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When you have more working capital, it is easier to start, maintain, and grow your business. Sometimes that means you’ll need a business loan, or other debt services, to get the money you need to succeed.

When you apply for a business loan, lenders will balance your cash flow against your liabilities prior to lending any money. By using the calculator on this page, you can estimate if you meet the requirements to get the loan you need ahead of time.

To learn about the different types of business loans, and what it takes to qualify, check out our FAQ below.


What is this calculator for?

This calculator was designed to help business owners prepare for the loan application process.

This interactive tool can estimate if you qualify for a certain loan amount by looking at your net income and liabilities. It also calculates the loan's starting monthly payment, giving you a clear idea of what you could be signing up for.

Additionally, playing around with the calculator inputs can give you an idea of what you need to change if you don't qualify right away.

Where can I get a business loan?

The most affordable loans come from big banks, but they can be tough to qualify for.

Statistics sourced from Biz2Credit show that only 21% of small businesses got loan approvals from a major bank. Small business owners often have better luck securing loans through online or alternative lenders, with approval rates around 61% in both cases.

Many online creditors offer a streamlined application and approval process, with quick time to funding.

There are many virtual platforms (such as Fundera, Lendio, and Biz2Credit) that link small business owners to affordable financing solutions. You’ll fill out one application, and connect with multiple lenders that fall within your needs.

How do you qualify for a business loan?

In most cases, you’ll need to have good credit with a FICO score above 680.

You’ll also need to show your history in similar industries or your current business financials. Most loan products require at least 1 to 2 years of established business history, with few exceptions.

For the majority of loan products, creditors will look at your debt service coverage ratio. This simple measurement can let the lender know if you can manage your loan payments, based on your cash flow and liabilities.

A great way to find out if you’re eligible is to test your situation using our commercial loan calculator. It only requires a few simple details to determine if you’ll qualify for the loan amount you need. Try it today!

Are there different types of business loans?

Since businesses are as unique as the individuals that operate them, commercial loans can come in many different forms too.

Here’s a list of six common loan products for small businesses.

1. Business Line of Credit

A business line-of-credit loan is a flexible, low-interest type of loan that is offered by most creditors. Loan amounts can go to $500,000 or more, depending on your business financials and projected cash flow.

Generally, these loans are written for a period of a year, with easy renewal options. Borrowers only pay interest on the money that they use from the line of credit and can go up to the loan limit as needed (similar to a credit card).

The terms of repayment will differ, but most lenders require the entire balance to be paid off for 7 to 30 days of each contract year.

2. Term Loan

A term loan is an amortizing loan that is similar to a mortgage or car loan.

These loans will usually go up to $500,000 to finance specific purchases but are suitable for wide range of uses. When it comes to business financing, the term loan is paid over equal monthly payments spanning from 1 to 5 years (or more).

3. Short Term Loan

Similar to above, a short-term loan is a business loan that you pay back what you borrowed (plus interest) using fixed weekly (or daily) payments.

Typically, these loans go up to $250,000 and have to be paid back between 3 months and 18 months at a high APR. Short-term loans have limited paperwork and will accept applicants with bad credit.

4. SBA Loan

This is a type of business loan that is endorsed by The US Small Business Association. They’ll back up to 85% of loans issued by banks to small businesses under three main programs.

Loan amounts start at $5,000 and can go up to $5 million. Since the loans are mostly guaranteed, banks feel more comfortable lending their money.

These loans generally come with good interest rates and minimal down payment requirements. However, applying for this type of loan requires a lengthy underwriting process.

5. Invoice Factoring

When a business owner has outstanding invoices, they can get the past-due amounts financed. Borrowers can receive up to 100% of their unpaid invoices, with 85% paid upfront.

This service gives small business owners a great way to put money back into their business. The terms of repayment are based on the length of time the customer takes to pay, so invoice factoring can cost more than traditional financing over time.

6. Equipment Financing

If you need new equipment for your business you can get financing by pledging the equipment as collateral.

Loan amounts can go up to 100% of the equipment value and are to be paid back over the expected life of the equipment. Interest rates can vary.

Which business loan is best for me?

Each loan product is meant to fulfill a different purpose. Below we outline the purpose of each loan product so you can get a better understanding of which loan might be most suitable for your situation.

Business line of credit

  • Maintaining cash flow
  • Purchases of inventory
  • Payment of operating costs
  • Payroll
  • Filling in gaps between business cycles

Term loan

  • Business acquisition
  • Equipment purchases or other capital assets that will take several years to pay back
  • Renovations or expansions
  • Long-term investments

Short-term loan

  • Financing immediate needs (Ie. New business opportunities)
  • Dealing with an urgent unexpected issue

SBA loan

  • Business start-up
  • Equipment purchases or other capital assets
  • Buying real estate
  • Adding to working capital
  • Consolidating business debts

Invoice Factoring

  • Finance outstanding invoices

Equipment financing

  • Purchases like computers
  • Machinery
  • Furniture
  • Vehicles
  • Or any other specialized equipment

Hopefully, after reading this guide and using our calculator, you'll feel more confident about the different types of business loans and your elgibility. And when in doubt, speak to a trusted finance professional.

For more great buisness tools, be sure to see our full list of business calculators.

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