Whether you're launching a new product, expanding operations, or covering day-to-day expenses, securing funding is one of the biggest challenges for business owners and startup founders. While venture capitalism gets a lot of attention, business loans remain one of the most reliable ways to access capital—without giving up equity. But with so many lenders, terms, and loan structures available, how do you choose the right one?
This guide breaks down the best business loan options, from traditional banks like Chase to fintech lenders like PayPal and Square. It also covers the pros and cons of business loans and alternative funding sources to help you make the best decision.
Popular Business Loan Options
Finding the right loan depends on your business model, credit history, and financing needs. Below, we explore the most common types of business loans from banks, fintech lenders, and government-backed programs.
Traditional Bank Loans
Banks remain a primary source of business loans. They provide competitive interest rates and structured repayment plans. However, they often require strong credit and financial history.
Chase Business Loan
Offers term loans and lines of credit for small businesses.
Approval requires a minimum credit score of 680.
With competitive interest rates, loan amounts range from $10,000 to $500,000.
Best for established businesses looking for lower-cost financing.
More information: Chase Business Loans
Bank of America Small Business Loans
Offers secured and unsecured loans with interest rates as low as 5.75 percent APR.
Requires at least two years in business and solid financials.
Loan terms range from 12 months to 7 years.
More information: Bank of America Business Loans
Wells Fargo Business Loans
Provides SBA-backed loans, equipment financing, and real estate loans.
Interest rates start around 6 percent APR.
Requires a strong credit profile and collateral for approval.
More information: Wells Fargo Business Loans
Traditional bank loans usually offer lower interest rates than fintech lenders, but approval can be slow, often taking several weeks. If you need cash quickly, consider alternative lending options.
Online and FinTech Lenders
For businesses needing quick access to cash, online lenders provide fast approvals, flexible terms, and lower credit requirements.
PayPal Business Loan
Offers fast cash based on your PayPal transaction history.
Loan amounts range from $5,000 to $150,000.
Fixed fees instead of traditional interest.
Approval takes minutes, with funding within 24 hours.
More information: PayPal Business Loan
Square Capital Loan
Ideal for businesses using Square for payment processing.
Loan repayment is automated and deducted from daily sales.
No credit check and approval is based on transaction volume.
More information: Square Capital
Kabbage (American Express) Loan
Provides lines of credit up to $250,000 for small businesses.
No collateral is required, but APR can be high (10-30 percent).
Instant approvals, with funds available within a day.
More information: Kabbage by Amex
Online lenders offer quick approvals, often with minimal paperwork, making them attractive for businesses that need funds immediately. However, they typically have higher interest rates than traditional banks.
Government and SBA-Backed Loans
For businesses that qualify, Small Business Administration (SBA) loans offer some of the lowest interest rates and longest repayment terms.
SBA 7(a) Loan
The most popular SBA loan offers up to $5 million.
Companies can use SBA loans for working capital, equipment, and expansion.
SBA loans require good credit (680 or higher), two or more years in business, and substantial revenue.
Interest rates start at 6.5 percent APR.
More information: SBA 7(a) Loans
SBA Microloan Program
Provides loans of up to $50,000 for small businesses and startups.
Best for minority-owned, women-owned, and rural businesses.
Interest rates range from 8 to 13 percent.
More information: SBA Microloans
SBA loans take processing longer than online lenders but often provide better terms. SBA microloans are ideal for businesses that can afford to wait for funding.
Pros and Cons of Business Loans
Advantages of Business Loans
Access to Large Capital – Loans provide access to larger amounts of money than credit cards or crowdfunding.
Structured Repayment Plans – Fixed terms and interest rates make it easier to manage cash flow.
Builds Business Credit – Successfully repaying loans can improve your credit score and help secure future funding.
Lower Interest Rates (for Banks and SBA Loans) – Traditional banks and SBA loans typically offer lower interest rates than credit cards and online lenders.
Disadvantages of Business Loans
Strict Credit and Revenue Requirements – Traditional bank loans often require a minimum credit score of 680 and solid financials.
Business Loans Might Require Collateral – Some loans require personal or business assets as collateral.
Time-Consuming Application Process – SBA and bank loans can take weeks or months to process.
Higher Interest Rates for FinTech Lenders – While online lenders offer quick approvals, their rates are often higher than those of traditional banks.
Alternatives to Business Loans
Not every business should take on debt. Here are alternative funding options worth considering:
Business Grants (Non-Dilutive Capital)
Free money, no repayment required.
Ideal for tech, R&D, and small business development.
Examples: SBIR grants and state and local business grants.
More information: Top Business Grants
Business Credit Cards
Good for small purchases and short-term financing.
Many offer 0 percent APR intro rates.
Examples: Chase Ink Business Preferred, Amex Blue Business Plus.
Venture Capital and Angel Investors
No debt, but it requires giving up equity.
Best for high-growth startups.
Examples: Y Combinator, Techstars, Andreessen Horowitz.
Revenue-Based Financing
Repay as a fixed percentage of monthly revenue.
No equity dilution.
Example: Clearco (formerly Clearbanc).
More information: Clearco Funding
Crowdfunding (Kickstarter, Indiegogo)
Raise money from customers and supporters.
No repayment is required, but success depends on marketing.
More information: Kickstarter
What’s the Right Funding Option for You?
Business loans can provide the capital you need, but they are not one-size-fits-all. Before committing to a loan, ask yourself:
Do I have the credit and revenue to qualify for low-interest loans?
Am I comfortable taking on debt?
Are there better options, like non-dilutive grants?
Chances are, if you are a revenue-generating tech business and qualify for a loan, you could be eligible for a grant—and the good thing about grants is you don't need to take on added debt. At Panna, we help businesses secure non-dilutive funding through grants and tax incentive programs—so you can make an informed decision.
More information: Check your funding options