What Is a Small Business Loan?

It’s always recommended to start by identifying what your business needs are and connecting them to real business outcomes.

For example, if you have a piece of machinery that’s broken or not running efficiently, you know that replacing it will increase productivity and therefore revenue.

You can then pursue getting a loan with confidence knowing that you’re in a position to use the funds effectively — and to pay it back.

Once you’ve determined that it makes sense to get a small business loan, you’ll want to identify the best type of loan for your business.

Some other best practices within this process include checking your eligibility, having a financial professional review your application, writing a business plan if required, and researching and comparing types of loans and lenders.

Navigating small business financing options successfully starts with understanding that different loans serve different purposes. Rather than assuming all business financing works the same way, smart business owners match their specific needs to the loan products designed to address those exact situations.

SBA loans
SBA loans often provide the most favorable financing terms you'll find as a small business owner. Backed by government guarantees, these loans generally feature lower interest rates and extended repayment schedules, making monthly payments more manageable for your budget.While SBA loans typically require more documentation and patience during the approval process, the benefits—including lower down payments and extended terms—often make this investment of time worthwhile for the right business situations.

Bank term loans
Traditional bank term loans provide predictable, fixed-rate financing with set repayment schedules. These loans generally work best for established businesses with solid credit profiles and specific plans for how they'll use the funding. Banks typically offer competitive rates for qualified borrowers.

Business lines of credit
A business line of credit gives you the flexibility to access funds as needed without the commitment of a traditional loan. Unlike a conventional loan that offers you everything upfront, you'll only pay interest on the funds you actually draw from your available credit line. This flexibility makes lines of credit particularly valuable for managing seasonal cash flow swings or seizing unexpected opportunities that require quick action.

Micro loans
Micro loans serve small businesses that need smaller amounts of capital, typically under $50,000. These loans often come with more flexible small business loan requirements and may be available to newer businesses or those with less established credit histories.

Same day funding
Certain lenders have built their business around providing capital when you need it most—sometimes within the same business day. While you'll generally pay more for this convenience through higher rates or shorter terms, same-day funding may be invaluable for urgent situations, such as equipment breakdowns or unexpected opportunities.

Equipment financing
Equipment financing allows businesses to purchase necessary equipment while spreading payments over time. The equipment itself typically serves as collateral, which may result in more favorable terms for businesses that might not qualify for unsecured financing.

Alternative lenders
Alternative lenders often provide faster decisions and more flexible underwriting than traditional banks. These lenders may work with businesses that don't meet conventional bank criteria, though terms and rates vary widely across providers. As the lending landscape continues to evolve, getting a small business loan may become easier for businesses that previously faced barriers.

Getting a small business loan online

Getting a business loan used to mean driving to a bank and sitting down with a loan officer. They’d give you brochures and other materials that explained their different loan options. But if you wanted to compare them to another lender, you had to do the whole process again at another bank.

That’s now changed thanks to online lending.

Online lending enables you to apply for a loan on your own time and at your convenience. Thanks to online search engines like Google, you can easily do your own research to compare your options. There’s a wealth of information available to learn what options you have and what makes sense for your business.

Plus, applying online for a small business loan is typically simpler and faster than going to a traditional bank branch. And you often get your funds sooner, too.

Using an online lender takes the pressure off of you to quickly make a decision while sitting in a loan officer’s office and instead allows you to do your own thorough research to find the right loan.

Your relationship with your bank extends far beyond just having a place to deposit checks. Strong small business banking relationships may significantly influence your loan application success, often in ways that aren't immediately obvious.

Access to expert advice and loan products
Working with experienced small business banking professionals generally provides valuable guidance throughout the loan process. These banking experts can navigate the maze of loan products and help match you with financing solutions that actually make sense for your situation and goals. Today's banks are evolving beyond traditional lending to become true growth partners, offering innovative tools and personalized support designed to help small businesses thrive in an increasingly competitive marketplace. Having a knowledgeable advocate in your corner may make the difference between getting approved and wondering why your application was declined.

Leverage established relationships
When you apply for a loan at a bank where you already do business, you're not starting from scratch—you have a track record they can review. Your banking history tells a story about how you manage money, handle cash flow, and run your operations day-to-day. This familiarity often translates into faster decisions and may open doors to better rates or terms, since lenders naturally feel more comfortable working with businesses they already understand.

Build banking history and creditworthiness
Your banking history serves as ongoing evidence of your business's financial management capabilities. Consistent account management, regular deposits, and responsible cash flow handling strengthen your loan application over time. For some business owners, this may even create opportunities for refinancing existing debt to improve cash flow and support growth initiatives.
Smart small business banking practices today generally create opportunities for better financing options tomorrow.