What Kinds of Loans Can Small Businesses Get?

By Kieran Daly, 10 January, 2023

What Kinds of Loans Can Small Businesses Get?

Small business owners have a lot of expenses. The truth is, even the most successful small businesses sometimes need additional capital flow. Whether it’s to cover things like product expansions, new equipment, payroll, or something entirely different, excess working capital is necessary at times to help a business grow and thrive. 

So what are your options for small business loans? There are a lot of options to explore! 

What Kind of Loan Can I Get as a Small Business?

There are a number of different options out there for small businesses looking to secure a loan or an alternative financing solution—from bank and credit union loans to small business loans from the government to alternative financing. Most of these loans have specific business loan requirements—like a certain credit score, number of years in business, or what you can and cannot use the money for—so it’s important to weigh your options before making a decision.

Commercial Bank Loans

When you hear the word “loan,” chances are you’re thinking of a commercial loan through a financial institution like a bank. These are attractive to a lot of small businesses because they typically offer high maximum loan amounts (often up to $5 million), and there are often a number of local branches to visit in person. However, commercial loans do tend to have higher interest rates. And, they can be difficult to secure, with approval ratings in 2022 hovering at around 15%, according to SmallBizTrends. What is the minimum credit score for a business loan through a bank? Although every bank has different numbers, you’ll likely need a credit score of at least 640-700 to qualify.

Credit Union Loans

Similar to commercial bank loans, credit unions also typically offer small business loans. Because they’re non-profit, credit unions do tend to offer lower interest rates than commercial loans. And, their approval rates are usually a bit higher, with 2022 approvals coming in around 20%, according to SmallBizTrends. That said, credit unions do have strict membership requirements and fewer locations, which can make it less convenient for borrowers.

SBA Loans

Where is the easiest place to get a loan? For a lot of businesses, it’s through the SBA. Contrary to what you might think, SBA loans aren’t issued by the Small Business Administration. Instead, they are backed by the SBA but issued by banks and other approved lenders. Essentially, because the SBA backs these loans (they guarantee repayment for a portion of each loan), they’re a lower risk for lenders. All of this means it can be easier to get approved. There are a number of different loans that the SBA offers, although the most popular include the 7(a) loan and the 504 loans.

  • 7(a) loans are the SBA’s most common loan program. Funds from this loan can be used for working capital; refinancing; real estate; and the purchasing of fixtures, furniture, and supplies. 7(a) loans are available for up to $5 million.

  • 504 loans are designed for those looking for long-term, fixed-rate financing for the purchase of major projects. Funds from this loan can be used for the purchase or building of existing or new facilities or equipment and machinery. You can also use 504 loans to improve facilities, including land, parking lots, streets, utilities, and more. These loans are available for up to $5 million.

SBA loans are a great option for those looking to use funding as described above. It is important to note, however, that they can take between 30 to 90 days to receive approval, so they may not be the right option for immediate financing needs.


Microloans are a certain subset of loans that offer smaller amounts. As such, they’re often considered one of the better options of small business loans for startups and other new companies. While microloans are available through a number of different organizations, one of the most common microloans is offered through the Small Business Association’s network of nonprofit, community-based organizations. They can be used for a number of different ways to help a business grow, including equipment, furniture, inventory, machinery, supplies, working capital, and more. Microloans are available for up to $50,000, though the average amount through the SBA is $13,000.

Alternative Financing

With all this information on loans, it may seem like your only option for sourcing financing for a small business. However, this isn’t the case. There are other short-term solutions available through alternative lenders, including Backd. Working capital financing through Backd allows you to skip the lengthy application process and access funding in just a few short business days. With amounts ranging from $10,000 to $2 million, short-term working capital financing is a great solution for when you need funding ASAP to keep your business thriving.

Get Funding Fast With Backd

When you need working capital to cover things like seasonal purchases, additional inventory, payroll, equipment… and anything else your business might need to succeed, turn to Backd. You can apply in as few as three short minutes with no impact at all to your credit score! All you need to apply is:

  • 1 year in business minimum

  • $300K annual revenue minimum

  • A business bank account

  • A U.S.-based business with a brick-and-mortar address

Ready to get started? Simply fill out a short application.