Guide · Funding 101
Business Funding Options: A 2026 Guide for Owners
There's no single "best" way to fund a business — there's the option that fits your revenue, timing, and use of funds. Here's an honest breakdown of the seven funding types most small business owners actually use, and when each one makes sense.
The seven main types of business funding
Term loans
A lump sum repaid over a fixed period (1–5 years typical). Best for one-time investments like build-outs, vehicles, or expansion.
SBA loans
Government-backed loans with longer terms and lower rates. Best for established businesses that can wait 30–90 days for funding.
Business lines of credit
Revolving credit you draw from as needed. Best for managing seasonality, payroll gaps, and unexpected costs.
Equipment financing
Loan secured by the equipment itself. Best for trucks, machinery, kitchen equipment, and medical devices.
Invoice factoring
Sell unpaid invoices for fast cash. Best for B2B businesses on 30/60/90-day terms.
Merchant cash advances (MCA)
Lump sum repaid as a percentage of daily card sales. Fastest funding but highest cost.
Revenue-based financing
Repayment scales with monthly revenue. A flexible middle ground between term loans and MCAs.
How to choose
Start with the use of funds, not the product. Buying a truck? Equipment financing. Smoothing payroll? A line of credit. Funding a remodel? A term loan or SBA. Once the use is clear, weigh speed vs cost: SBA is cheapest but slow; MCA is fastest but expensive; working capital and revenue-based financing sit in the middle.
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Frequently asked questions
What types of business funding are available?
The most common options are term loans, SBA loans, business lines of credit, equipment financing, invoice factoring, merchant cash advances, and revenue-based financing. Each fits a different use case and business profile.
Which funding option is cheapest?
SBA loans and traditional bank term loans typically carry the lowest rates, but they also have the strictest qualifications and slowest funding timelines.
Which is fastest to fund?
Working capital, merchant cash advances, and revenue-based financing can fund in 24–72 hours when documentation is complete.
Do I need collateral?
Equipment financing and SBA loans usually involve collateral. Lines of credit and revenue-based products are often unsecured but may require a personal guarantee.
Can I combine multiple types?
Yes. Many businesses pair a line of credit for cash-flow swings with equipment financing or a term loan for larger one-time investments.