Below are common options North Carolina businesses explore, with examples of how they are typically used.
SBA 7(a) Loan
The SBA 7(a) loan is the U.S. Small Business Administration’s flagship program, designed for working capital, equipment, inventory, business acquisition, partner buyouts, and debt refinance. SBA does not lend directly; it provides a partial guarantee to participating lenders, which may make approval more achievable for qualified applicants.
- Use cases: Expansion, equipment, partner buyout, acquisition, refinancing eligible debt.
- Typical features: Longer repayment terms compared to many conventional options; rates commonly tied to Prime; personal guarantee is common.
- Useful links: SBA 7(a) Program, Investopedia: SBA 7(a) Loan, and our in-depth overview SBA loan guide.
SBA 504 Loan
Designed for major fixed assets, such as purchasing commercial real estate or large equipment. It’s a partnership between a Certified Development Company (CDC) and a bank or credit union.
- Use cases: Owner-occupied real estate, heavy machinery, facility upgrades.
- Useful link: SBA 504 Program.
SBA Express Loan
SBA Express can offer faster turnaround than standard 7(a) for smaller amounts. It’s useful when speed and flexibility are important.
Traditional Term Loan
A fixed amount repaid over a set period. Term loans are widely used when a business has a clear project or asset with a defined ROI timeline.
Business Line of Credit (LOC)
An LOC offers a revolving limit you draw from as needed. You pay interest only on what you use, which can be helpful for seasonality or variable working capital needs.
Short-Term Business Loan
A short term business loan typically provides quick access to capital with shorter repayment horizons. It may suit time-sensitive needs but can carry higher effective costs than longer-term structures.
Equipment Financing
Financing or leasing for vehicles, machinery, and other equipment. The equipment often serves as collateral.
Invoice Financing and Factoring
Turn accounts receivable into immediate working capital. With invoice factoring, you typically sell invoices at a discount and receive cash now.
Merchant Cash Advance (MCA)
An MCA advances funds based on future card sales, with repayments linked to daily or weekly revenue. It’s fast, flexible, and typically more expensive than many alternatives.
Revenue-Based Financing
Capital repaid as a percentage of monthly revenue until a predetermined cap is reached. This can align with variable revenue patterns.
Microloans
Smaller loans for startups and very small businesses. Several Community Development Financial Institutions (CDFIs) and nonprofits in North Carolina offer microloans.
- Use cases: Early-stage working capital, small equipment, initial inventory.
- External resource: SBA Microloan Program.
Startup Business Funding
Pre-revenue or early-stage companies may look to a mix of microloans, lines of credit, equipment financing, revenue-based funding (if early sales exist), grants, and bootstrapping. Strong business plans, financial projections, and personal credit readiness can help.
