The best business loan for your needs varies based on factors like the type of business, the amount you want to borrow, and why you need the money. Exploring multiple loan types increases your chances of a successful application.

Loans in each of the common categories below may be secured or unsecured. Secured loans are covered by collateral like equipment or a vehicle. If you don’t repay the loan, the bank can seize the property that secures the loan. Unsecured loans don’t require collateral, so they often have stricter approval guidelines.

SBA loans

Funding from the U.S. Small Business Association is a smart choice if you have average credit or below. Guaranteed government repayment means it’s easier for small businesses to qualify for funding through the SBA than through other channels.

The three main SBA loan types include:

• Microloans of up to to $50,000 for equipment, supplies, inventory and/or working capital
• 504 loans of up to $5 million for real estate, equipment, or upgrades that increase the value of property you already own
• 7(a) loans of up to $5 million to buy another company, obtain working capital, or otherwise grow your business

SBA loans have an estimated APR of 3% to 13% and terms of up to 25 years. They’re often the most cost-effective way to get small business funding if you have bad credit, but approval can be slow.

Traditional Bank Loans

Term loans from traditional lenders like banks and credit unions usually have a fixed interest rate of around 9%, so it’s an affordable option if you can meet the relatively strict approval requirements. Most applicants need to provide collateral or a personal guarantee, and you’ll need a credit score of at least 680. Your monthly payments will stay the same for the life of the loan, typically about 10 years.

Business Line of Credit

This type of business loan is similar to a personal credit card. Your company has an open line of credit up to a certain amount. You can make purchases until you reach that limit, making monthly payments toward the principal each month along with interest. Business credit lines usually have interest rates ranging from 7% to 25%.

Accounts Receivable Loans

If you have outstanding invoices, you can get this type of secured business loan. Accounts receivable loans are good for businesses with bad credit since they use your company’s invoices as collateral. Designed to help you pay for short-term expenses and debts, these loans carry an interest rate of anywhere from 10% to 60%.

Merchant Cash Advance

If your business has bad credit but strong sales, you might want to consider a merchant cash advance. Rather than checking your credit rating, this loan lets you borrow a percentage of your future credit card transactions. However, you’ll need to pay a steep interest rate ranging from 40% to 150%.

Equipment and Construction Loans

Your company can use these secured loans specifically for equipment or real estate renovation. For an equipment loan, the equipment acts as collateral. In the case of a construction loan, the property itself counts as the collateral. Equipment and construction loans typically have interest rates around 4% to 40%.

Short-Term Loans

Short-term business financing could also work if you don’t have the best credit. These loans last about three years and top out at about $500,000, but you can borrow much less.

Online lenders usually offer short-term loans and you can even receive the funds within a few days if you qua