Below are common ways Vermont businesses secure funding. Review how each structure works, typical use cases, and considerations.
SBA 7(a) Loan
The SBA 7(a) loan is a flexible flagship program for working capital, equipment, refinancing, and business acquisitions. Loan amounts can be up to $5 million. Rates are generally variable and depend on market benchmarks and lender policies. Terms vary by use: working capital often up to 10 years; equipment may go longer if it matches useful life; real estate can extend further within program guidelines.
- Best for: General expansion, partner buyouts, acquisitions, refinancing higher-cost debt
- Pros: Longer terms and potentially lower payments than many alternatives
- Considerations: Documentation-heavy; time to funding can be longer than online alternatives
Learn more: Complete SBA Loan Guide and the official SBA 7(a) overview.
SBA CDC/504 Loan
The SBA 504 program is designed for major fixed assets such as owner-occupied commercial real estate and large equipment. A common structure is 50/40/10: a bank senior loan (about 50%), a Certified Development Company (CDC) debenture (about 40%), and a borrower down payment (often 10%).
- Best for: Buying or building an owner-occupied facility; large equipment with long useful life
- Pros: Long-term, fixed-rate financing on the CDC portion
- Considerations: Owner-occupancy and job-creation policy targets apply; more complex closing
SBA Express Loan
SBA Express offers a streamlined route for smaller needs, typically with faster turnarounds than standard 7(a). As of recent updates, maximum loan size is generally lower than standard 7(a), and the SBA guaranty percentage is often lower.
Explore: SBA Express Loan Guide
Short Term Business Loan
Short-term loans can cover immediate needs such as inventory purchases, bridging seasonal gaps, or funding a quick project. Repayment periods may range from a few months to two years, with frequent payment schedules in some products.
- Best for: Time-sensitive opportunities with clear, near-term ROI
- Pros: Speed and lighter documentation compared with bank products
- Considerations: Higher effective costs; frequent payments; plan cash flow carefully
See how structures differ: Short-Term Online Loan
Term Loan
A classic term loan delivers a lump sum with fixed or variable payments over a set schedule. Terms vary widely by lender type (bank, credit union, CDFI, or online lender).
- Best for: Equipment, renovations, project-based investments
- Pros: Predictable payments and amortization
- Considerations: May require collateral, covenants, or minimum credit thresholds
Learn the basics: Term Loan and a deeper dive in our Term Loan Guide.
Business Line of Credit
A revolving line of credit offers flexibility for working capital, payroll timing, and unexpected expenses. You borrow, repay, and borrow again up to the credit limit.
- Best for: Seasonal businesses and companies with uneven receivables
- Pros: Pay interest only on what you use
- Considerations: May require annual renewal; unused line fees or covenants can apply
Compare features: Business Line of Credit and our educational article Business Line of Credit Guide.
Equipment Financing and Leasing
Equipment loans or leases align payments with the useful life of tractors, CNC machines, point-of-sale systems, commercial kitchen equipment, and more. Some structures are secured by the equipment itself.
- Best for: Businesses aiming to preserve cash while upgrading assets
- Pros: Potentially minimal upfront cost; structure matched to equipment
- Considerations: Review end-of-lease options, fees, and maintenance responsibilities
Explore options: Equipment Financing and our 2025 overview Equipment Financing Guide.
Invoice Factoring and Receivables Financing
Factoring converts outstanding invoices into immediate working capital. Instead of waiting 30–60+ days for customers to pay, businesses receive an advance against eligible invoices and then a final settlement minus fees when customers pay.
- Best for: B2B firms with predictable invoicing and creditworthy customers
- Pros: Financing growth without adding traditional debt
- Considerations: Fees vary; review notification and customer interaction policies
Learn more: Invoice Factoring Guide
Revenue-Based Financing
In revenue-based financing, payments are tied to a percentage of monthly revenues until a pre-agreed total is repaid. It can suit companies with strong gross margins and recurring revenue.
- Best for: Subscription, eCommerce, and SaaS models with predictable sales
- Pros: Payments flex with revenue
- Considerations: Effective cost can be higher than bank debt; evaluate unit economics
Overview: Revenue-Based Financing
Merchant Cash Advance (MCA)
An MCA provides a lump sum repaid via a portion of daily card sales or fixed ACH withdrawals. Speed is the primary advantage, but effective costs can be high.
- Best for: Urgent cash needs with strong card sales
- Pros: Fast funding; revenue-linked remittances
- Considerations: Higher costs and daily/weekly payments can pressure cash flow
Insights: Merchant Cash Advance Guide
Microloans via CDFIs
Community Development Financial Institutions (CDFIs) such as the Vermont Community Loan Fund and Community Capital of Vermont offer microloans and advisory support. They may consider borrowers newer to credit.
- Best for: Startups and early-stage firms needing smaller amounts
- Pros: Technical assistance and mentoring often included
- Considerations: Loan sizes are smaller; eligibility varies by program
