Loan Comparison
Compare business loan types side by side
As a nationwide commercial loan broker, we place all of these products — so we have no reason to steer you toward one. Here is how they actually differ.
Which financing fits my situation?
“I need money this week”
Working capital loan, invoice factoring, or a merchant cash advance. Factoring is cheapest if you invoice business customers.
“My revenue is uneven month to month”
A business line of credit. It costs nothing when unused and covers payroll gaps on demand.
“I'm buying a truck, machine, or equipment”
Equipment financing. The asset secures the loan, so rates are lower and approvals faster than unsecured debt.
“I'm buying a business or a franchise”
SBA 7(a) acquisition financing, often stacked with a seller note and a working capital tranche.
“I'm buying or refinancing a building”
Conventional CRE for investment property, SBA 504 or 7(a) if your business occupies at least 51%.
“My business is brand new”
Startup programs based on your personal profile, or SBA with a larger equity injection and projections.
SBA loan vs. conventional bank loan
Both are the lowest-cost ways to finance a business. The difference is who absorbs the risk and how much documentation that requires.
| Factor | SBA 7(a) | Conventional bank loan |
|---|---|---|
| Loan amount | Up to $5,000,000 | No program cap; bank-dependent |
| Down payment | As low as 10% | Typically 20% – 30% |
| Term length | 10 years, 25 with real estate | 5 – 10 years, often with a balloon |
| Time to close | 30 – 90 days | 21 – 45 days |
| Credit expectation | 650+ FICO, SBSS 155+ | 700+ FICO with strong financials |
| Collateral | All available business assets | Specific, fully covering collateral |
| Guaranty fee | 2% – 3.75% of guaranteed portion | None |
| Best when | You need leverage, term, or lower equity | You already qualify and want speed |
Our take
Choose SBA when a longer term or a smaller down payment makes the deal possible. Choose conventional when your financials are strong enough to qualify outright and you want fewer moving parts.
Business line of credit vs. term loan
The right answer comes down to whether the need is recurring or one-time.
| Factor | Line of credit | Term loan |
|---|---|---|
| Structure | Revolving — draw, repay, redraw | One-time lump sum |
| Interest charged on | Outstanding balance only | Full principal from day one |
| Cost when unused | Usually nothing | Not applicable |
| Typical amount | $10,000 – $5,000,000 | $25,000 – $5,000,000 |
| Term | 12 – 24 months, renewable | 3 months – 5 years |
| Payments | Vary with balance drawn | Fixed and predictable |
| Best when | Timing gaps and unpredictable needs | A defined purchase or project |
Our take
Keep a line of credit open as a standing safety net for payroll and seasonality. Use a term loan when you know the exact amount and want a fixed payoff date.
Invoice factoring vs. merchant cash advance
Both fund fast without strong credit, but one advances revenue you have already earned and the other advances revenue you have not.
| Factor | Invoice factoring | Merchant cash advance |
|---|---|---|
| What is advanced | Invoices already issued | Future sales not yet made |
| Pricing | 1% – 4% per 30 days | Factor rate of about 1.10 – 1.49 |
| Repayment | When your customer pays | Daily or weekly remittances |
| Underwriting focus | Your customers' credit | Your deposit and card volume |
| Adds debt to books | No — it's a receivables sale | No — it's a receivables purchase |
| Speed | 24 hours after setup | 24 – 48 hours |
| Requires B2B invoicing | Yes | No |
| Relative cost | Lower | Highest of the common options |
Our take
If you invoice business customers, factoring is almost always the cheaper choice. An MCA makes sense mainly for consumer-facing businesses with no receivables to sell and an immediate need.
Bridge loan vs. permanent commercial mortgage
Speed and flexibility on one side, cost and term on the other.
| Factor | Bridge loan | Permanent CRE loan |
|---|---|---|
| Term | 6 – 24 months | 5 – 30 years |
| Payments | Usually interest-only | Amortizing |
| Time to close | 7 – 21 days | 30 – 60 days |
| Property condition | Unstabilized, value-add, vacant | Stabilized with in-place income |
| Leverage | 65% – 80% of cost, plus rehab | 65% – 80% of value |
| Underwriting | Asset and exit strategy first | Cash flow, DSCR, and credit |
| Relative rate | Higher | Lowest available commercial debt |
Our take
Use bridge debt to win the deal or complete the business plan, then refinance into permanent financing once the property produces stable income.
Invoice factoring vs. accounts receivable financing
The mechanics look similar; the customer experience does not.
| Factor | Invoice factoring | AR financing |
|---|---|---|
| Ownership of invoices | Sold to the factor | Retained by you |
| Who collects | The factor | You |
| Customer awareness | Usually notified | Confidential |
| Advance rate | 80% – 95% | 80% – 90% of eligible AR |
| Setup time | 3 – 7 days | 1 – 3 weeks |
| Typical minimum size | Small volumes accepted | $100,000+ facilities |
Our take
Choose factoring for speed, small volumes, or when collections are a burden. Choose AR financing when protecting customer relationships and keeping the facility invisible matters most.
Comparison questions we hear often
What is the difference between an SBA loan and a conventional bank loan?
An SBA loan is partially guaranteed by the government, which allows longer terms and down payments as low as 10%, but takes 30 to 90 days and requires more documentation. A conventional bank loan closes faster with no guaranty fee but requires stronger financials and typically 20% to 30% down.
Is a line of credit better than a term loan?
Neither is universally better. A line of credit is better for recurring or unpredictable needs because it costs nothing when unused and can be redrawn. A term loan is better for a defined one-time purchase because payments are fixed and the payoff date is certain.
Which is cheaper, invoice factoring or a merchant cash advance?
Invoice factoring is almost always cheaper. Factoring typically costs 1% to 4% per 30 days against invoices you have already earned, while a merchant cash advance uses a factor rate of roughly 1.10 to 1.49 on revenue you have not yet generated.
When should I use a bridge loan instead of a permanent commercial mortgage?
Use a bridge loan when the property is not yet stabilized or when you need to close in one to three weeks. Refinance into a permanent mortgage once the asset produces stable income, since permanent debt is materially cheaper.
What is the cheapest business loan option?
SBA and conventional bank loans carry the lowest rates and longest terms. The trade-off is documentation and a longer timeline — in commercial lending, speed almost always costs money.
All 13 financing solutions
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