Frequently Asked Questions

What credit score do I need for a business loan?

Most traditional bank loans require a personal credit score of 680 or higher. SBA loans typically need 650+, while online lenders may approve scores as low as 500-550 with higher interest rates. Your business credit score, revenue history, and time in business also factor heavily into approval decisions.

What is the difference between an SBA loan and a traditional bank loan?

SBA loans are partially guaranteed by the Small Business Administration, which reduces risk for lenders and often results in lower interest rates and longer repayment terms. Traditional bank loans have no government backing but may fund faster. SBA loans typically take 30-90 days to close versus 1-3 weeks for conventional bank loans.

How long does it take to get approved for a business loan?

Timeline varies by lender type: online lenders can approve in 24-48 hours, traditional banks take 2-4 weeks, and SBA loans typically require 30-90 days. Having your documents prepared — tax returns, bank statements, financial projections, and business plan — significantly speeds up the process.

Is a merchant cash advance worth it?

Merchant cash advances provide fast funding but at a steep cost — factor rates of 1.2 to 1.5 translate to APRs of 40-350%. They work best as a last resort for businesses with strong daily card sales that need emergency capital. For most situations, a business line of credit or short-term loan offers far better economics.

Do I need collateral for a business loan?

It depends on the loan type. SBA loans and traditional bank loans often require collateral such as equipment, real estate, or inventory. Unsecured business loans and lines of credit exist but typically charge higher rates and require stronger credit profiles. Many lenders also require a personal guarantee regardless of collateral.

Can I get a business loan for a startup with no revenue?

Yes, but options are limited. SBA microloans (up to $50K), business credit cards, and personal loans for business use are the most accessible. Some online lenders offer revenue-based financing after just 3-6 months of operations. Strong personal credit and a detailed business plan significantly improve your chances.

What is the difference between a business line of credit and a term loan?

A term loan gives you a lump sum repaid in fixed installments over a set period. A line of credit provides flexible access to funds up to a limit — you only pay interest on what you draw. Lines of credit work best for managing cash flow gaps, while term loans suit specific one-time investments like equipment purchases.

What are the best business loan options with bad credit?

Online lenders like Fundbox, BlueVine, and OnDeck work with credit scores in the 500-600 range. Microloans from nonprofit organizations like Kiva or Accion are another option. Expect higher APRs (15-40%) and shorter terms. Improving your score by even 30-50 points before applying can unlock significantly better rates.

How does equipment financing work?

The equipment itself serves as collateral, making approval easier than unsecured loans. You receive funds to purchase specific equipment and repay over 2-7 years. Interest rates typically range from 4-20% depending on credit. At the end of the term, you own the equipment outright. Some programs offer $0-down options for well-qualified borrowers.

How much can I borrow with a business loan?

Borrowing limits depend on your revenue, time in business, and credit profile. Online lenders typically offer $5K-$500K, traditional banks $25K-$5M, and SBA loans up to $5M (7a program) or $5.5M (504 program). A common rule of thumb: lenders approve 10-30% of your annual revenue for unsecured products.

How do business loans work?

A business loan provides a lump sum of capital that you repay over a set term with interest. The lender evaluates your business financials, credit, and collateral to determine approval, loan amount, and interest rate. Repayments are typically fixed monthly installments. The loan funds go directly to your business bank account and can be used for any approved business purpose.

What is the difference between secured and unsecured business loans?

A secured business loan requires collateral — business equipment, real estate, inventory, or accounts receivable that the lender can seize if you default. Unsecured loans require no collateral but carry higher interest rates because the lender assumes more risk. Most SBA loans are secured; many online lender products are unsecured. Secured loans typically offer better rates and higher limits.

What is a personal guarantee on a business loan?

A personal guarantee makes you personally liable for the debt if your business cannot repay it. Lenders can pursue your personal assets — bank accounts, car, home — to recover the balance. Most small business loans under $1 million require a personal guarantee from all owners with 20%+ stake. Signing a personal guarantee means business debt can directly impact your personal financial life.

How does business credit differ from personal credit?

Business credit is built in your company's name using your EIN, while personal credit is tied to your SSN. Business credit bureaus (Dun & Bradstreet, Experian Business, Equifax Business) track payment history with vendors and lenders. Strong business credit can qualify you for loans without a personal guarantee, higher limits, and better terms. Business credit takes 2-3 years to establish from scratch.

How does a business term loan work?

A term loan provides a fixed lump sum that you repay in equal installments over a set period (typically 1-10 years) at a fixed or variable interest rate. Short-term loans (under 2 years) fund working capital and immediate needs; long-term loans (5-10 years) fund major assets or expansions. Each payment covers interest plus principal, with early payments being mostly interest (amortization).

Should I choose a 5-year or 10-year business loan term?

A shorter term means higher monthly payments but less total interest paid. A longer term reduces monthly payments but costs significantly more in total interest. Choose the shorter term you can comfortably service. A 5-year term on $100,000 at 7% has payments of ~$1,980/month and total interest of ~$18,800; the same loan over 10 years has payments of ~$1,161/month but total interest of ~$39,300.

What is a balloon payment on a business loan?

A balloon payment is a large lump sum due at the end of a loan term, after smaller regular payments. For example, a 5-year loan with a balloon structure might have low monthly payments for 5 years, then a final payment of 50-80% of the principal. Balloon loans offer lower monthly cash flow burden but require refinancing or a large cash reserve at maturity — risky if rates rise or sales decline.

How does business loan amortization work?

Amortization spreads loan repayment across the loan term so each payment is equal but the portion going to principal vs interest shifts over time. Early payments are mostly interest; later payments are mostly principal. On a $200,000 10-year loan at 7%, your first payment is roughly $1,394 interest + $929 principal. By year 8, the same payment is roughly $410 interest + $1,913 principal.

What is an SBA 7(a) loan and how does it work?

The SBA 7(a) is the Small Business Administration's most common loan program. The SBA doesn't lend directly — it guarantees 75-85% of loans made by approved lenders, reducing lender risk and enabling better terms for borrowers. Loan amounts up to $5 million, terms up to 10 years for working capital (25 years for real estate), and rates typically WSJ Prime + 2.75-4.75%.

What is an SBA 504 loan?

The SBA 504 loan funds fixed assets: commercial real estate, heavy equipment, and major renovations. It works through a three-way split: the lender provides 50%, a Certified Development Company (CDC) provides 40% (SBA-guaranteed), and you put down 10%. Maximum 504 loan size is $5.5 million. The structure allows 10-25 year terms at below-market rates for business owners who want to build equity in property.

What is the SBA Microloan program?

The SBA Microloan program provides loans up to $50,000 (average $13,000) through nonprofit intermediary lenders. It's designed for startups, newer businesses, and businesses in underserved communities that don't qualify for traditional bank loans. Terms up to 6 years, rates typically 8-13%. Many intermediaries also provide business training and technical assistance alongside the capital.

How long does an SBA loan take to get approved?

SBA loan timelines vary significantly by program and lender. SBA 7(a) loans through traditional banks take 60-90 days from application to funding. SBA Preferred Lender Program (PLP) lenders can approve in 3-10 days. SBA Express loans (under $500,000) target a 36-hour turnaround from the SBA side. The full funding process still typically takes 30-45 days even with Express approval.

What are the requirements for an SBA loan?

SBA loan requirements include: operating as a for-profit US business, meeting SBA size standards, being unable to obtain financing on reasonable terms elsewhere, having a legitimate business purpose, and the owner having good personal credit (typically 650+). You'll need 2 years of business and personal tax returns, financial statements, a business plan, and a personal financial statement.

What are SBA lender types and which should I use?

SBA lenders range from large banks (Wells Fargo, JPMorgan, Live Oak Bank) to community banks and credit unions to online lenders (Fundera, SmartBiz). Preferred Lenders (PLP) have authority to approve SBA loans internally — faster and often more experienced. Live Oak Bank is the top SBA lender by volume and specializes in specific industries. Choose a lender experienced in your loan type and industry.

What is revenue-based financing?

Revenue-based financing (RBF) provides capital in exchange for a fixed percentage of future monthly revenue until you've repaid a predetermined total (e.g., $1.10-$1.50 for every $1.00 borrowed). Unlike loans, there's no fixed payment schedule — you pay more when revenue is strong and less when it's slow. This makes RBF attractive for seasonal or variable-revenue businesses.

How does a factor rate work on a business advance?

A factor rate is a simple multiplier (not an APR) used to calculate total repayment. A $100,000 advance with a 1.3 factor rate means you repay $130,000 total. Factor rates typically range from 1.1 to 1.5. To compare to an APR, you need to factor in repayment speed: a 1.3 factor rate repaid over 6 months equates to roughly 60-80% APR — far more expensive than it initially appears.

What is the difference between a merchant cash advance and revenue-based financing?

Both provide upfront capital repaid as a percentage of revenue, but MCAs are technically an advance against future credit card sales (purchased at a discount), while RBF is structured as a loan repaid from total revenue. MCAs are often more expensive (factor rates 1.2-1.5) and less regulated. True RBF products tend to be cleaner structurally, with better terms and more transparent total cost.

What is the true cost of a merchant cash advance?

MCA costs are often stated as factor rates (1.2-1.5) rather than APR, obscuring the true cost. A $50,000 MCA with a 1.4 factor rate means you repay $70,000. Repaid over 6 months through a 15% daily sales remittance, the effective APR can exceed 100-150%. MCAs should be a last resort — the cost of capital is extremely high compared to any other financing option.

How does equipment financing work?

Equipment financing uses the purchased equipment as collateral, enabling up to 100% financing with no additional security required. The lender holds a lien on the equipment until the loan is repaid. Terms typically match the equipment's useful life (3-7 years for most equipment, up to 20 years for real property improvements). Because the equipment secures the loan, approval requirements are more lenient than unsecured loans.

Equipment leasing vs buying: which is better?

Leasing preserves cash and lets you upgrade to newer equipment at lease end — ideal for technology that depreciates fast. Buying (with financing) builds equity and is typically cheaper long-term for equipment with long useful lives. The break-even depends on the lease rate, equipment lifespan, and your tax situation. Section 179 deduction can make buying more attractive by allowing immediate expensing of the full purchase.

How does Section 179 interact with equipment financing?

Section 179 allows businesses to immediately deduct the full cost of qualifying equipment in the year purchased, rather than depreciating it over several years. Importantly, you can take the Section 179 deduction even if you financed the purchase — you don't need to pay cash. For 2025, the deduction limit is $1,220,000. This can dramatically reduce your net tax cost of acquiring equipment.

What is invoice factoring?

Invoice factoring (also called accounts receivable factoring) involves selling your unpaid invoices to a factoring company at a discount (typically 70-90% of face value upfront). The factor then collects payment from your customers and pays you the remaining balance minus their fee (1-5% of invoice value). Factoring solves cash flow gaps when you have creditworthy customers but long payment terms.

What is the difference between factoring and invoice discounting?

With factoring, you sell invoices outright and the factor takes over collections — your customers know a third party is involved. With invoice discounting, you use invoices as collateral for a credit line but retain control of collections and customer relationships. Invoice discounting is more confidential and suits businesses with strong collections processes. Factoring is simpler and removes the burden of collections.

What is spot factoring?

Spot factoring (or single-invoice factoring) lets you factor individual invoices on demand without a long-term contract or minimum volume requirement. Traditional factoring usually requires factoring all invoices or a monthly minimum. Spot factoring is ideal for businesses that occasionally need to accelerate cash flow on a specific large invoice rather than maintaining a continuous factoring relationship.

Which industries benefit most from invoice financing?

Industries with long payment terms between invoice issuance and payment are ideal candidates: staffing agencies (invoicing clients but paying employees weekly), construction (30-90 day payment terms on contracts), manufacturing, wholesale distribution, trucking and freight, and B2B service businesses. Consumer-facing businesses typically don't use invoice financing since customers pay at point of sale.

What is working capital?

Working capital is current assets minus current liabilities — it measures the short-term financial health of your business. Positive working capital means you have more liquid assets than near-term obligations. Insufficient working capital is the leading cause of small business failure, even for profitable companies. Businesses in growth mode or seasonal businesses frequently need working capital financing.

Why are working capital loans typically short-term?

Working capital loans fund short-term operational needs — payroll, inventory, accounts payable — that generate revenue and cash flow within weeks or months. Matching short-term assets with short-term financing is sound financial practice. Using long-term debt to fund operating expenses creates a mismatch: you're still paying off a loan long after the inventory it funded has been sold.

How do seasonal businesses handle working capital?

Seasonal businesses (retailers, landscapers, tourism operators) typically secure a working capital line of credit before peak season, draw on it to build inventory and staff up, then repay as season revenue comes in. Some use revolving credit lines that can be drawn and repaid repeatedly. The key is having the facility in place before you need it — lenders are reluctant to approve credit under cash flow pressure.

What credit score do I need for a business loan?

Requirements vary by lender and loan type. Traditional bank loans and SBA loans typically require personal credit scores of 680-720+. Online lenders (Kabbage, OnDeck, Bluevine) work with scores of 600-640+. Equipment financing often approves 620+. Merchant cash advances may approve 500+. Below 600, your options narrow to high-cost alternatives. Building credit before applying significantly improves your terms.

How do lenders evaluate business creditworthiness?

Lenders assess five factors: credit score (personal and business), cash flow (can you service the debt?), collateral (what secures the loan?), capital (how much are you investing?), and conditions (why do you need the money and what is the economic environment?). Cash flow coverage is increasingly the primary factor — lenders want to see monthly cash flow 1.25x or greater than debt payments.

What is DSCR and why does it matter for business loans?

DSCR (Debt Service Coverage Ratio) measures how well your cash flow covers debt payments. DSCR = Net Operating Income / Annual Debt Service. A DSCR of 1.25 means you generate $1.25 of cash flow for every $1.00 of debt payments — the minimum most lenders require. Below 1.0 means your business doesn't generate enough cash to cover debt service, which is a firm decline for most lenders.

What are business credit scores?

Business credit scores include the D&B PAYDEX (0-100, measures payment promptness), Experian Business Intelliscore (0-100), and Equifax Business Credit Score. Unlike personal credit, business scores are publicly accessible by vendors and lenders. A PAYDEX of 80+ is considered good — it means you pay on or before due dates. Building business credit requires opening trade lines in your business name and paying promptly.

What is a PAYDEX score?

PAYDEX is Dun & Bradstreet's business credit score (0-100) that specifically measures payment promptness to vendors and suppliers. A score of 80 means you pay exactly on time; 100 means you pay 30+ days early. Most lenders want to see a PAYDEX of 75 or higher. To get a PAYDEX score, your business needs a DUNS number and at least three vendors reporting to D&B.

What documents do lenders need for a business loan application?

Standard documentation includes: 2-3 years of business and personal tax returns, 3-6 months of business bank statements, current profit and loss statement, balance sheet, accounts receivable/payable aging reports, business license, articles of incorporation, and a copy of any existing loan agreements. SBA loans add a business plan and personal financial statement. Have these organized before applying.

How do I prepare my financials for a business loan?

Ensure your financial statements are current (within 60-90 days), prepared by an accountant if possible (reviewed or audited statements carry more weight than owner-prepared), and accurately reflect cash flow. Clean up any unexplained deposits or withdrawals in bank statements. Reconcile any discrepancies between tax returns and financial statements. Lenders notice inconsistencies and it raises red flags.

What are the most common reasons business loan applications are rejected?

Top rejection reasons: insufficient cash flow to service the debt, poor personal or business credit, insufficient time in business (under 2 years), too much existing debt, inadequate collateral, incomplete documentation, and misuse of funds (applying for a long-term asset loan using short-term financing). Understanding the rejection reason is the first step to reapplying successfully.

How can I improve my chances of business loan approval?

Six months before applying: improve personal credit (pay down balances, dispute errors), build business credit (open vendor trade lines), prepare clean financial statements, reduce existing debt where possible, open a dedicated business bank account with consistent cash flow history, and develop a clear use-of-funds plan. Apply with lenders matched to your profile rather than starting with the most restrictive lenders.

What financing options exist for restaurants?

Restaurants commonly use SBA 7(a) loans for new locations and major renovations, equipment financing for kitchen equipment, MCAs and revenue-based financing for working capital (since they have predictable credit card revenue), and equipment leasing for items that need regular replacement. Restaurant-specific lenders like Credibly and Bluevine understand the industry's cash flow patterns and lower margins.

What are the best financing options for construction companies?

Construction companies use equipment financing for machinery, lines of credit for project working capital between milestone payments, contract financing against signed contracts, and invoice factoring for slow-paying general contractors. SBA loans work well for established contractors buying equipment or real estate. The key challenge is matching financing to construction's milestone-based cash flow cycle.

How do medical practice loans work?

Medical practice loans fund equipment (imaging, dental chairs), facility build-outs, practice acquisitions, and working capital. Healthcare-specialized lenders (Provide, Bankers Healthcare Group) understand medical billing cycles, high equipment costs, and practice valuation. SBA 7(a) and 504 loans are popular for acquisitions. Medical practices generally qualify for larger loan amounts than most industries due to predictable revenue.

What financing options work best for retail businesses?

Retail businesses commonly use lines of credit for inventory purchases, merchant cash advances or revenue-based financing for seasonal working capital (since they have predictable card sales), equipment financing for fixtures and POS systems, and SBA loans for location expansion. The inventory cycle makes revolving credit lines particularly useful — draw when buying inventory, repay as products sell.

What are the best loans for real estate investors?

Real estate investors use DSCR loans (qualified by property cash flow, not personal income), hard money loans (asset-based, fast close for fix-and-flip), commercial real estate loans, SBA 504 for owner-occupied commercial property, and bridge loans for acquisitions during property transitions. DSCR loans have become the dominant product for residential investment properties since they don't require income verification.

Can a startup get a business loan with no revenue?

Getting a traditional business loan with no revenue is very difficult but not impossible. Options include: SBA Microloans ($50K max, designed for startups), CDFI loans (Community Development Financial Institutions), equipment financing (the equipment secures the loan), personal loans used for business, and lines of credit secured by personal assets. Investors and business grants are often more realistic for pre-revenue startups.

What loans are available for businesses under 1 year old?

Businesses under 12 months old face limited traditional loan options. The most accessible: SBA Microloans ($50K limit, startup-friendly), equipment financing (equipment secures the loan), secured business credit cards (for establishing credit), CDFI and nonprofit lender programs, and business lines of credit secured by personal guarantees. Online lenders generally require 6 months in business minimum.

How do I get my first business loan?

Start by checking your personal credit score and correcting any errors. Open a business checking account and ensure all business income flows through it. Apply for a business credit card to start building business credit. After 6+ months of documented business revenue, apply with online lenders first (easiest approvals), then use that track record to qualify for bank or SBA financing within 12-24 months.

What pre-revenue financing options exist for startups?

Pre-revenue startups primarily access: personal savings and home equity, friends and family investment, angel investors, venture capital (for high-growth potential), government grants (SBIR/STTR for R&D companies), business incubator programs with attached funding, equipment leasing (no revenue required), and revenue advance programs once you have any sales history. Traditional debt financing is largely inaccessible without revenue.

What happens if I default on a business loan?

Defaulting on a business loan triggers a cascade: the lender sends default notices, may accelerate the full balance, and begins collection efforts. For secured loans, they seize and liquidate collateral. If you personally guaranteed the loan, they can pursue your personal assets. The default is reported to credit bureaus, damaging both business and personal credit. Early communication with lenders about financial hardship can prevent many of these consequences.

What is a loan workout agreement?

A workout agreement is a negotiated modification between you and your lender when you're struggling to repay — an alternative to default or bankruptcy. Common modifications include: reduced monthly payments, temporary interest-only payments, extended repayment term, partial principal forgiveness, or deferral of payments. Lenders prefer workouts over defaults because collections are expensive. Early, proactive communication significantly increases your chances of getting workout terms.

What is the difference between secured and unsecured loans in default?

For secured loans, the lender can directly seize and sell the collateral (equipment, real estate, inventory) to recover their loss — without necessarily suing you first. For unsecured loans, the lender must sue, obtain a judgment, and then attempt to collect from your business assets. If you personally guaranteed an unsecured loan, they can then come after your personal assets after obtaining a judgment.

What is a business line of credit?

A business line of credit is a revolving credit facility — like a credit card but with higher limits and lower rates. You're approved for a maximum amount (e.g., $100,000), draw what you need, repay it, and can draw again. You pay interest only on the outstanding balance. Lines are ideal for managing cash flow gaps, unexpected expenses, and seasonal inventory needs. They typically require annual renewal.

What is the difference between a business loan and a business line of credit?

A term loan provides a fixed lump sum with scheduled repayments — best for a specific, defined purpose (equipment, expansion). A line of credit is revolving and flexible — best for ongoing working capital and variable needs. Lines of credit often carry higher interest rates than term loans but provide flexibility that a fixed loan cannot. Most businesses benefit from having both: a term loan for capital projects and a line for operations.

What is a business credit card and how does it help with financing?

Business credit cards provide revolving credit with 0% intro APR offers (typically 9-15 months), rewards on business spending, expense categorization, and employee card controls. They're one of the easiest business credit products to get and help build business credit history. For short-term financing under $25,000, a 0% APR business card can be less expensive than most loan products during the intro period.

What is a USDA business loan?

The USDA Business & Industry (B&I) Loan Guarantee Program helps rural businesses access financing by guaranteeing up to 80% of loans made by approved lenders. It's similar to SBA 7(a) but restricted to rural areas (population under 50,000). Loan amounts up to $25 million, terms up to 30 years for real estate. USDA B&I loans are underused and can be excellent for rural businesses that struggle to access capital.

What is a business acquisition loan?

Business acquisition loans fund the purchase of an existing business. SBA 7(a) loans (up to $5M, 10-year terms) are the most common vehicle — they allow financing up to 90% of the purchase price if the business has strong cash flow. Lenders require a down payment of 10-30%, the target business's financial statements for 3 years, and evidence the acquisition cash flow can service the debt.

What is a bridge loan for businesses?

A business bridge loan is short-term financing (3-18 months) that "bridges" a gap — typically between needing cash now and expecting a larger financing event later (a real estate closing, SBA loan approval, or equity raise). Bridge loans carry higher rates (8-20%+) to compensate for the short term and elevated risk. They're a tactical tool, not a long-term financing solution.

What is the SBA Community Advantage program?

The SBA Community Advantage (CA) loan program provides SBA-backed loans of up to $350,000 through mission-based lenders (nonprofits, CDFIs) to businesses in underserved markets — startups, minority-owned businesses, and those in low-income areas. The underwriting is more flexible than standard SBA 7(a) loans. As of 2024, CA was merged into the broader SBA 7(a) Small Loan program.

What is the difference between a bank loan and an online lender?

Banks offer lower interest rates (6-12% for qualified borrowers), larger loan amounts, and SBA programs, but require 2+ years in business, strong credit, and thorough documentation with 2-4 week approval timelines. Online lenders (Bluevine, OnDeck, Fundbox) approve in 24-72 hours, accept weaker profiles, but charge significantly more (factor rates or 30-80% APR equivalents). Use banks for established businesses; online lenders for speed and lower qualification bars.

What is a commercial real estate loan?

Commercial real estate (CRE) loans finance the purchase or refinance of commercial property: office buildings, retail centers, warehouses, multifamily buildings (5+ units), and industrial. Terms typically run 5-25 years with a balloon at 5-10 years, amortized over 25-30 years. Lenders require 25-35% down, strong DSCR (1.25+), and assess the property's income-producing potential as primary security.

How does a business cash flow loan work?

Cash flow loans are underwritten primarily on your business's cash flow history rather than collateral. Lenders review 3-12 months of bank statements to assess average monthly revenue, volatility, and cash management. They typically advance 75-150% of your average monthly revenue. These loans are faster and more accessible than collateral-based loans but carry higher rates due to unsecured risk.

What is a 7(a) Small Loan and how is it different from standard 7(a)?

The SBA 7(a) Small Loan program handles loans under $500,000 with a streamlined application and faster processing than the standard 7(a). Documentation requirements are reduced, and lenders have more flexibility to approve based on creditworthiness rather than full financial analysis for loans under $150,000. Community Advantage lenders also participate in the small loan program targeting underserved businesses.

What are common fees on business loans?

Business loan fees include: origination fees (1-5% of loan amount charged at closing), SBA guarantee fees (0-3.5% depending on loan size, waived for loans under $1M through FY2025), prepayment penalties (common on fixed-rate loans under 5 years), documentation fees, annual line of credit fees ($150-$500), and late payment fees. Always calculate the total cost of the loan including all fees, not just the interest rate.

What is the SBA loan guarantee fee?

The SBA charges a guarantee fee to the lender (usually passed to the borrower) as a percentage of the guaranteed portion of the loan: 0% for loans under $150,000; 2% for loans $150,000-$700,000; 3% for loans $700,001-$5 million. For FY2025, the SBA waived guarantee fees on loans under $1 million for first-time borrowers. This waiver can save $7,000-$21,000 on a $700K-$1M loan.

What is a DUNS number and do I need one for business loans?

A DUNS (Data Universal Numbering System) number is a unique 9-digit identifier assigned by Dun & Bradstreet to track your business credit file. It's required to apply for SBA loans, government contracts, and to build a PAYDEX score. Getting a DUNS number is free at the D&B website and takes 30 days for standard registration or 24-48 hours for expedited. Apply before you need financing.

What is accounts receivable financing?

Accounts receivable (AR) financing uses your outstanding invoices as collateral for a credit line — you borrow against what your customers owe you. Unlike factoring, you retain ownership of the invoices and collection responsibility; the lender simply holds a lien. AR lines typically advance 70-85% of eligible receivables at rates of 1-3% per month. It's best for B2B businesses with creditworthy customers and consistent invoice volume.

What is the difference between a business loan broker and a direct lender?

A direct lender (bank, credit union, online lender) provides the funds themselves from their own capital. A business loan broker connects you with multiple lenders, helps package your application, and submits it to lenders most likely to approve — in exchange for a referral fee (typically 1-5% of the loan, paid by the lender). Brokers are useful when you don't know which lenders fit your profile, but always verify the broker's fee structure upfront.