Running a small business means juggling growth, challenges, and cash flow all at once.
Eventually, you’ll need extra funding to hire staff, expand operations, or cover gaps when payments slow down — especially since 43% of small businesses report running out of cash at least once a year.
In 2024, having the right loan could be the edge you need to stay competitive — whether it’s launching a new product or upgrading equipment. But not every loan fits every need. Finding the right one to fuel your goals without weighing your business down is key.
Let’s explore the top loan options and how they can power your next move.
Not sure which loan fits your business best? Let’s break down the most popular types you should explore this year.
Term loans are one of the most common financing options. This loan provides you with a lump sum of cash and it’s your obligation to pay it back over a predetermined period with interest. This loan is perfect if you need to make big investments — like opening a second location or purchasing heavy machinery.
In 2024, expect interest rates on term loans to range between 7% and 25%, depending on your credit score and lender.
The U.S. Small Business Administration backs SBA loans, giving you access to better terms and lower interest rates. These loans are ideal for large investments, but the downside is that they come with lots of paperwork and can take weeks to get approved.
Still, the trade-off may be worth it: SBA 7(a) loans offer interest rates as low as 10%, with loan amounts reaching up to $5 million.
A line of credit gives you flexibility. Instead of receiving a fixed amount upfront, you borrow only what you need — and pay interest only on the amount you use. This option is great for managing cash flow, especially when you have fluctuating expenses or seasonal sales cycles.
Need to buy new equipment but don’t want to drain your savings? Equipment financing helps you spread out the cost while the equipment itself acts as collateral. This reduces the risk for lenders, which means you’re likely to secure better terms even if your credit isn't perfect.
Ever feel stuck waiting for customers to pay their invoices? With invoice financing, lenders advance your cash against your unpaid invoices, keeping your operations running smoothly. This type of loan works well for businesses with long payment cycles.
MCAs offer quick cash but at a high price. They work by giving you an upfront sum in exchange for a percentage of your future sales. While MCAs can provide fast funding, their fees can translate to APRs as high as 50% — so they’re best used as a last resort.
When looking for a business loan, most people worry about approval, but you should focus on choosing the right loan. Here are a few things to keep in mind before signing on the dotted line:
Low rates are appealing, but be sure to look beyond the interest. Some loans come with additional fees that can add up. Compare the annual percentage rate (APR) of multiple lenders to get the full picture.
Pay attention to how long you’ll be paying off the loan. A longer loan term may mean smaller monthly payments, but it can also mean you’ll pay more interest over time. Make sure your business can handle the repayment schedule without affecting your cash flow too much.
Some loans require collateral (like equipment or property), which lowers the lender’s risk and may get you better terms. But if you’d rather avoid putting up assets, look for unsecured loan options — just keep in mind they typically have higher interest rates.
Different lenders have different requirements. While banks may need two years of business history and a solid credit score, online lenders often accept lower credit scores and newer businesses. But before you apply, make sure you check if you meet their eligibility criteria.
When it comes to financing your business, it’s all about finding the right lender. Banks, online lenders, and credit unions each have their pros and cons. Below is a look at some of the top business loan providers to consider.
Banks remain a solid option if you have strong credit and an established business history. They offer lower interest rates — usually between 5% and 12% — but approval can take time, sometimes several weeks. Traditional banks are a good fit for businesses planning long-term investments and willing to jump through a few hoops to secure lower rates.
If speed and convenience are your top priorities, online lenders like Kabbage and OnDeck may be your best bet. Their applications are quick, approvals are fast, and you can get funding within 24 to 48 hours. However, convenience comes with a price — interest rates go from 10% to 40%, depending on your credit score. Online lenders are perfect if you need cash fast to grab a business opportunity.
Credit unions often offer better rates and more personalized service than traditional banks. They’re ideal if you value community-based lending, but you may need to become a member to qualify for a loan. Their approval process can also be slower, so they’re not the best option if you need instant cash.
Many lenders specialize in processing SBA loans, and it’s worth exploring if you need a government-backed loan. Just remember, patience is key — approvals can take weeks, but the interest savings are often significant.
If you’re in a pinch and need immediate funding, alternative lenders can offer quick cash. However, the interest rates can be steep, and repayment is usually tied to your daily or weekly sales, which can put pressure on your cash flow.
Securing the right loan can give your business the means it needs to grow and thrive in 2024. Whether you’re expanding your operations, purchasing new equipment, or managing cash flow, there’s a loan out there for you. The key is to understand your business’s unique needs, compare your options, and make informed decisions. With careful planning, you can leverage these financing options to fuel sustainable growth and position your business for success.
Now’s the time to explore your options — because with the right loan, the possibilities are endless.