans)
- Issued by banks as well as non-bank financial institutions, including peer lending groups and community-based organizations
- Provide more flexibility with terms, amounts, and uses than conventional loans
- Require a business plan and clear documentation
- Obtained through banks with small business expertise that can secure favorable terms and rates guaranteed by the SBA
Federal, state, and local government programs
- Favor projects that encourage entrepreneurship and improve an area’s economy and/or quality of life
- Contain specialized financing programs—like those run by the U.S. Department of Agriculture—with very flexible rates and terms
- Include disaster relief financing, loans for veterans, and business/industrial financing
- Attractive, low-cost alternative for established businesses with strong suppliers and significant purchasing power
- Flexible payment terms, discounts for early payment, and financing options to free up working capital
- Low-cost option that may only have a positive impact on working capital
If you’re looking for capital, brushing up on the basics of financing can help you find the best option with the most favorable terms.
Equity co-investment – Lenders like to see that you’ve invested equity in your company. Be sure to emphasize any contributions you’ve made to your business, including existing cash, retained earnings, stock, real estate, or any other substantive item of value. Contributing equity enables lenders to offer you more favorable terms and rates because you have a stake in your company’s financing and share the risk. Traditional bank loans typically require a 25–30% cash down payment, while SBA guaranteed loans can have a down payment as low as 10%.
Collateral – Traditional bank loans require collateral, which is highly liquid or saleable assets like cash, investments, equipment, or vehicles. Collateral allows lenders to protect their investments. Providing more collateral could mean lower rates and better terms—be sure to ask up-front.