If you've spent any time looking for business capital, you've heard the same three options pitched: an SBA loan, a merchant cash advance (MCA), or a traditional term loan. The problem is that the people pitching each one are usually selling that one — and the actual answer depends almost entirely on three things you control: how fast you need the money, how strong your bank picture is, and what you're using the capital for.
This guide walks through each path honestly — including when it wins and when it's the wrong move — so you can make the call without three weeks of phone calls.
Quick Takeaways
- SBA loans have the best rates but take 30–90 days and require strong credit + collateral.
- MCAs fund in 1–3 days with no collateral but cost meaningfully more.
- Term loans sit in the middle — 1–3 weeks, mid-tier rates, mid-tier requirements.
- Your time-to-money + credit profile usually picks the option for you.
The 30-Second Comparison
| Factor | SBA Loan | Term Loan | MCA |
|---|---|---|---|
| Time to fund | 30–90 days | 1–3 weeks | 1–3 days |
| Cost (APR-equivalent) | ~7–11% | ~9–25% | ~30–80% |
| Funding amount | $50K–$5M | $25K–$500K | $5K–$500K |
| Credit requirement | 680+ | 640+ | 500+ |
| Collateral | Usually required | Sometimes | None |
| Repayment | Monthly, 5–25 years | Monthly, 1–5 years | Daily/weekly, 3–18 months |
| Best for | Real estate, acquisitions, long projects | Equipment, expansion, working capital | Speed, bridge, lower credit |
SBA Loans: The Cheapest Money — When You Can Wait For It
SBA loans (most commonly the 7(a) and 504 programs) are partially guaranteed by the federal government, which is why banks can offer relatively cheap money — usually prime + 2.75–4.75%. For real estate, business acquisitions, or anything where the payback period is 5+ years, this is almost always the right tool.
The catch: the underwriting process is brutal. You'll provide three years of business tax returns, three years of personal tax returns, projections, business plan, debt schedule, and (usually) collateral worth ~80% of the loan. From application to funds in your account, plan on 45–75 days minimum. For most SBA loans over $350K, expect closer to 90.
When SBA wins: Real estate purchases. Buying out a partner. Acquiring another business. Major expansion with a 7+ year payback. You have time, you have collateral, and your credit is strong.
When SBA loses: You need money this month. You don't have collateral. Your credit is below 680. You don't want to put your home on the line.
Term Loans: The Middle Path
A traditional term loan is exactly what it sounds like — a lump sum, paid back over a fixed term with fixed monthly payments. Coming from a bank, term loans typically range $25K to $500K, fund in 1–3 weeks, and carry rates between roughly 9% and 25% depending on credit, time in business, and revenue.
For most growing businesses, term loans are the unsexy but reliable workhorse. You know exactly what you owe and when. The payment doesn't change. There's no daily debit eating at your cash flow. And the underwriting is meaningfully less invasive than SBA.
When a term loan wins: You need $50K–$500K for a defined project — equipment purchase, build-out, hiring ramp, marketing push. You have at least 1–2 years in business, decent credit (640+), and consistent monthly revenue. You want predictable monthly payments.
When a term loan loses: You need money in 48 hours. Your credit took a hit recently. Your revenue is too lumpy to support a fixed monthly payment.
Not sure which path is right?
The ShopFunders team has placed every type of funding in this guide. We'll walk you through what your business actually qualifies for in a 10-minute call — no obligation, no credit check.
Get a Quick Quote →MCAs: Fastest Capital, Highest Cost
A merchant cash advance isn't technically a loan — it's a purchase of future receivables. You get capital today; the provider collects a fixed dollar amount over time (usually daily or weekly) until they've recovered the agreed-upon total. Total cost is expressed as a factor rate (e.g., 1.30 = you'll repay $130K on a $100K advance), not an APR.
The two big things to know: MCAs are fast (often funded in 24–72 hours with minimal paperwork) and they're expensive (factor rates from 1.20 to 1.50+, which translates to roughly 30–80% APR depending on the term).
When an MCA wins: You need money this week. Your credit is mid-tier. You have consistent revenue ($15K+/month) but uneven monthly numbers. You're funding a short-term opportunity where the ROI is clearly higher than the cost. You don't have collateral and don't want to use it.
When an MCA loses: You're funding a long-payback project (you'll pay too much). Your cash flow is already tight (daily debits will tip it over). You qualify for a term loan and aren't in a rush.
The Real Decision Tree
- How fast do you need it? If it's days, you're looking at MCA or a fast term loan. SBA is off the table.
- What's your credit and time in business? 680+/3+ years opens every door. 640+/1+ year opens term loans and MCA. Sub-640 typically means MCA or specialty programs.
- How long is the payback? Anything over 3 years should be a term loan or SBA — not an MCA. The math doesn't work otherwise.
- Do you have collateral you're willing to use? If yes and you can wait, SBA. If no, term loan or MCA.
- What's the use case? Real estate or acquisitions → SBA. Equipment or expansion → term loan. Inventory, bridge, or opportunistic → MCA.
The Bottom Line
There's no "best" funding product — there's the right product for your situation right now. The smartest business owners we work with use all three at different stages: MCA for speed and opportunity capital, term loans for predictable growth investments, and SBA for the big strategic moves.
If you'd rather have someone who's placed thousands of deals walk through your specific situation, submit a quick application. We'll come back within 24 hours with the options you actually qualify for — not a sales pitch for whichever product makes us the most money.