Guide
Business funding options in 2026: the complete comparison
There are more ways to fund a business than there have ever been. There are also more ways to overpay. Here is the full landscape, priced honestly.
On this page
The number of ways to fund a small business has grown considerably over the last decade. Bank lending is no longer the default, online underwriting has compressed decision times from weeks to hours, and a whole layer of marketplaces and brokers now sits between owners and the capital itself.
That is mostly good news. It is also why the market has become difficult to read. More options means more pricing conventions, and the conventions are not interchangeable. An owner comparing four offers is frequently comparing four numbers that do not measure the same thing.
1. The funding landscape in one table
The figures below are published market ranges for each funding type. They are not offers, and they are not specific to any one company. What any individual business is offered depends on that provider's underwriting.
| Option | Typical max amount | Typical cost of capital | Time to funds | Best suited to |
|---|---|---|---|---|
| Funding marketplace | $250,000 | Varies; 0% intro tiers exist | 24–72 hrs | Speed with a range of options |
| SBA 7(a) loan | $5,000,000 | Prime + 2.75–4.75% | 30–90 days | Large amounts, patient timelines |
| SBA 504 loan | $5,500,000 | Long-term fixed | 30–90 days | Property and heavy equipment |
| Bank term loan | Varies by bank | ~7–12% APR | 2–4 weeks | Established, strong credit |
| Business line of credit | ~$250,000 | ~8–25% APR on drawn funds | 1–7 days | Recurring, uneven cash needs |
| Equipment financing | Cost of the asset | ~6–20% APR | 2–10 days | Buying a specific machine or vehicle |
| Invoice financing | Value of the invoices | ~1–5% per month | 1–3 days | Long customer payment terms |
| Merchant cash advance | ~$250,000 | 1.2–1.4 factor rate | 1–2 days | Urgent gaps, weaker credit |
| Business credit card | Under $50,000 | 0% intro, then ~18–29% APR | 1–2 weeks | Smaller, short-term expenses |
2. Why the prices are hard to compare
Look down the cost column above and you will notice it does not use one unit. Some rows are quoted as an annual percentage rate, one is a factor rate, one is a monthly percentage, and one is an introductory period followed by a revert rate. These are genuinely different measurements, and the differences are not cosmetic.
An APR expresses cost as a yearly percentage of the money you still owe. Because your balance falls as you repay, an APR already accounts for time. A factor rate does not. It is a flat multiplier applied once to the amount advanced, and it does not fall if you repay early.
Worked example Two offers on $60,000. The first is a term loan at 14% APR over 24 months: total interest of roughly $9,000. The second is an advance at a 1.3 factor rate, repaid over 10 months: a fixed cost of $18,000. The factor rate looks like "30%", which sounds close to 14%. It is not close. Thirty per cent charged over ten months on a falling balance works out well above 60% APR. The two numbers are not comparable until you convert them.
The practical rule is unchanged regardless of which products you are weighing: convert every offer to an APR before you compare, and make sure that APR includes origination and administrative fees. An offer with a lower headline rate and a 3% origination fee can easily cost more than one with a higher rate and no fee. Our guide to how business funding works sets out the conversion in more detail.
3. Matching the product to the need
Most expensive funding mistakes are not pricing mistakes. They are matching mistakes — using a product designed for one job to do another.
- A one-off project with a known costA renovation, a vehicle, an acquisition. This is what term loans and equipment finance exist for. You know the amount, so borrow the amount.
- A recurring gap that opens and closesPayroll in a slow month, stock ahead of a season. A line of credit fits, because you pay only on what you draw. A term loan charges you for the whole balance whether you need it or not.
- Money that is already yours but has not arrivedInvoices on 60- or 90-day terms. Invoice financing is built for exactly this and is priced against the invoice rather than against you.
- A genuine emergencyAdvances and short-term products fund fastest and cost the most. They are defensible when the alternative is worse, and hard to defend otherwise.
If your need is a pattern rather than a project, read our comparison of a line of credit against a business loan before you commit to a fixed schedule.
4. What you pay for speed
Time to funds and cost of capital are closely related across this market, and the relationship is not a coincidence. Fast products are fast because they underwrite on less information — often bank deposit data alone, without tax returns, projections or a full credit review. Less information means more uncertainty for the provider, and that uncertainty is priced in.
The SBA sits at the other end. A 7(a) loan can take 30 to 90 days because the file is genuinely examined, and it is cheap partly because the SBA guarantees a portion of it for the lender. You are trading weeks for rate. That is a reasonable trade if you have the weeks.
The question worth asking before you accept a fast, expensive product is simply whether the deadline is real. Owners frequently pay a substantial premium for a two-day turnaround on a need that would have kept for three weeks.
5. The costs that are not the rate
Comparing two APRs is only reliable if both include everything you will actually pay. Frequently they do not, and the items below are where the difference hides.
- Origination fees. A one-off charge for issuing the funding, usually a percentage of the amount and often deducted before you receive the money. A 3% fee on $100,000 means $97,000 lands in your account while you repay against $100,000.
- Prepayment penalties. Some products charge you for repaying early. On a factor-rate product the cost does not fall on early repayment anyway, which amounts to the same thing.
- Draw and maintenance fees. Common on lines of credit. A facility with a low rate and a monthly maintenance fee can cost more than a higher-rate facility with none, particularly if you draw on it rarely.
- UCC filings. A public filing giving the provider a claim over business assets. It does not cost much directly, but it can restrict your ability to obtain further funding while it is in place — a real cost that never appears in a rate.
- Personal guarantees. Not a fee, but a transfer of risk from the business to you personally. Worth weighing alongside the price.
The practical habit is to ask every provider for the total dollar cost of the funding over its full term, in dollars rather than percentages, with all fees included. Providers who price honestly will answer directly. The ones who do not are telling you something useful.
5. Common questions
Will comparing options damage my credit score?
Only if the provider runs a hard inquiry. A soft pull — used for pre-qualification — does not affect your score and can be repeated freely. Ask which type is being run before you submit anything, because some providers run a hard inquiry before showing you a single number.
Do I need to have been trading for two years?
For bank and SBA products, usually yes or close to it. Revenue-based products often want six months. There are products aimed specifically at businesses with no trading history at all, covered in our piece on startup loan options.
Is a personal guarantee normal?
It is very common in small business lending, including most SBA loans. It makes you personally liable if the business cannot repay. It is not unusual, but it is not trivial either, and it is worth reading carefully rather than assuming.
What is the cheapest option overall?
On rate alone, SBA and traditional bank lending, consistently. They are also the slowest and the hardest to qualify for. The cheapest option you can actually obtain, in the time you actually have, is a different question — and it is the one that matters.
Figures on this page describe each funding type generally, based on published market ranges. They are not offers, and they are not specific to any one company. Your own rate, amount and terms depend entirely on the provider’s underwriting and your qualifications. Nothing here is financial advice.