U.S. businesses can access working capital through multiple funding structures. Each has trade-offs in cost, speed, and eligibility.
Term loans (short-term)
Short-term term loans provide a lump sum repaid over a fixed period with interest. They are best for one-time needs or planned short-term projects.
Lines of credit
A business line of credit acts like a credit card for your business: draw, repay, and redraw within a set limit. Options include prime-based bank lines and alternative online lenders.
Accounts receivable financing & invoice factoring
Convert outstanding invoices into immediate cash. Invoice factoring sells receivables to a funder, while invoice financing uses receivables as collateral for a loan.
Related: Accounts Receivable Financing
Asset-based lines of credit
These lines use business assets (inventory, receivables, equipment) as collateral, often allowing larger borrowing amounts at lower rates than unsecured options.
Related: Asset-Based Line of Credit
SBA loans (7(a) and Express)
SBA-backed loans are government-guaranteed and can be used for working capital. SBA 7(a) loans and SBA Express loans may provide competitive rates and longer terms compared with online short-term loans, though processing can take longer.
Related: SBA 7(a) Loan | SBA Express Loan
Merchant cash advances (MCA)
MCA provides upfront cash in exchange for a portion of future card sales. Repayment fluctuates with sales, so cash flow variability is factored into cost. Typically a high-cost option best reserved for businesses with steady card volume.
Related: Merchant Cash Advance (MCA)
Business credit cards
For smaller, recurring needs a business credit card can provide flexibility and benefits like rewards or 0% introductory APR offers. Rates vary and balances should be managed to avoid high interest costs.
Related: Credit Card
Microloans and community lenders
Smaller businesses or startups may qualify for microloans (non-SBA) or community development financial institution (CDFI) financing; these can be more accessible for businesses with limited credit history.
Related: Microloans (non-SBA)
