Below is an at-a-glance tour of common structures used by San Francisco businesses, with learning resources to help you dive deeper.
SBA 7a Loan: Flexible Use of Proceeds
The SBA 7a loan is a flagship program well-suited for working capital, equipment, business acquisitions, and even refinancing in some cases. It features government backing, which can support longer terms than many conventional loans. Rates and fees vary by lender and market conditions.
Typical considerations include time in business, cash flow adequacy, collateral, personal guarantees, and management experience. Expect a deeper underwriting process and more documentation than fast online options.
SBA 504 Loan: Real Estate and Heavy Equipment
SBA 504 loans support owner-occupied commercial real estate and large equipment purchases. They often combine a bank loan, a Certified Development Company (CDC) second lien, and a borrower down payment. The structure can offer longer fixed-rate components for stability. If you plan to purchase a building or long-lived assets in San Francisco, the 504 may be worth exploring.
SBA Express Loan: Faster Decisions on Smaller Requests
SBA Express loans provide a streamlined route for smaller loan amounts relative to standard 7a, often with faster decisions. While the maximum guaranteed portion is smaller, the speed can fit time-sensitive needs.
Short-Term Business Loan: Speed and Simplicity
A short-term business loan can provide quick working capital, typically repaid over 3–18 months. This is often used to capture an immediate opportunity—bulk inventory, seasonal staffing, or a marketing push. Costs can be higher than longer-term bank or SBA loans, so review total dollar cost and prepayment terms.
Business Line of Credit: Ongoing, Flexible Access
Lines of credit are useful for bridging receivables and managing cash timing. Draw what you need, repay, and draw again. Many San Francisco service firms and agencies prefer LOCs to handle irregular client payments or project-based work.
Term Loan: Predictable Payments, Longer Horizons
Term loans provide a set amount repaid over a fixed period (e.g., 2–7 years). These may suit expansion, equipment, or refinancing existing debt. Compare amortization schedules, prepayment policies, collateral, and any covenants.
Equipment Financing: Preserve Cash While Upgrading
Equipment loans and leases can align repayment with the useful life of the asset. Restaurants, manufacturers, healthcare practices, and construction contractors commonly use equipment financing to expand capacity without a large cash outlay.
Invoice Factoring: Turn Receivables into Working Capital
If clients pay on net-30/60/90 terms, invoice factoring can accelerate cash flow by advancing funds against outstanding invoices. This may help agencies, logistics, and manufacturing firms that need cash before customers pay.
Merchant Cash Advance (MCA): High-Speed, High-Cost
MCAs provide funding based on future revenue, often with daily or weekly remittances. They can be fast and documentation-light, but the total cost is typically higher and the repayment frequency can impact cash flow.
Revenue-Based Financing (RBF): Pay as You Earn
With RBF, payments are tied to a percentage of monthly revenue until a fixed amount is repaid. For some recurring-revenue companies, RBF can be a non-dilutive alternative to venture capital.
