The Different Types of Small Business Loans: A Complete Overview

Business owners look for different ways to finance their companies. Traditional small business loans from banks aren’t available for every business. Fortunately, business owners who run out of luck with conventional avenues can turn to alternative small business loans from small business funding marketplaces like AdvancePoint ( Here’s your guide to the different types of small loans that might be available to your company.  

Business term loans

A business term loan is a loan for a set amount of money. The borrower pays back the loan on a set schedule, usually once per month. The money goes toward the principal and interest of the loan. Business owners use these loans to purchase equipment, grow the business, or buy property. 

Merchant cash advance

Businesses use money from lenders who forward cash based on credit card sales. With a merchant cash advance, companies pay them back in daily payments. The merchant lender takes money from the business’s bank account. These lenders withdraw cash based on a percentage of daily sales. 

Business lines of credit

With a business line of credit, business owners get a rotating line of credit. The borrower can spend it on necessary items without exceeding the limit. When making payments, users pay the interest, then the principal. Business owners often use business lines of credit for emergency funding and seasonal spending. 

Short-term business loans

Short-term business loans are low-risk loans because borrowers pay them back quickly. Rather than charging interest, lenders pay a single fixed fee. These are helpful loans for business owners with poor credit or who need quick cash infusions. 

Personal loans for business

Another option for business owners is a personal loan for business. Personal loans are ideal options for business owners who don’t have a credit score for their companies. The individual guarantees the money and uses it toward their startup. 


Microloans are loans under $50,000. These loans help small businesses that cannot afford larger loans or don’t have the capital to support more principal. Microloans usually have repayment terms with low interest. 


Small businesses rely on crowdfunding to get small amounts from several investors. Usually, crowdfunding investors want to see business plans to determine whether the company is a good investment. 

Commercial real estate loan

Businesses can get loans for buildings and land with a commercial real estate loan. These financing options work like mortgages, usually with terms up to twenty or thirty years. Businesses often find commercial real estate loans from banks and other traditional lenders. 

Business credit card

Business credit cards work like personal credit cards. Borrowers receive a revolving line of credit they can use for their business expenses. Borrowers can track their expenses and earn bonuses and rewards with a business credit card. 

Wrap up

Businesses can choose short-term options with daily payments and select traditional loans with longer terms and low monthly payments. 

With flexible rates and varying terms, business owners have options to buy equipment and real estate. Entrepreneurs also have choices for making their payroll and receiving a quick cash infusion. 

Adam Hansen

Adam is a part time journalist, entrepreneur, investor and father.