What credit score do you need for a business loan?

SBA loans typically require 680+. Traditional bank loans need 700+. Online lenders may approve scores as low as 500-600, but at much higher rates (15-30%+). The higher your credit score, the better your rate and terms.

How hard is it to get a small business loan?

It depends on the lender and loan type. SBA loans have strict requirements (strong credit, 2+ years in business, solid revenue). Online lenders are much easier to qualify for but charge higher rates. About 50% of small business loan applications are approved.

An SBA loan is a small business loan partially guaranteed by the Small Business Administration, which reduces risk for lenders and results in lower rates (6-10%) and longer terms (up to 25 years). SBA 7(a) loans are the most common, up to $5 million.

Business Loan Guide: Types, Rates, and How to Qualify (2026)

Choosing the right business loan can save thousands in interest and provide the capital your business needs to grow. Here’s how the major options compare.

Business Loan Types Compared

Loan Type	Amount	Rate (APR)	Term	Time to Fund	Best For
SBA 7(a) Loan	Up to $5M	6-10%	7-25 years	2-3 months	Established businesses, large purchases
SBA 504 Loan	Up to $5.5M	5-7%	10-25 years	2-3 months	Real estate, equipment
SBA Microloan	Up to $50K	8-13%	Up to 6 years	1-2 months	Startups, small needs
Bank Term Loan	$25K-$5M	7-12%	1-10 years	2-8 weeks	Established businesses, strong credit
Online Term Loan	$5K-$500K	10-30%	3 months-5 years	1-5 days	Quick funding, weaker credit
Business Line of Credit	$10K-$500K	8-25%	Revolving	1-7 days	Working capital, cash flow gaps
Equipment Financing	Up to 100% of equipment cost	6-15%	Term of equipment life	1-2 weeks	Specific equipment purchases
Invoice Factoring	Up to 90% of invoice value	10-30% (factor rate)	Until invoice paid	1-3 days	B2B businesses with outstanding invoices
Merchant Cash Advance	$5K-$500K	20-50%+ (factor rate)	3-18 months	1-3 days	Last resort (very expensive)

SBA Loans: The Gold Standard

SBA 7(a) Loan Details

Feature	Details
Maximum amount	$5,000,000
Interest rates	Prime + 2.25-4.75% (currently ~8-11%)
Terms	Up to 10 years (working capital), 25 years (real estate)
Down payment	10-20%
Guarantee fee	0-3.75% of guaranteed portion
Personal guarantee	Required
Collateral	Required for loans over $350,000
Time in business	Typically 2+ years
Minimum credit score	680+ (most lenders prefer 700+)

Qualification Requirements by Lender Type

Requirement	SBA Loan	Bank Loan	Online Lender
Credit score	680+	700+	500-600+
Time in business	2+ years	2+ years	6 months+
Annual revenue	$100K+	$250K+	$50K+
Collateral	Sometimes	Usually	Rarely
Business plan	Yes	Yes	No
Financial statements	Yes	Yes	Sometimes
Approval rate	~50%	~25-40%	~60-80%
Time to funding	2-3 months	2-8 weeks	1-5 days

Interest Rate Comparison by Credit Score

Credit Score	SBA Loan	Bank Term Loan	Online Lender
750+	6-8%	7-9%	10-15%
700-749	8-10%	9-11%	12-20%
650-699	10-12%	May not qualify	15-25%
Below 650	May not qualify	Unlikely	20-30%+

Cost Comparison: $100,000 Loan

Loan Type	Rate	Term	Monthly Payment	Total Interest Paid
SBA 7(a)	8%	10 years	$1,213	$45,600
Bank term loan	10%	5 years	$2,125	$27,500
Online term loan	18%	3 years	$3,615	$30,150
Online term loan	25%	2 years	$5,293	$27,030
Merchant cash advance	40% factor	12 months	~$11,667	$40,000

An SBA loan at 8% costs $45,600 over 10 years. A merchant cash advance can cost $40,000 in just 12 months.

The Bottom Line

SBA loans offer the best rates and terms for small businesses but require strong credit, established revenue, and patience (2-3 months to fund). Bank loans are the next best option. Online lenders are useful for quick capital needs but at significantly higher costs. Avoid merchant cash advances—their effective rates of 40-100%+ make them the most expensive form of business capital. Always compare the total cost of borrowing, not just the monthly payment.