At a Glance: All Funding Options Compared
| Funding Type | Min. Credit | Typical Cost | Time to Fund | Repayment | Best For |
|---|---|---|---|---|---|
| Merchant Cash Advance | 500 FICO | Factor rate 1.10-1.50 (~50-200%+ APR) |
1-3 days | % of daily revenue | Speed, bad credit, variable revenue |
| SBA Loan (7a) | 640+ FICO | 7-11% APR | 30-90 days | Fixed monthly | Low cost, established businesses |
| Business Line of Credit | 620+ FICO | 10-30% APR | 3-10 days | Monthly (revolving) | Recurring cash flow needs |
| Invoice Factoring | No minimum | 1-5% per month | 1-3 days | When invoices paid | B2B businesses with invoices |
| Equipment Financing | 600+ FICO | 6-25% APR | 2-7 days | Fixed monthly | Equipment purchase only |
Not sure which fits your situation? → Take the 5-question funding decision tool
Option 1: Merchant Cash Advance (MCA)
Fastest · Most AccessibleA merchant cash advance is a purchase of your future business revenue, not a loan. The provider gives you a lump sum now in exchange for a fixed percentage of your future deposits. There is no interest rate, no fixed monthly payment, and approval is based on revenue, not credit score.
- Best for:
- Bad credit (500 FICO minimum)
- Urgent capital need
- Variable or seasonal revenue
- Bank turndown recovery
- Tax liens, NSFs on record
- Not ideal for:
- Debt consolidation
- Businesses with 620+ credit
- Long-term investments
- Revenue under $4K/month
Option 2: SBA Loan
Lowest Cost · SlowestSBA 7(a) loans are government-backed loans offered through approved lenders. They carry the lowest interest rates available to small businesses (7-11% APR) but require the strongest qualifications and take the longest to fund. They are ideal for businesses that can wait 30-90 days and have strong credit and collateral.
- Best for:
- 640+ FICO, 2+ years in business
- Long-term investments
- Real estate, major equipment
- Businesses that can wait 60-90 days
- Not ideal for:
- Urgent capital needs
- Credit under 640
- Startups (under 2 years)
- No collateral available
→ Full comparison: MCA vs SBA Loan (and when each option wins)
Option 3: Business Line of Credit
Flexible · RevolvingA business line of credit gives you access to a revolving credit limit: you draw what you need, repay it, and draw again. Interest is charged only on the outstanding balance. This makes it more flexible than a lump-sum advance for businesses with recurring, predictable cash flow needs.
- Best for:
- Recurring cash flow gaps
- 620+ FICO
- Predictable, stable revenue
- Need to draw multiple times
- Not ideal for:
- Bad credit (under 620)
- Startups
- Very urgent needs
Option 4: Invoice Factoring
B2B Only · No Minimum CreditInvoice factoring allows you to sell outstanding invoices to a factoring company at a discount (typically 80-95% of face value). You receive the cash immediately instead of waiting 30-90 days for customers to pay. Approval is based on your customers' creditworthiness rather than yours, making it accessible even with poor personal credit.
- Best for:
- B2B businesses (invoicing clients)
- Any credit score (customer credit matters)
- Net-30/60/90 payment terms
- Construction, staffing, logistics
- Not ideal for:
- B2C businesses (no invoices)
- Retail, restaurants, e-commerce
- Long-term working capital
Option 5: Equipment Financing
Equipment Only · Self-CollateralizedEquipment financing is a loan or lease used specifically to purchase business equipment (vehicles, machinery, technology, medical devices). The equipment itself serves as collateral, making approval easier than unsecured loans. Available to businesses with 600+ FICO and any time in business if the equipment value is sufficient.
- Best for:
- Equipment purchase specifically
- 600+ FICO
- Medium cost (6-25% APR)
- Businesses needing to preserve cash
- Not ideal for:
- Working capital / payroll
- Non-equipment expenses
- Very urgent needs
How Approval Actually Works
MCA and invoice factoring use revenue-based underwriting. The provider reviews your last 6 consecutive months of business bank statements (personal account statements are not accepted) to verify average monthly deposits, ending balance, and NSF activity. Credit is checked, but it plays a secondary role: the check at application is typically a soft pull that does not affect your score, and a hard pull usually follows later, before final approval, with a small, disclosed impact of a few points.
SBA loans, bank term loans, and most bank lines of credit use credit-based underwriting instead: personal and business credit reports, 2+ years of tax returns, a business plan, and often collateral or a lien on business assets. That is the real reason they take longer and reject more applicants outright, even when the business itself is healthy. The chart below shows why the two approaches land in such different timelines.
One thing every option on this page shares: a personal guarantee is standard on nearly all of them, MCA included, not just on bank loans. Read the guarantee language in the agreement before you sign, whichever option you choose.
How to Choose the Right Option
-
1Do you need the capital urgently?
If yes, only MCA or invoice factoring are realistic options. Banks, SBA, and LOC all take longer. -
2What is your credit score?
Under 500: MCA with strong revenue may still work. 500-620: MCA is your best option. 620-640: MCA or business line of credit. 640+: All options available; compare costs and timelines. -
3What will you use the capital for?
Equipment purchase → consider equipment financing first. Outstanding invoices → invoice factoring. Working capital, payroll, inventory, marketing → MCA or LOC. -
4Is your revenue stable or variable?
Variable/seasonal revenue → MCA's flexible repayment is a significant advantage. Fixed monthly payment options are risky when revenue is unpredictable. -
5What is the cost-benefit?
MCA is expensive relative to SBA loans. It is the rational choice only when: the capital generates revenue that exceeds the factor rate cost, or when speed and accessibility have clear business value (preventing downtime, capturing an opportunity, meeting payroll).
Honest Guidance
Not sure which applies to you?
Take the 5-question funding decision tool
Frequently Asked Questions
What are the main small business funding options?
The main small business funding options are: merchant cash advance (MCA), SBA loan, business line of credit, invoice factoring, and equipment financing. Each has different approval requirements, costs, and timelines. MCA is fastest and most accessible. SBA loans cost the least. Lines of credit work best for recurring needs. Invoice factoring works best for B2B businesses with outstanding invoices.
What business funding option is easiest to qualify for?
Merchant cash advances are the easiest to qualify for. Approval is based primarily on monthly business revenue, with a minimum of 500 FICO and $4,000-$6,000 per month in deposits. Invoice factoring is also accessible since approval is based on your customers' creditworthiness, not yours. SBA loans and bank term loans have the strictest requirements: 640+ FICO, 2+ years in business, and collateral.
Which business funding option is fastest?
Merchant cash advances are typically the fastest option. Invoice factoring also funds quickly once the provider approves your file. Business lines of credit take 3-10 days. Equipment financing takes 2-7 days. SBA loans take 30-90 days. If you need capital immediately, MCA or invoice factoring are the only realistic options.
What is the cheapest small business funding option?
SBA loans have the lowest cost at 7-11% APR, but they require the strongest qualifications and take 30-90 days to fund. Business lines of credit average 10-30% APR. Equipment financing averages 6-25% APR. Invoice factoring costs 1-5% of invoice value per month. Merchant cash advances have the highest effective cost, but offer the fastest access and the lowest credit requirements.
What is the difference between a business loan and a merchant cash advance?
A business loan is debt: you borrow a fixed amount and repay with fixed monthly payments at a stated interest rate (APR). A merchant cash advance is a purchase of future receivables: the provider buys a portion of your future revenue at a discount, and repayment is automatic as a percentage of daily deposits. MCA has no fixed monthly payment, no stated interest rate (it uses a factor rate instead), approves primarily on revenue rather than credit alone, and can fund in days. Business loans are typically cheaper but slower and require stronger credit.
Can I get business funding with bad credit?
Yes. Merchant cash advances are available to businesses with credit scores as low as 500, because approval is based primarily on monthly business revenue. Invoice factoring also has no minimum credit score requirement. SBA loans and business lines of credit generally require 620-640+ FICO scores.
Funding by State
MCA and working capital funding for small businesses in every state. Same approval standards, same speed, no location restrictions.
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