Dave Thomas, Wendy’s founder, once said, “What do you need to start a business? Three simple things: know your product better than anyone, know your customer and have a burning desire to succeed.” He is right, but one element is missing: Money. Every small business dream needs an extra push in the form of extra cash flow and consistent working capital. A business loan can provide that nudge in the right direction. If you are getting a business loan for the first time, then there are chances than your potential funding options are minimal.

There is no denying the fact that the lender approves a business loan application with a credible financial history and a perfect credit score. Does this mean you have exhausted all of your options? Read below and find the best financing options that you can benefit from as a first-time business loan:


Small business Administration (SBA), has been administering loans since 1953. It monitors and backs up the loan by banks, credit unions, and various other lenders. SBA loans are best known for their low-interest rates and the borrowers are allowed to choose the repayment terms as they desire. This relaxed criterion comes at a price; SBA demands ‘fair’ credit score, impeccable financial standing, and at least two years old business. Still, your small business can take advantage of two small business loans:

  • SBA Microloans

With an interest rate of 8% to 11%, you can get an SBA microloan up to $50,000. Utilize the amount in multiple ways form starting a new business, to purchasing equipment, or stocking on the inventory – your pick! Usually, the lender allows you to pay back the loan in six years.

The only negative side of SBA microloans is that a borrower has to offer some collateral to get the better deal. You can either offer your personal or business-related assets as collateral.

  • SBA 7(a) Loans

A huge number of small business owners apply for the SBA 7(a) loan, as it allows the borrower to get five dollars. You can use the money to purchases equipment & real estate, business expansion, increase working capital, and for business expansion. The interest rate on the SBA 7(a) loan starts at 2.25%. Its loan repayment term depends on the loan amount approved by the lender. It can be from 7 to 25 years.

The only negative side of SBA 7(a) loans is that these loans are comparatively difficult to qualify for.

If you are planning to apply for a small business loan, you must have ‘the good’ credit score. In addition to this, you must be ready to pay the collateral. If you have a poor credit score, let us explore some business loan options that lenders can easily approve even with a poor credit score.


Applying for a business loan for the first time is hard especially if you are applying with a poor credit score but not in this age. With the advancement in business lending, you can take help from multiple business loans even with bad credit.

  • Invoice Financing

Technically speaking, invoice financing is not a business loan but it is an ideal way to increase the working capital. If you are facing a financial crisis, then invoice financing can be a way out. If you run a business where you have some pending invoices, offer those invoices to the lender and get money in exchange. Depending on the nature of the invoices, the factoring company can offer you from 75% to 90%. If you apply for factoring, your potential lending company is responsible to gather the payment from the lender.

The negative side of the invoice financing is that the lender has to pay the factoring fee. Clear all the confusion with the lender before making the final decision.

  • Merchant Cash Advance

Just like invoice financing, the merchant cash advance is not a business loan as well. If you run a retail store, then a cash advance may be a nice financial fit for your business. Through merchant cash advance you can have access to loan amount up to $250,000. As you pay the lender from future revenue so it saves you from the constant worry of making timely daily, monthly, or weekly payments.

The negative side of merchant cash advance is that it an expensive funding option as a factor fee is involved. If you have exhausted all the other financing options, only and only then, apply for a merchant cash advance.


  • Business Credit Cards

Most of the small business managers rely on business credit cards to fund their small businesses. If you are applying for the business loan for the first time or looking for some extra money for your startup, then go with credit cards. The reason behind this is that you don’t need to have a stellar credit score, a two-year-old business, and massive annual revenue for a business credit card. As the focus is on the personal credit score, so make sure you have a decent credit score.

The negative side of the business credit card is that you have to offer a personal guarantee. So that if you fail to make the repayment on time, you will be one responsible and you agree to suffer the consequences.

  • Equipment Financing

Need a new machine for your business? Apply for the equipment financing, you don’t even have to worry about borrowing money as the new equipment act as the collateral. If due to any unfortunate circumstances, you fail to make the payment on time, the equipment you put as the collateral will be seized by the lender. It is a win-win situation for both the borrower and the lender.

The negative side of the equipment financing is that most of the lenders ask for at least a year in running a business.

  • Personal Business Loan

If you have good personal credit, then you can easily qualify for a personal business loan. Many entrepreneurs who apply for a business loan for the first time, take shelter under personal business loans. It has a relatively low-interest rate and flexible eligibility criteria.

The negative side of a personal business loan is that most business owners don’t put their assets at risk in the initial stages of the business. In addition to this, even if you end making all the timely payments, your credit score performance won’t be reported by the lenders.


Every business is different; the financial need for trucking business is different from the financial need of a printing business. Take all the time you need and explore your potential loan and types of lenders.

Merchant Advisors provides ideal first-time business loans, so apply away. For more tips and guides on a business loan, follow us on Facebook and Twitter (@Onlinecheck). If you have any question, call us on our toll-free number at (833) 827-4412; our financial advisors will help you every step of the way.

Small Business Financing News │ Merchant Advisors | blog
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If you are applying for the business loan for the first time to get rid of financial hurdles, then read this brief guide and know your options.