Small-Business Financing Options
The top sources of small-business financing include loans from banks and online lenders, as well as small-business grants.
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Lead Writer Companies can get business financing by taking on debt, like small-business loans from traditional banks and online lenders, or by offering investors equity in exchange for capital. Business grants are another debt-free financing option.
Why you need capital, how fast you need it and your qualifications will determine the best financing option for your business.
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Tell us how much you need and see your options in minutes.Financing options for small businesses
| Type of business financing | Best for |
|---|---|
| Bank and credit union loans | Established businesses with good credit seeking low interest rates. |
| SBA loans | Qualified businesses wanting low-cost, long-term financing. |
| Online business loans | Fast funding or borrowers that can’t qualify for traditional loan options. |
| Small-business grants | Businesses looking to avoid (or can’t qualify for) debt financing. |
| Equity financing | High-growth startups willing to give up ownership. |
Bank and credit union loans
Best for: Established businesses with good credit seeking low interest rates.
Business loans from banks and credit unions typically offer low interest rates and competitive terms. However, you’ll usually need:
- Strong personal credit.
- Established business revenue.
- At least two years in operation.
Credit unions may have more flexible lending criteria than banks and have increased their business lending in recent years.
You must be a member to qualify for financing from a credit union, but membership can be relatively easy to obtain. Plus, because credit unions are cooperatives and often community-focused, you may benefit from more personal relationships and local name recognition.
Where to find bank and credit union loans
Bank of America Bank of America Business Advantage Unsecured Term Loan
Max Loan Amount
$100,000 Start with a bank where you already have a relationship.
Options include:
- Smaller local banks (often strong supporters of community economic development).
- Large national banks, like Chase, Bank of America and Wells Fargo.
- Community credit unions.
- National credit unions like Navy Federal Credit Union.
- Online banks like Live Oak, First Internet Bank and LendingClub.
According to the Federal Reserve’s 2025 Small Business Credit Survey, applicants report higher approval rates with smaller banks and greater overall satisfaction compared to large banks and online lenders .
SBA loans
Best for: Qualified businesses wanting low-cost, long-term financing.
The U.S. Small Business Administration offers several loan programs, including:
- SBA 7(a) loans (most popular; up to $5 million; flexible use cases).
Because SBA loans are federally guaranteed, they’re less risky for lenders and typically offer competitive rates and terms.
To qualify, you’ll usually need:
- A credit score of 690+.
- Strong annual revenue.
- Two or more years in business.
The application process can be long and paperwork-heavy, but a good SBA lender can help guide you through it.
Where to find SBA loans
U.S. Small Business Administration SBA 7(a) loan
Max Loan Amount
$5,000,000 Most SBA loans are issued by:
- Banks
- Credit unions.
- Other financial institutions.
Start with a lender you’ve previously worked with or a local bank. National banks like Chase, Wells Fargo and Bank of America also issue SBA loans.
You can also use the SBA’s lender match tool to connect with lenders in your area.
Online business loans
Best for: Fast funding or borrowers that can’t qualify for traditional loan options.
Online business loans have increased in popularity, especially among business owners with credit challenges. In 2025:
- 49% of medium- or high-risk credit applicants applied to online lenders.
- 15% applied to nonbank financial companies .
Online lenders often offer fast approvals and funding (sometimes within 24 hours).
Available products include:
- Term loans.
- Business lines of credit.
- Invoice financing.
Borrowing costs, however, are generally higher — with annual percentage rates ranging from 14% to 99%.
Where to find online business loans
The best lender depends on your financing needs and qualifications. Examples include:
- iBusiness Funding (traditional term loans with faster process).
- Bluevine (flexible line of credit).
- OnDeck (flexible line of credit).
- Fundbox (flexible line of credit).
| Product | Max loan amount | Min. credit score | |
|---|---|---|---|
 iBusiness Funding - Online term loan Nerdwallet Rating with Fundera by NerdWallet | $500,000 | 660 | with Fundera by NerdWallet |
 Bluevine - Line of credit Nerdwallet Rating with Fundera by NerdWallet | $200,000 | 625 | with Fundera by NerdWallet |
 OnDeck - Line of credit Nerdwallet Rating with Fundera by NerdWallet | $200,000 | 625 | with Fundera by NerdWallet |
 Fundbox - Line of credit Nerdwallet Rating with Fundera by NerdWallet | $250,000 | 600 | with Fundera by NerdWallet |
Small-business grants
Best for: Businesses looking to avoid (or those that can’t qualify for) debt financing.
Small-business grants provide debt-free funding that doesn’t need to be repaid. They’re typically offered by:
- Nonprofits.
- Government agencies.
- Corporations.
Some grants focus on specific industries or types of business owners. Small-business grants can be a good option for startups or businesses that can’t qualify for traditional financing.
Where to find business grants
Grants may be available through:
- Federal and state agencies.
- Private corporations.
- Your local Economic Development branch.
- Your local Small Business Development Center.
Targeted grant lists include:
Equity financing
Best for: High-growth startups willing to give up ownership.
Equity financing involves raising capital in exchange for equity, or ownership in your business. Common sources include:
- Crowdfunding.
- Venture capital.
- Angel investors.
- Friends and family.
Your company has to be compelling enough to attract investors. Equity crowdfunding also requires compliance with securities laws and regulations.
Equity financing can be a good option for early-stage startups, but it’s not an ideal solution for long-term financing.
Where to find equity financing
Equity financing platforms include:
Crowdfunding
- Republic.
- CircleUp.
- Fundable.
Angel investors
- Angel Capital Association.
- AngelList.
How to choose the best financing for your business
There’s no single “best” financing option. The right choice for you will depend on your business’s current stage and funding needs. Here’s what to consider:
- Time in business. Established businesses should consider bank or SBA loans, which offer low interest rates. Newer businesses might opt for grants, online loans or equity financing.
- Credit score. If you have strong credit, you may be able to qualify for a bank or SBA loan. If you have fair or bad credit, consider online loans — or alternatives to debt financing.
- Funding timeline. If you need financing quickly, online loans will be your best bet (although they can be expensive). It may take anywhere from weeks to months to get a bank or SBA loan. And for grants and equity financing, there’s no set timeline; plus, funding isn’t guaranteed.
- Cost. Online loans may be fast, but they’ll be expensive compared to other financing options. If you don’t want to pay for your capital, consider grants or equity financing.
- Ownership. If you’re OK with giving up ownership in your business, you might use equity financing. If not, stick with debt-based options or grants.
➡️ Want personalized guidance to find the right small-business financing?
Consider using a business loan marketplace, like Fundera by NerdWallet. These marketplaces allow you to submit one application, compare multiple offers and receive advice from lending experts.
Frequently asked questions
What is the best way to finance a small business?
The best way to finance a small business depends on why you need capital, how fast you need it and your qualifications.
- Highly-qualified businesses that want the most affordable option should consider a bank or SBA loan.
- Newer businesses or those with fair credit might choose an online loan.
- If you’re looking to avoid debt, consider grants or equity financing.
What type of financing do small businesses use?
Small businesses typically use debt or equity financing — or a combination of the two. Debt financing involves borrowing money from a third party, which you then repay, with interest. Equity financing, on the other hand, means you receive money from an investor in exchange for partial ownership of your company.
Where can I get financing for my business?
Some of the most common sources of small-business financing include banks, credit unions and online lenders. Grants are also available from sources like nonprofits, government agencies and private corporations. Investors or crowdfunding platforms can offer equity financing.
Rosalie Murphy contributed to this article.
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- 1. Federal Reserve Banks. 2026 Report on Employer Firms: Findings from the 2025 Small Business Credit Survey.
