Key Takeaways
- Small business funding comes in several forms: grants, SBA loans, revenue-based financing, invoice factoring, and lines of credit, each with different speed, cost, and eligibility trade-offs.
- SBA loans offer large amounts at structured terms but require significant paperwork and weeks to months to close.
- A business line of credit is one of the most flexible funding tools available, letting you draw what you need, repay, and reuse, without reapplying each time.
- Most lenders evaluate time in business, annual revenue, and credit score. Some, like Loot, use business revenue and cash flow in underwriting without setting a minimum credit score.
- Businesses with at least one year in operation and around $200,000 in annual revenue may qualify for a revolving line of credit through Loot, with no hard credit pull to check eligibility.
What Types of Small Business Funding Are Actually Available?
Not all funding works the same way. Before you apply anywhere, it helps to understand what you're actually choosing between.
SBA Loans
SBA loans are government-backed and can reach into the millions. They tend to offer structured repayment terms and are a solid option if you need a large, one-time capital injection. The tradeoff: the application process is paperwork-heavy, approval can take weeks or months, and requirements are strict. For a business that needs capital this week, SBA loans are rarely the answer.
Business Grants
Grants are non-repayable, which makes them attractive. But they're also highly competitive, often restricted to specific industries or demographics, and rarely designed for general working capital needs. Programs like SBIR/STTR, for example, are built for R&D-focused businesses, not a restaurant covering payroll or an HVAC contractor buying equipment before a big job.
Revenue-Based Financing and Invoice Factoring
These options work by advancing you money against future revenue or outstanding invoices. They can be fast, but the fees can add up quickly, and they're best suited to specific business models, typically those with predictable recurring revenue or large outstanding receivables.
Business Line of Credit
A line of credit is a revolving credit facility. You draw what you need, pay fees only on what you use, and your available credit replenishes as you repay. It's one of the most flexible tools for managing cash flow gaps, covering payroll, funding inventory, or bridging the gap between a completed job and a client payment. For small businesses that face recurring, unpredictable capital needs, a line of credit is often the right fit.
What Do Lenders Look at When Evaluating Your Business?
Understanding how lenders make decisions helps you know where you stand before you apply.
Time in Business and Revenue
Most lenders want to see at least one year of operating history and a minimum level of annual revenue. These signals tell a lender that your business has traction and generates enough cash to support repayment. At Loot, the minimums are one year in business and approximately $200,000 in annual revenue.
Credit Score
Traditional lenders typically require a FICO score of 600 or higher. Loot takes a different approach: our underwriting looks at your actual business cash flow, not just a credit score. That means a personal credit score that isn't where you'd like it doesn't automatically close the door.
How Do You Choose the Right Funding for Your Situation?
The right type of funding depends on three things: how fast you need it, how much flexibility you need, and what your business can qualify for today. This table gives you a quick side-by-side view:
| Funding Type | Speed | Flexibility | Typical Requirements |
|---|---|---|---|
| SBA Loan | Weeks to months | Low (fixed term) | Strong credit, collateral, extensive docs |
| Business Grant | Months | None (restricted use) | Industry/demographic eligibility |
| Invoice Factoring | Days | Low (tied to invoices) | Outstanding receivables |
| Revenue-Based Financing | Days | Medium | Recurring revenue |
| Business Line of Credit | Hours to days | High (draw as needed) | Time in business, revenue |
If you're a marketing agency managing campaign costs between client payments, or a landscaping company ramping up for spring, a line of credit gives you capital on your terms. You draw when you need it, repay as revenue comes in, and the line stays open for the next time.
Understanding the difference between a line of credit vs. a term loan is also worth your time before you commit to any product. The structure matters as much as the amount.
If your business runs on seasonal cycles and you want to understand how to protect your cash flow during a slow season, that's a smart place to start before you decide how much to draw and when.
Loot offers a revolving business line of credit from $5,000 to $100,000, with no hard credit pull to check eligibility, same-day decisions in most cases, and a 50% discount on outstanding fees if you pay off early. Applying takes under five minutes.
This content is for informational purposes only and does not constitute financial advice. Terms and eligibility may vary
Blackbeard
Senior Content Strategist · Small Business Finance · Loot
Blackbeard writes about cash flow, lending, and financial planning for small business owners, drawing on eight years of covering SMB finance. Blackbeard holds a B.S. in Finance and has contributed to several small-business banking publications.
FAQ
Yes, depending on the lender. Traditional banks and many online lenders set a minimum FICO score, often 600 or higher. Loot does not require a minimum credit score. Instead, eligibility is based on your business's actual cash flow. If your business has been operating for at least a year and generates around $200,000 in annual revenue, you may qualify even if your personal credit score isn't where you'd like it to be..
It depends on the lender. Many lenders run a hard credit pull when you apply, which can have a small impact on your score. Loot only runs a soft pull, so checking your eligibility never affects your credit history, whether you're approved or not. That makes it a low-risk first step if you're exploring your options.
Speed varies significantly by product. SBA loans can take weeks to months. Invoice factoring and revenue-based financing typically move faster. With a business line of credit through Loot, decisions typically happen in minutes, and funds may arrive the same day or within a couple of business days, depending on the transfer method you choose.
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