If you’ve looked into SBA loans, you probably know they can be tough to qualify for and slow to fund. The good news is you have plenty of other financing options. We’ll walk through the best SBA loan alternatives, who they work best for and what to watch out for. We’ll also compare them side by side so you can find the right fit for your business.
SBA loans are popular because of their lower rates and long repayment terms. But many small businesses run into challenges:
If your business needs faster funding or doesn’t meet the SBA requirements, other lending options may be a better choice.
Traditional business loans come from banks, credit unions and other financial institutions. They can include term loans, real estate loans and lines of credit. These loans work best for businesses with a proven track record and strong financials, offering competitive rates and structured repayment terms.
Online business loans are designed for speed and convenience. You complete the application digitally, and funding can often arrive in just a few days. While rates are higher than traditional loans, they are more accessible to businesses that may not meet strict bank criteria.
Microloans are smaller loans ideal for startups, women-owned or minority-owned businesses. They are usually offered by nonprofit organizations or online lenders and can provide funding quickly without extensive documentation. Loan amounts are typically under $50,000, making them ideal for smaller financing needs.
Equipment financing is specifically for purchasing machinery, vehicles or technology. The equipment itself typically serves as collateral, which can make approval easier than for general loans. Payments are spread over time, helping businesses manage cash flow while acquiring necessary assets.
Invoice factoring lets businesses access cash tied up in unpaid invoices. A lender advances a portion of your invoices, giving you immediate working capital. This option is ideal for B2B businesses with predictable invoicing cycles.
MCAs provide a lump sum of cash up front in exchange for a percentage of future credit card sales. Repayment is tied to sales volume, so amounts fluctuate based on business performance. They offer very fast access to cash but can be expensive if your sales slow down.
Community Development Financial Institutions (CDFIs) provide loans to businesses in low-income or underserved communities. These loans often have flexible requirements and are offered by banks, credit unions and loan funds certified by the US Treasury. CDFI loans focus on supporting businesses that may not qualify for traditional financing.
Note: Government shutdowns can slow processing and funding for some CDFI loans.
USDA loans are designed for agricultural businesses or companies located in rural areas. They can support farm operations, rural business development and expansion. These loans often come with lower rates and favorable repayment terms, though availability depends on location and business type.
Note: USDA lending may be paused during a government shutdown, delaying new loans.
| Alternative | Description | Approval Speed | Best For | Government Shutdown Impact |
|---|---|---|---|---|
| Traditional Business Loans | Term loans, real estate loans and lines of credit from banks, credit unions and other institutions. | Weeks | Established businesses with strong financials | Mostly unaffected, though some regulatory or processing delays may occur |
| Online Business Loans | Fast, digital loans from online lenders, often with flexible requirements. | 1–3 days | Businesses needing quick access to cash | Unaffected |
| Online Microloans | Small loans (typically under $50,000) for startups, women- or minority-owned businesses, offered by nonprofits or online lenders. | 1–4 weeks | Startups and small businesses with smaller funding needs | May be affected if funded through government-backed programs |
| Equipment Financing | Loans or leases for machinery, vehicles or technology; the equipment often serves as collateral. | 1–7 days | Businesses needing to acquire or upgrade equipment | Unaffected |
| Invoice Factoring | Access cash from unpaid invoices; the lender advances a portion of the receivable. | 1–3 days | Businesses with predictable B2B revenue | Unaffected |
| Merchant Cash Advances (MCAs) | Lump sum up front, repaid via a percentage of future credit card sales. | under 24 hours | Businesses with strong daily card sales | Unaffected |
| CDFI Loans | Loans from banks, credit unions or loan funds certified by the US Treasury, focused on underserved communities. | 1–6 weeks | Businesses in low-income or underserved areas | May be affected due to reduced staffing or funding during a shutdown |
| USDA Loans | Loans for agricultural or rural businesses to support operations, expansion or equipment. | 4–8 weeks | Rural and agricultural businesses | Affected; USDA suspends new loan commitments during a shutdown |
These options make sense if:
Consider your business needs:
Before committing, make sure you check:
SBA loans are a solid choice if you qualify, but alternatives exist for businesses that need speed, flexibility or smaller amounts. From traditional loans to microloans, CDFI funding, USDA loans and other options, the key is matching your business needs with the right type of financing. This approach ensures you get the support you need without taking on unnecessary risk.
A guide to down payment requirements for certain SBA business loans.
Estimate monthly payments for that government-backed loan you’ve been eyeing.
Learn what documents and forms you might need to submit and find out what happens after you apply.