17 Business Financing Options (2026)

This article is for informational purposes only and shouldn’t be considered financial advice.

Business financing is the capital a store owner brings in from sources like banks or investors to start or grow a company. They can use it to cover startup costs, a seasonal inventory order, an unexpected slow month, or an expansion into a new location or market.

In a 2025 Shopify survey, 62% of store owners said they used outside funding on top of self-funding to grow.* Bringing in financing instead of waiting for the brand to generate more revenue organically can be a huge boost to a retail store’s growth.

This guide covers 17 business financing options and walks through how to secure financing for your own retail store.

What is business financing?

Business financing involves securing capital to fund a new or existing store. It can give a retail business more freedom to buy inventory, hire staff, or open a new location to fuel more growth. Business financing is also useful for covering initial costs when first starting a business.

Financing options generally fall into three types: 

• Debt financing. Borrowing a set amount and repaying it over time with interest through an avenue like a bank loan, credit line, or credit card.
• Equity financing. Selling a share of ownership to an investor, such as an angel investor or a venture capital firm, in exchange for capital with no repayment obligation.
• Grants. Funds that are awarded by a government agency, foundation, or company that don’t need to be repaid, though they often come with rules on how the money gets used.

17 best business financing options

The right financing option can depend on how much capital your store needs, how soon you need it, and whether you can take on debt. 

These 17 options are grouped into five categories: debt financing, revenue-based and alternative financing, equity financing, grants, and self-funded options.

1. Bank loans

A bank loan is a lump sum of capital borrowed from a bank and repaid over a fixed term, with interest. Store owners can take out a small business bank loan or borrow against personal assets (though the latter carries more personal risk).

Commercial and industrial loan balances at US banks reached nearly $2.9 trillion in June 2026, according to Federal Reserve data. Median interest rates on new small business term loans were about 6.7% at urban banks and 7% at rural banks in the first quarter of 2026.

Best for: Stores with established revenue.

Pros

• Easy to apply. Applying for a bank loan follows a straightforward process most lenders can walk a store owner through.
• Lower rates for qualified borrowers. Bank loans tend to offer lower rates than online or alternative lenders for stores with strong credit and revenue.

Cons

• More requirements to qualify. Many banks require a long credit history, which makes this a difficult startup business loan option.
• Slower funding. Bank loans often take longer to fund than online or fintech alternatives.

2. Online loans

An online loan is a business loan issued and managed entirely through a digital lender, often a fintech company, rather than a traditional bank. 

Online lenders use underwriting methods that may rely less on some conventional markers like time in business, making approval faster and more flexible than a bank loan.

Best for: Stores that don’t qualify for conventional loans.

Pros

• Convenience. A store owner can apply for, receive, and manage the loan entirely online, without ever visiting a bank.
• Faster funding. Some online loans are funded within one or two days of approval.
• Easier qualification. Online lenders may accept shorter credit histories and lower revenue thresholds than banks.

Cons

• Higher rates and fees. Speed and convenience come at a cost, and online loans typically carry higher interest rates than bank loans.
• Shorter repayment terms. Many online loans require repayment over a shorter period than a bank term loan.
• Lower borrowing limits. Stores that need a large amount of capital may find online loan caps too restrictive.

3. SBA loans

An SBA loan is a business loan partially guaranteed by the US Small Business Administration and issued through an SBA-approved lender. 

The 7(a) loan is the SBA’s primary business loan program. It can fund working capital, equipment, real estate, and business acquisitions, with a maximum loan amount of $5 million.

To get a small business loan, a business must operate for profit, be based in the US, meet the SBA’s small business size requirements, be unable to get comparable credit elsewhere on reasonable terms, and demonstrate a reasonable ability to repay the loan. 

Applications go through a participating lender, not the SBA directly, and the SBA’s Lender Match tool can connect a store owner with one.

Best for: Stores with strong credit history.

Pros

• Favorable repayment terms. SBA loans can carry longer repayment periods compared to conventional loans, and interest rates are capped.
• Free business advice. The SBA’s Small Business Development Centers and SCORE mentoring program offer free guidance to applicants.

Cons

• Difficult to qualify. SBA loans require more documentation and stricter underwriting than many other loan types.
• Personal liability. A store owner may be personally liable if the business can’t repay the loan.
• Long, slow process. SBA loans often take weeks or months to fund because of the paperwork involved.

4. Credit union financing

Credit union financing is a business loan or line of credit issued by a nonprofit, member-owned financial cooperative rather than a for-profit bank. 

Credit unions offer many of the same lending products as banks, including capital for businesses. Around 70% of small employers who applied for credit union financing in the previous 12 months said they were either fully or partially approved, according to the Fed’s 2025 Small Business Credit Survey.

Best for: Stores seeking lower interest rates and fewer fees.

Pros

• Lower rates. Credit unions generally offer lower interest rates than traditional banks.
• Easier qualification. Smaller, localized credit unions may apply more flexible lending criteria.

Cons

• Limited locations. Credit unions typically have a smaller branch footprint than national banks.
• Membership required. Many credit unions only lend to individuals or businesses who are already members of their institution, which may require opening an account first.

5. Business line of credit

A business line of credit is a revolving credit limit that lets a store borrow, repay, and borrow again, similar to a credit card. Many banks, credit unions, and online lenders offer lines of credit, which can cover short-term needs like payroll, inventory, or cash flow gaps. 

A secured line of credit uses assets like inventory or accounts receivable as collateral, while an unsecured line doesn’t require collateral but typically demands stronger financials to qualify.

Best for: Stores with a steady sales track record.

Pros

• Flexible financing. Store owners draw funds as needed instead of taking a lump sum upfront.
• Revolving access. Once repaid, business owners can draw from their line of credit again.
• Interest on funds used only. Stores only pay interest on the portion of the credit line they draw, rather than the full limit.

Cons

• Varying requirements. Eligibility and terms differ widely by lender.
• Extra fees. Draw fees and maintenance fees can add to the cost of a revolving line of credit.

6. Microloans

A microloan is a small business loan, usually up to $50,000, issued through nonprofit or community-based lenders, sometimes partnered with the SBA. 

The average SBA microloan is around $13,000, and each intermediary lender sets its own eligibility criteria.

Best for: Stores having trouble qualifying for bank loans.

Pros

• Access for startups. If you’re just starting your business and you need funds, microloans may be among the few financing options available.
• Low interest rates. Rates vary by lender but SBA microloan rates are typically 8% to 13%.

Cons

• Limited use. SBA microloans can’t be used to pay off existing debt or purchase real estate.
• Shorter repayment period. SBA microloans cap repayment at seven years.
• Varying requirements. Because each intermediary lender sets its own criteria, eligibility differs by microloan program.

7. Business credit cards

A business credit card is a revolving credit line tied to a card. It’s typically used for everyday purchases and often carries higher limits than personal credit cards. 

Making on-time payments on a business credit card helps a store build a credit history separate from the owner’s personal credit, which can make it easier to qualify for more financing later. 

Shopify Credit is a pay-in-full business charge card that lets a store either pay its full statement balance each month or repay over 10 months through automatic debits from daily sales, for a fee, with cashback on eligible purchases.

Best for: Stores with little or no credit history.

Pros

• Fast and convenient. Applying for a business credit card is typically quicker than most other financing options.
• Builds business credit. Consistent, on-time payments help establish a credit history for the business itself.

Cons

• Higher interest rates. Credit cards typically carry higher rates than small business loans, so carrying a balance can get expensive.
• Personal guarantee may be required. Many issuers require a personal guarantee from the owner, tying personal credit to the card’s performance.

8. Vendor financing

Vendor financing is capital a supplier or vendor lends to a business, with the requirement that it’s spent on that vendor’s products or services. For example, a supplier might let a retailer take on inventory now and pay for it later in installments. 

Best for: Purchasing goods or property without a traditional loan or collateral.

Pros

• Steady operations. Inventory financing in particular helps a store avoid stockouts while managing cash flow.
• Easier qualification. Vendor financing arrangements may not require a long credit or business history.

Cons

• Depreciating collateral. Inventory or equipment used as collateral can lose value over time.
• Higher cost. Vendor financing often comes with higher rates and additional fees than a standard loan.

9. Equipment financing

Equipment financing is a loan or lease taken out specifically to purchase machinery, tools, or other business equipment like manufacturing equipment, retail point-of-sale hardware, or warehouse machinery.

Best for: Stores buying machinery or equipment.

Pros

• Often no collateral required. Many equipment financing options use the equipment itself as collateral, lowering the risk to other business assets.
• Builds business credit. Consistent payments on equipment financing contribute to a business’s credit history.

Cons

• Restricted use. Funds can only go toward business-related equipment.
• Total cost. Interest means a store ultimately pays more than the equipment’s original price.

10. Cash flow loans

A cash flow loan is a term loan sized against a business’s projected cash flow rather than a business’s assets. This option is useful for service-based businesses, digital product sellers, and stores that don’t own much physical inventory or equipment.

Best for: Stores with few or no assets.

Pros

• No assets as collateral. Because loans typically aren’t asset-based, a business’s property may not be directly at risk.

Cons

• Requires strong financials. Lenders look for solid financial statements and, often, a good credit score. A personal guarantee may be required.

11. Merchant cash advance

A merchant cash advance (MCA) is a business financing option repaid as a percentage of future sales and fees rather than through fixed loan payments. An MCA provider may collect a portion of a store’s daily or weekly sales until the advance and fees are repaid.

Shopify Capital offers eligible store owners either an MCA or a loan, with repayments made automatically as a percentage of daily sales.** 

When Josh Thompson and his brothers once needed capital to stock up for the holiday season at their haircare brand, FreeTheRoots, they used Shopify Capital to fund the purchase. 

“Between the access to cash, capital loans, and credit, Shopify has empowered us to grow to who we are today,” says Josh.

Best for: Working capital for short-term needs.

Pros

• Repay as you earn. Payments scale with sales, so a slow sales day can mean a smaller payment.
• Fast access to cash. MCAs typically fund faster than a bank loan or SBA loan.
• Easier to qualify. MCA providers may have easy eligibility requirements.

Cons

• Frequent payments. Daily or weekly repayments mean stores get less coming in from sales.
• High effective cost. MCAs are priced using a factor rate, which can add up to a high effective cost compared to a term loan’s interest rate.
• Doesn’t build credit. MCA repayment may not be reported to credit bureaus, so it won’t help a new business build credit.

**All loans through Shopify Capital Loans are issued by WebBank. Offers are subject to change based on several factors including your store's performance and the review of your financial information. Shopify Capital Loans must be paid in full within 18 months, and two minimum payments apply within the first two six-month periods. Offers to apply do not guarantee funding. Repayments are made based on a percentage of daily sales.

12. Crowdfunding

Crowdfunding is a method of raising capital by collecting small contributions from a large number of people, usually through an online platform like Kickstarter or Indiegogo. Producers may offer incentives like early access, discounts, or exclusive products to contributors. 

Grand View Research estimated the global crowdfunding market at $2.8 billion in 2026, projected to reach $5.5 billion by 2030.

Best for: New ventures and one-time funding.

Pros

• Builds brand buzz. A crowdfunding campaign can help a brand build up an audience before it has products for sale.
• Creates a community. Contributors might stay engaged with the brand long after the campaign ends.

Cons

• Requires marketing effort. A successful campaign typically needs its own marketing strategy to reach funding goals.
• Platform fees. Third-party crowdfunding platforms may take a percentage of funds raised.

13. Angel investors

An angel investor is a wealthy individual who provides capital to a startup, usually in exchange for an ownership stake in the business. 

Best for: Startups seeking early-stage funding.

Pros

• Accessible for early-stage startups. Angel investors are often a fit for businesses too small to interest a venture capital firm.
• Values-based investing. Many angels weigh a founder’s commitment and market opportunity as heavily as projected growth.

Cons

• Requires a strong pitch. Without a guaranteed return, an angel investor needs to be convinced the business is worth the risk.
• Loss of some control. Angel investors become part-owners, which can mean giving up some decision-making authority.

14. Venture capital

Venture capital (VC) is financing provided to privately held businesses by an investment firm in exchange for partial ownership of the company. 

Unlike an individual angel investor, a VC is a firm with multiple partners, and it typically takes a more active role in company decisions through a setup like a seat on the board.

Best for: Early-stage businesses looking to accelerate growth.

Pros

• Willing to take risks. VCs may be more willing than banks to fund high-risk, high-growth industries.
• Ongoing support. Because VCs have a stake in the outcome, they often provide guidance and connections beyond capital.

Cons

• Growth pressure. VCs typically expect aggressive, fast revenue growth from their investments.
• Highly competitive. Few companies secure venture capital investment, and the application and pitch process is demanding.

15. Small business grants

Small business grants are funds given to business owners by government, corporate, or nonprofit sources without any repayment requirements. 

Each grant sets its own eligibility criteria, and because businesses don’t have to repay them, there are often strict rules about how the funds can be used since the goal is to support a cause the grant issuer cares about.

Best for: Projects that benefit specific causes.

Pros

• No repayment. Grant funds don’t need to be paid back.
• Supports a mission. Grants often connect a store to a broader community aligned with its values.

Cons

• Highly competitive. Because the money doesn’t need to be repaid, grants attract a large pool of applicants.
• Restricted use. Grant funds often come with rules about how they can be used.

16. Family and friends funding

Family and friends funding is capital borrowed or invested by people in a store owner’s personal network, outside of a formal lending institution. 

This route comes with fewer requirements and more flexible terms than a bank, though it still benefits from a written repayment plan to protect the relationship.

Best for: When other financing options aren’t available.

Pros

• Flexible terms. A family member or friend can offer a lower interest rate and more flexible repayment schedule than a bank.
• Easier access. There’s typically no formal application process to complete.

Cons

• No credit-building benefit. These loans usually aren’t reported to credit bureaus, so they won’t help build a business credit score.
• Relationship risk. A loan that goes sideways can strain a personal relationship.

17. Self-funding

Self-funding, also called bootstrapping, means relying on personal funds and resources to start or grow a business instead of borrowing or raising outside capital. 

Personal savings, credit cards, and home equity are all common forms of self-funding. In a 2025 Shopify survey, 79% of store owners said they used profits to self-fund growth.*

Some US business owners fund a new venture through a Rollover as Business Startup, or ROBS, which uses retirement funds like a 401(k) to purchase stock in a new C corporation without triggering the early-withdrawal taxes and penalties that might normally apply. 

ROBS arrangements involve strict compliance requirements, and a business owner considering one should consult a qualified tax or legal advisor before proceeding.

Best for: Keeping ownership in-house and limiting debt.

Pros

• No eligibility requirements. Self-funding doesn’t depend on credit score, revenue, or time in business.
• No interest or fees. Depending on the source, self-funding options may not come with the debt or interest costs of a loan.

Cons

• Slower growth. Limited personal resources can cap how quickly a business can scale.
• Increased personal risk. Without a funding cushion, an unexpected cost can be harder to absorb.

How to get business financing 

Each financing option has its own application steps, but many follow the same path: build a strong credit profile, plan the purpose and repayment, decide how much to borrow, prepare a lender-ready application, and compare offers before signing.

Improve your credit score

A good credit score tells a lender a business is more likely to repay what it borrows. With that in mind, building your business’s credit from the jump should be a priority. 

Lenders check a combination of factors before approving a loan, including:

• Personal and business credit scores. Many lenders weigh both, especially for newer businesses, so work on improving your personal credit score alongside your business one.
• Time in business. Lenders often set a minimum operating history, commonly six months to two years.
• Annual revenue. Lenders use revenue to gauge whether a business can reliably make payments.
• Cash flow. Bank statements show whether a business consistently has funds available to cover repayment.
• Existing debt. Lenders review current obligations to assess how much more debt a business can carry.

Businesses with limited credit history or revenue, like newer startups, may have access to a different set of options than established borrowers. Online loans, microloans, business credit cards, vendor financing, and equipment financing tend to have more flexible requirements than a bank or SBA loan.

Have a plan

Lenders may want to see a clear purpose for the funds along with a realistic repayment plan. To appear more credible, specify exactly what the funds will be used for, be it inventory, equipment, or payroll, as you prepare your application.

Monitor your finances and have a financial plan for your business. In a 2025 Shopify survey, 20% of merchants said they wished they had waited for consistent cash flow before scaling. Planning your funding ambitions ahead of time can help you get capital well before you’re in dire straits. 

Decide how much you want to borrow

Just because you’ve been approved for a massive loan doesn't necessarily mean you should take the full amount. Estimate your realistic borrowing needs by looking at what, specifically, you want the funding to cover.

For example, if you need a single large inventory order or one new piece of equipment, you can compare those costs against your existing bank balance so you’re not taking on too big of a loan when you don’t need it.

Don’t borrow too little or you won’t be able to cover your planned costs. On the other side of the spectrum, borrowing more than you need can add unnecessary interest costs and monthly payments.

Prepare your application

Every financing option involves some form of vetting, and a well-prepared application helps your business stand out.

Lenders typically want documentation like:

• A business plan
• Recent financial statements
• A product or service catalog
• Documentation of the funds’ intended use

A specific explanation of why the business needs the capital carries more weight than a general funding request.

Compare different business financing options

Different financing options have their own pros and cons. Weigh your options based on factors like:

• Funding amount. Microloans and credit cards typically cap out lower than bank loans, SBA loans, or venture capital.
• Eligibility. Bank and SBA loans typically require the strongest credit and revenue history, while online loans, MCAs, and self-funding are more accessible to newer businesses.
• Speed. Online loans and MCAs can be funded in days, while bank and SBA loans often take weeks or months.
• Total cost. Bank and SBA loans generally carry the lowest interest rates, while online loans, MCAs, and other financing options cost more for their speed and flexibility.
• Ownership. Debt financing keeps full ownership with the store owner, while equity financing and, in some cases, crowdfunding mean giving up a stake in the business.

Comparing quotes and terms across multiple lenders before applying can help you find the best rate or repayment schedule for your needs. You’re not committed to any offer until you sign.

This article is for informational purposes only and shouldn’t be considered financial or legal advice. A qualified financial advisor or accountant can help evaluate which option fits a specific business.

*Based on a 2025 survey of 500 Shopify merchants conducted in English across Australia, Canada, the United Kingdom, Ireland, New Zealand, and the United States. Respondents were established merchants with two or more years on the platform. Results reflect the experiences of this specific sample and may not be representative of all merchants.