Core Funding: Term Loans, Lines of Credit, SBA and Working Capital
These four routes cover most general business borrowing. They differ in how money arrives, how it is repaid and what the lender examines — not in how “good” they are. The right one depends on what you are paying for and when cash comes back.
Start with the expense, not the product. A one-off purchase, a recurring gap and a program-eligible project each point somewhere different.
Educational comparison only. Independent providers set their own eligibility, pricing and terms.
The four routes
What “core funding” covers
These are the general-purpose routes a business uses when the need is not tied to one specific asset or invoice. If a machine, a receivable or a property is the reason for borrowing, a purpose-specific product usually fits better and costs less to arrange.
Working capital is the odd one out. It describes a need — the gap between money going out and money coming in — rather than a single product. A working capital need might be met by a term loan, a line of credit or something else entirely, which is why it has its own page explaining how to size the gap before choosing a structure.
Which route fits the situation
Scroll the table sideways to see every column.
| Your situation | What that usually means | Start here |
|---|---|---|
| A single planned purchase or project | What that usually meansYou know the amount and the date | Start hereBusiness Term Loans |
| Recurring gaps you cannot predict | What that usually meansAmount and timing both vary | Start hereBusiness Lines of Credit |
| Payroll, inventory or seasonal timing | What that usually meansThe gap is the problem, not the purchase | Start hereWorking Capital Loans |
| A project that may qualify for a program | What that usually meansLonger terms matter more than speed | Start hereSBA Loan Options |
| You are not sure the need is real yet | What that usually meansCash may be the symptom, not the cause | Start hereWorking Capital Loans |
Compare the four in detail
Business Term Loans
A defined amount disbursed once, repaid on a fixed schedule. Best when you know the amount and the date. Check net proceeds after fees, the total of all payments, prepayment terms and what secures the loan.
Business Lines of Credit
Draw what you need up to a limit, repay, and draw again. Suits recurring or unpredictable gaps. Renewal terms, variable pricing and how availability is calculated matter more than the headline limit.
SBA Loan Options
7(a), 504 and microloan programs delivered through participating lenders and intermediaries, not by the SBA directly. Longer terms are the usual draw; eligibility rules and documentation are the trade-off.
Working Capital Loans
Sizing the operating gap before choosing how to fund it. Covers the forecast, the downside case, and when borrowing makes the position worse rather than better.
What to compare, whichever route you take
The same six figures decide cost across all four. Get them in writing before comparing anything:
- Cash actually delivered, after any fee withheld at closing
- Payment amount, frequency and total number of payments
- Total of all scheduled payments, not just the rate
- Payoff figures at realistic early dates
- Collateral, liens and any personal guaranty
- What happens on a missed payment, and any renewal or balloon
A lower payment is not a lower cost. A longer term reduces the payment and increases the total. Use the Business Loan Calculator to see both figures for the same loan before deciding.
Frequently Asked Questions
Which core funding option is cheapest?
No category is cheapest in general. Cost depends on the provider, the business, the term and what secures the financing. Compare total scheduled payments and net cash delivered across real written offers rather than comparing product types.
Can I have more than one at the same time?
Often yes, subject to each provider’s rules and any covenants in existing agreements. Add the payments together and test them against a low-revenue month before taking on the second obligation.
Is an SBA loan always better because it is government-backed?
No. SBA programs can offer longer terms, but they carry their own eligibility conditions, documentation and closing requirements. A conventional term loan may be faster and simpler for a smaller amount. See SBA Loan Options.
What is the difference between working capital and a term loan?
Working capital describes the need — the operating gap. A term loan is one structure that might fund it. Size the gap first, then choose the structure. See Working Capital Loans.
Do I need collateral for any of these?
It varies by provider and product. Some are secured by specific assets, some by a general lien on business assets, and many carry a personal guaranty even when described as unsecured. Read the guaranty and lien terms rather than the product label.
What if my credit is impaired or the business is new?
Those situations have their own pages, because the comparison changes. See Bad Credit Business Funding or Startup Business Funding.
Does ShopRates decide whether I qualify?
No. ShopRates provides information and may connect you with independent providers. Each provider makes its own eligibility and pricing decisions.
Compare Core Funding Against the Full Obligation
Tell us the purpose, amount range, business stage and timing. ShopRates can organise the comparison and may connect you with independent providers. Each provider determines its own eligibility, pricing, fees, terms and funding schedule.
This is not an application, offer or commitment.