How to use this guide. Start with the business need and repayment capacity, then compare the actual written terms. Providers may offer more than one product, and labels do not make offers equivalent. No live interest rates, fees, approval data, or provider rankings are quoted here. Program descriptions were checked against official sources on November 6, 2026; the Federal Reserve source is dated March 2025 and summarizes survey data from 2023.
01 · The landscape
Provider type and financing product are different questions
A bank, credit union, community development financial institution (CDFI), online lender, or other finance company describes a source or provider channel. A term loan, line of credit, equipment financing, factoring arrangement, or revenue-based advance describes a financing structure. One organization may offer several structures. The Federal Reserve’s small-business credit overview describes these provider channels and products; its survey-based examples are useful for orientation, not a current directory or a measure of what any one applicant will be offered. Federal Reserve: Consumer & Community Context, March 2025
Banks and credit unions
These depository institutions may offer term loans and revolving business credit. Ask which legal entity would make and service the loan, what underwriting information it needs, and whether the proposed structure fits your use of funds and cash cycle. Federal Reserve survey reporting includes banks and credit unions among the channels small firms use to seek credit. Federal Reserve: Consumer & Community Context, March 2025
Online lenders and finance companies
These providers can offer different business-credit products through online or direct channels. Federal Reserve survey reporting includes online lenders and other nonbank finance companies alongside banks and credit unions. The report cautions that offers may express costs differently, so compare each offer’s written payment schedule and total cost rather than assuming that a fast application or familiar brand means the terms are comparable. Federal Reserve: Consumer & Community Context, March 2025
SBA participating lenders, CDCs, and microlenders
SBA programs are delivered through participating lenders or intermediaries. The 7(a) program covers a range of eligible purposes, including working capital and changes of ownership; a 504 loan is designed for major fixed assets and cannot be used for working capital; microloans are made through nonprofit intermediaries for eligible small-business uses. Check the exact program and current eligibility with the lender: SBA does not make 7(a) loans directly to borrowers. SBA 7(a) loans; SBA 504 loans; SBA Microloans
Asset, invoice, and sales-based financing
Equipment or real-estate financing is tied to a particular asset or project. Invoice factoring exchanges an advance against unpaid invoices for a fee. A merchant cash advance or other sales-based arrangement may collect repayment as a share of sales or revenue instead of a fixed installment. The contracts vary; ask how the payment is calculated, what happens when sales fall, whether invoices are recourse, and which collateral or account controls apply. Federal Reserve: Consumer & Community Context, March 2025; SBA 504 loans
These categories overlap: an SBA-participating bank is still a bank, while an online company may offer more than one product. A marketplace or broker may introduce you to a funder without being the lender. Ask each contact to identify its role and the legal entity responsible for the offer.
02 · Match the need
Choose a structure around the use of funds and cash flow
A revolving line can support changing liquidity needs; a term loan may suit a defined purchase or project with repayment over time. SBA 7(a) financing may cover several eligible purposes, while SBA 504 focuses on major fixed assets. An invoice-based product depends on receivables, and a sales-based advance links remittances to revenue. These are product descriptions, not recommendations: the proposed contract controls. Federal Reserve: Consumer & Community Context, March 2025; SBA 7(a) loans; SBA 504 loans
- For short-term liquidity: ask whether a revolving line, term loan, or another structure is available, how much can actually be drawn, when availability renews, and whether unused-line fees apply.
- For equipment or property: confirm what asset is financed, the down payment and closing costs, collateral, useful-life assumptions, and what happens if the purchase or project changes.
- For unpaid invoices: ask whether the arrangement is a loan or sale of receivables, what reserve or fee is retained, who collects from the customer, and when your business bears loss if an invoice is disputed or unpaid.
- For ownership changes: ask whether the program and lender allow the proposed acquisition structure, which buyer and seller documents are required, and which funds must come from the buyer. SBA describes changes of ownership as an eligible 7(a) use subject to program rules. SBA 7(a) loans
Before sharing sensitive financial information, identify the company receiving it, why it is needed, whether the contact is the lender or an intermediary, and how the information will be used. SBA Lender Match says it is a way to find potential participating lenders, not a loan application, and it does not guarantee a match or an offer. SBA Lender Match
03 · Compare the offer
Put every offer on the same written comparison sheet
Ask for the full agreement or term sheet, not just a headline rate, “factor,” or estimated payment. In its March 2025 discussion, the Federal Reserve notes that consumer Truth in Lending Act disclosure standards do not apply to small-business credit. Ask each provider to define its quoted cost and provide a payment schedule and total dollars due so you can compare like with like. That source describes the federal disclosure context at publication; this guide does not summarize state law. Federal Reserve: Consumer & Community Context, March 2025
Cost and amount received
- Net cash deposited after origination, broker, closing, and other fees.
- Total dollars repaid under the stated schedule.
- How the quote expresses cost: fixed or variable rate, factor, or other fee.
- Whether a rate is annualized, what it includes, and what it leaves out.
- Prepayment, renewal, draw, maintenance, late, and returned-payment fees.
Payment mechanics
- Payment amount and frequency, including daily or weekly withdrawals.
- Fixed or variable rate, reference index, margin, reset rules, and cap.
- Amortization, maturity, balloon payment, and any demand feature.
- For revenue-based products, the remittance formula and reconciliation process.
- Whether payment dates match the business’s actual cash cycle.
Security and obligations
- Collateral, lien scope and priority, and any filing or release costs.
- Personal guaranties and which owners or affiliates must sign.
- Financial covenants, reporting duties, and restrictions on other debt.
- Default triggers, cure periods, acceleration, and collection rights.
- Cross-default clauses and any blanket lien or account-control terms.
Provider and process
- Legal name of the lender, broker, marketplace, and servicer.
- How each intermediary is paid and whether compensation changes by offer.
- Documents and conditions required before funds can be disbursed.
- Who makes the credit decision and who handles questions after closing.
- Applicable regulator or licensing status, verified for the entity and activity.
Then compare the payment schedule against a conservative cash-flow forecast. Include existing debt payments, seasonality, customer concentration, planned investment, and a slower-sales scenario. This is a way to test affordability, not a prediction that revenue or financing will follow any particular path.
04 · Due diligence
Questions to ask before signing
- What is the exact legal name and role of each company in this transaction?
- Who is the actual lender, who services the obligation, and who receives fees?
- What will I receive after all deductions, and what is the total amount I may repay?
- Can you show every payment date and amount for the full term?
- What can change the payment, term, rate, or amount available?
- Which collateral, guaranties, covenants, and default provisions apply?
- Can I prepay, refinance, or renew? What costs or restrictions apply?
- What conditions remain before approval becomes a binding commitment or funds disburse?
- How is any broker, marketplace, or referral partner compensated?
- Which regulator can confirm this entity’s status for this activity in my state?
Take the agreement to a qualified attorney or accountant when the obligations are unclear or material to your business. Verify applicable licensing and legal requirements with the relevant regulator. Do not treat a provider’s verbal explanation, an SBA match, or a preliminary quote as a final credit decision or commitment.
References
Primary sources and scope
Program descriptions were reviewed November 6, 2026. No current rates, fees, provider performance, or approval outcomes are asserted. Recheck eligibility and terms with the source and lender before acting.
Federal Reserve: Consumer & Community Context, March 2025
Its product descriptions draw on the 2023 Small Business Credit Survey of small businesses and describe common structures, not current market pricing or terms for all commercial borrowers.
Official program page for eligible uses, lender roles, eligibility, and repayment structure.
Official program page describing fixed-asset purposes, CDC participation, and ineligible uses.
Official program page describing intermediary lenders, eligible uses, and limits on proceeds.
SBA explains the matching process and explicitly says a match or loan offer is not guaranteed.
The Federal Reserve article was published in March 2025 and its cited survey findings refer to 2023. SBA program pages were checked November 6, 2026; limits, eligibility, and operating rules can change, so confirm the current version directly.