SBA 7a loan requirements, set beside every other funding option
Factor rates in dollars. APR-equivalents next to every quote. The terms agreements actually use, defined. Start by reading, and only apply if the figures work for your business.
- Costs shown as dollars and APR-equivalent
- Banks and alternatives on the same table
- Written for owners, reviewed against current agreements
What business funding costs, by option
| Option | Typical cost | Speed | Term | What it needs | When it fits |
|---|---|---|---|---|---|
| Merchant cash advance | Factor 1.15–1.45 → roughly 40–150% APR-equivalent | 1–3 days | 3–12 months, daily or weekly remittance | Steady deposits, bank statements and at least 6 months operating | Urgent, high-profit needs a bank can't move fast enough for; owners already turned down by banks |
| Revenue-based financing | Cap of 1.2–1.6× the amount | 3–7 days | 6–24 months, a fixed % of revenue | Recurring revenue, 12+ months, clean statements | Businesses with seasonal swings or rapid growth that need payments to rise and fall with sales |
| Credit lines for businesses (bank) | Prime + 1–5%, roughly 9–14% APR | 1–4 weeks | Revolving, annual review | 2+ years, 680+ FICO, financials | For gaps that keep coming back; no flexible money a qualified business can hold costs less |
| Online line of credit | Roughly 20–60% APR | 1–3 days | Revolving, 6–12 month draws | 6–12 months, 600+ FICO, statements | A line of credit for when the bank's minimums or timeline don't work |
| Bank term loan | Roughly 8–14% APR | 2–8 weeks | 1–10 years, monthly | At least 2 years in business, a 680+ FICO, tax returns, and collateral in many cases | For planned spending when there's time to qualify; nothing but SBA costs less |
| The SBA 7(a) loan | Prime + 2.25–4.75%, roughly 10–14% APR | 30–90 days | 7–25 years, monthly | At least 2 years in business, a 680+ FICO, a complete package and a personal guaranty | When the timeline works, the biggest, longest and cheapest capital a small business can get |
| Equipment financing | Roughly 7–20% APR | 2–10 days | 2–7 years, monthly | The equipment quote, 1+ year, 600+ FICO | Equipment purchases: because the asset backs the deal, pricing runs far lower than unsecured capital |
| Invoice factoring | 1–5% of the invoice per month outstanding | 1–3 days after setup | Per invoice, 30–90 days | B2B invoices to creditworthy customers | Companies whose reliable customers take 30–90 days to pay |
Costs are typical ranges for U.S. small businesses as of this page's update date, not offers. APR-equivalents for advances assume a daily remittance over the stated term; see the factor rate calculator for the arithmetic.
Turn a quote into dollars
Calculator for any factor rate
Enter an advance quote's amount, factor rate, term and remittance schedule to see the total payback, the dollar cost, the daily or weekly remittance, and the APR a loan would need to match it.
How much can I qualify for?
A rough funding range based on average monthly revenue, years in business, open positions and credit band, much like an underwriter's first pass at sizing a file.
8 options, one table
Typical cost, speed, term, what each needs and when each fits — banks, SBA and advances side by side.
Explainers, answer first
Debt Service Coverage Ratio Calculator and How to Read the Result
A debt service coverage ratio calculator that divides net operating income by annual debt payments, with a plain guide to what the result means.
Accounts Receivable Financing vs Factoring: Costs and Fit
Accounts receivable financing vs factoring: compare who collects, what each costs, and which option fits your cash flow today.
sba 7a loan requirementsSBA 7(a) Loan Requirements: Eligibility, Credit, and Collateral
SBA 7a loan requirements explained: eligibility, credit, collateral, equity injection and documents, with what each option costs.
The words in the agreement
- APR-equivalent
- The annual percentage rate at which a loan would cost exactly what an advance costs over an identical term.
- Average daily balance
- Your average closing bank balance across a month.
- Broker
- A middleman the funder pays once a deal closes, typically 8–15% of the amount, with that cost built into the factor rate.
- Credit lines for businesses
- A credit limit that refills as you repay, which you tap when you need it, paying interest only on the balance you owe.
- Confession of judgment
- A signed statement admitting liability ahead of time, so a funder can get a judgment without going to trial if the merchant defaults.
- Default
- Whatever the agreement lists as a trigger, such as bounced remittances, switching bank accounts, or taking a new position when that is prohibited.
- Discount for paying off early
- If the balance is paid off within a set window, the purchased amount drops, usually by 10–25% of what's left.
- Equipment financing
- Financing in the form of a loan or lease backed by the equipment, which generally brings a lower rate and a term that fits how long the asset lasts.
- Factor rate
- The number that determines an advance's cost: multiply the amount by the factor rate to get the purchased amount.
- Holdback
- The portion of daily card sales that a split-funded advance holds back, usually 8–20%, until the full purchased amount has been delivered.
- Invoice factoring
- Selling your unpaid invoices to a factor for 70–90% at the outset, with the remainder, less a fee of 1–5% for each month outstanding, paid when the customer settles.
- Merchant cash advance
- The sale of a set slice of a business's future receivables at a discount, which brings in a lump sum today that is paid back daily or weekly until the purchased amount is delivered.
Plain answers, then the detail
Each explainer here starts with the short answer and follows it with the detail.
Is a merchant cash advance a loan?
No. With an MCA, the funder buys a set amount of your future receivables at a discount and pays you a lump sum up front, and you then remit a fixed daily or weekly sum, or a share of card sales, until the full purchased amount has been delivered. An advance is not a loan, so it carries no interest rate; what it costs is the gap between the money you get and the money you pay back, stated as a factor rate, and you can only line that factor rate up against a loan after converting it to an APR-equivalent over the same term.
What's the right way to compare a factor rate to an interest rate?
Put both in dollars across the same number of months, and then express each one as an APR. A $50,000 advance priced at 1.30 and repaid over six months carries $15,000 in cost, which works out to about 109% APR-equivalent with daily remittance. Borrow the same $50,000 from a bank for six months at 12% APR and the cost comes to roughly $1,770. An advance can still make sense for a short, high-margin purpose the bank won't fund in time, as long as you compare both numbers before you pick.
When is a bank the better choice?
Whether its yes arrives before you need the money. An advance costs many times more than a bank term loan or line of credit, and an The SBA 7(a) loan costs even less than those. Begin there if your business is at least two years old, your score is 680 or higher, and your financials are clean. The extra cost of an alternative makes sense when a bank has already turned you down, or when the opportunity or shortfall can't wait.
What do funding partners look at?
We start with deposits, reviewing three to six months of business bank statements along with the average daily balance, any negative days and positions already in place. The range comes from time in business and the owner's credit band, while the number comes from the statements. Most advance and revenue-based programs will show you options without asking for tax returns.
Does reading or applying affect my credit?
Reading does nothing. Starting a request does not pull credit. Should you go ahead with a particular offer, the funding partner might pull your credit with a soft or hard inquiry, and you will be told which one before it does.
How is this site paid?
When a request referred by Copley Square Business Review gets funded, a funding partner pays Copley Square Business Review. Reading, applying and getting options all cost readers nothing. We say so on every page that leads to the application, and we publish the cases where the right answer is a bank, a line of credit or waiting a quarter.
Ready to see what your numbers come back as?
One request, three months of statements, options from our network of funding partners in plain dollars — or an honest note that a bank is your better route.