Small business financing, honestly compared.

SBA loans vs. online term loans: speed vs. APR

The cleanest way to think about the SBA-versus-online-lender choice is as a trade between price and time. An SBA 7(a) loan from a lender like Live Oak Bank typically prices in the 11.5–14.5% APR range, runs 10–25 years, and goes up to $5 million. The catch is the timeline: 30–90 days from application to funding is normal, the document package is heavy (tax returns, financial statements, business plan, debt schedule, personal financial statement), and the underwriting bar is real. An online term loan from Funding Circle or OnDeck can fund in 1–7 business days with a much lighter document load — but APRs run higher (7.49–28% on the prime tier, much steeper at the short-term end). If the use of funds is acquisition, real estate, or long-horizon capital investment, the SBA math almost always wins. If it's a 6-month working-capital gap, the SBA process is overkill.

Personal guarantee: what you're actually signing

A personal guarantee is a separate contract, signed alongside the loan agreement, that makes the business owner personally liable if the business defaults. It's nearly universal in small-business lending under $1 million, including most SBA loans (the SBA itself requires personal guarantees from any owner with 20%+ equity). What this means in practice: the LLC or S-corp wrapper around the business does not protect personal assets — home equity, savings, even future wages can be pursued in a default. Some guarantees are "unlimited" (the owner is on the hook for the full debt); some are "limited" (capped at a percentage). A few collateralized products — equipment financing where the equipment is sufficient security, or fully secured SBA 504 loans — can be structured without a personal guarantee, but those are the exception. Always read the guarantee separately from the loan note. Estimates only; partner contracts govern.

Factor rate vs. APR: why merchant cash advances are usually expensive

A merchant cash advance is not technically a loan — it's the sale of a portion of future receivables at a discount. The pricing is quoted as a factor rate (typically 1.2 to 1.5), not an APR, and that's the heart of the problem. A $50,000 advance at a 1.4 factor means the business owes $70,000 back. Repaid through a daily ACH or a percentage of card sales over six months, that's an effective APR somewhere between 60% and 130% — multiples of what a term loan or line of credit costs. MCAs do solve a real problem (fast cash for businesses with poor credit or thin documentation), but they should be the last option, not the first. The Federal Trade Commission and several state attorneys general have brought cases against MCA providers for misleading marketing on this exact point. If a sales rep won't quote an APR-equivalent number, that's the answer.

Building business credit so you can borrow without a personal guarantee

Business credit is a separate scoring system from personal credit, run primarily by Dun & Bradstreet (PAYDEX score, 0–100), Experian Business and Equifax Business. Building it deliberately is what eventually unlocks loans without a personal guarantee — and it takes years, not months. The mechanics: register the business as a separate legal entity, get an EIN, obtain a D-U-N-S number from D&B, open trade lines with vendors who report to business credit bureaus (Uline, Grainger, Quill are common starter lines), and pay every invoice early — PAYDEX rewards early payment, not just on-time. After 12–24 months of clean trade-line history and $250k+ in business revenue, larger lines of credit and unsecured term loans without personal guarantees start becoming realistic. There's no shortcut. The businesses that escape personal guarantees are the ones that planned for it from year one.

Lines of credit vs. term loans: when each fits

The two products solve different problems and shouldn't be compared head-to-head on APR alone. A term loan is the right structure for a one-time, defined-amount expense with a clear payback horizon — buying out a partner, opening a second location, replacing a roof. The full amount funds at closing, and a fixed payment schedule makes budgeting predictable. A line of credit is the right structure for cash-flow smoothing — covering payroll between large invoices, buying seasonal inventory, bridging a slow month. Interest only accrues on the drawn balance, and most lines (Bluevine, Fundbox) let the business repay and redraw repeatedly. The mistake is using a term loan for cash-flow gaps — paying interest on the full amount even when the business doesn't need it — or using a line of credit for a long-term capital project, where revolving rates eventually cost more than a fixed-rate amortization. Pick the structure that matches the use, then shop for the best price within that structure.