Choosing the Right Financing Option: Comparing SBA Loan vs. Bank Term Loan vs. Line of Credit

When it comes to choosing the right financing option for your small business, it may be hard to know where to start. Comparing three different financing options may help you decide the best fit for your business needs. 

SBA Loans

SBA (Small Business Administration) loans are government-guaranteed loans typically made available to eligible U.S. entrepreneurs through banks and other financial institutions. SBA-backed loans provide excellent value for small businesses needing funding to grow. 

Features

• Great rates and longer terms, with low monthly payments
• $30,000 - $500,000 for working capital and debt refinancing

Eligibility Criteria

• Business owners are U.S. citizens or legal permanent residents
• Must be 2+ years in business with good credit and cash flow

Costs and Repayment Terms

• SBA loans tend to be the least expensive financing available to small businesses
• 10-year repayment terms with low monthly payments
• Varying application fees and closing costs associated with SBA loans

Benefits 

• Excellent value for small businesses hoping to grow
• Beyond working capital and debt refinancing, SBA loan funds can be used to invest in Commercial Real Estate, hire employees, purchase equipment, marketing, business expansion, or operating or inventory expenses. 

SmartBiz® has helped more small business owners secure SBA loans than any other platform. Our dedicated team and technology help streamline the long, complicated application process into something much more manageable for today’s busy business owner.

SBA Success Story

In 2017, BTC Envelopes and Printing, LLC® secured an SBA loan from a SmartBiz bank partner to restructure high interest debt, upgrade computer systems, and hire a new employee. Read their story to see how the SBA loan carried them through the pandemic and helped them expand.

Bank Term Loans

If you are looking to secure funds quickly, a Bank Term loan may be right for you. Bank Term loans typically offer you the opportunity to secure cash flow more quickly, while locking in a favorable fixed rate. 

Features

• Shorter terms and faster delivery of funds, in as little as 7 days from application approval
• Competitive fixed interest rates
• $30,000 - $350,000 for working capital and debt refinancing

Eligibility Criteria

• Business owners are U.S. citizens or legal permanent residents
• Must be 2+ years in business with good credit and cash flow

Costs and Repayment Terms

• 2 - 5 year repayment terms with stable monthly payments
• Varying application fees and closing costs associated with Bank Term loans

Benefits

• Faster application process can get you faster access to funds
• Beyond working capital and debt refinancing, Bank Term loan funds can be used for hiring employees, purchasing equipment, marketing, construction, partner buyouts, acquisitions, and inventory

Bank Term Loan Success Story

SmartBiz worked with Enyermy Dominguez, a successful beauty entrepreneur, to secure additional capital with a Bank Term loan. Dominguez recently launched an upscale line of hair care solutions. Her products quickly became popular, and she needed additional capital to keep up with demand. Read how Dominguez is expanding her business with proceeds from a term loan funded by a bank in the SmartBiz network.

Line of Credit

If you aren’t sure exactly when you will need extra cash flow or what you will need it for, a line of credit may be the right choice for you. A line of credit gives you access to the funds you need, when you need them. You decide when and how to use your funds and your interest-only monthly payments are based on the amount you actually use. 

Features

• Quick, flexible funding lets you use funds in ways that make sense for your business
• $25,000 - $100,000 for working capital

Eligibility Criteria

• Business owners are U.S. citizens or legal permanent residents
• Must be 2+ years in business with good credit and cash flow

Costs and Repayment Terms

• Low, interest-only monthly payments based on amount you use
• Option to refinance if you qualify for more favorable terms
• One-time origination fee at closing and flat closing costs
• No additional fees for withdrawals

Benefits

• Access to funds when you need them
• Beyond working capital funds from a line of credit can be used to hire, acquire inventory, finance upcoming projects or take advantage of a new business opportunity

The Right Financing

No matter which option is right for you, or even if you still aren’t sure, SmartBiz is here to help you get the right financing, right now. SmartBiz is proud to be the leading financing platform connecting small businesses with SBA, bank term loans, line of credit and other flexible financing options. 

Our online lending network matches you with the right bank or lending partner to fit your needs. See if you pre-qualify for up to $500,000 within five minutes with our one, streamlined application. Our experienced financial professionals are with you every step of the way as you complete your online application, and there is no impact on your credit score.* Get started today.