There are several types of small business loans, including Small Business Administration (SBA) loans, working capital loans, term loans and equipment loans. These loans help small businesses, typically companies with up to 300 employees, fund their operations. Local businesses—like landscapers, hair salons, restaurants or family-owned grocers—and sole proprietors—such as freelancers who still have a traditional day job—also can apply.
Small business loans typically have more qualification requirements than personal loans, especially if you’re applying for an SBA loan. However, the rewards are well worth it because these loans can give your business the financing it needs to grow. Alternative business financing methods, like invoice factoring or merchant cash advances, may be more costly, leaving small business loans as the best option for business financing.