SBA 7(a) Loans vs. Revenue-Based Capital: Which Fits Your Business?

SBA 7(a) loans and revenue-based capital sit at opposite ends of business financing. Neither is better in general: the right choice depends on how fast you need funds, how long you've been operating, and what the money is for.

SBA 7(a) loans

• Amounts up to $5 million, with terms up to 10 years for working capital and up to 25 years for real estate
• Interest rates capped by SBA rules, among the lowest available to small businesses
• Fixed monthly payments
• Detailed paperwork: tax returns, financial statements, and often a business plan
• Usually takes several weeks to a few months to fund
• Generally needs established credit and, typically, two or more years in business

Revenue-based capital

• Repayment flexes with your revenue: you repay a percentage of sales until a set total is reached
• Approval relies mostly on revenue and bank activity, so credit history counts for less
• Lighter paperwork; linking your bank account often replaces statements
• Can fund much faster than an SBA loan
• Costs more in total than an SBA loan, and terms are shorter

Which should you choose?

Consider an SBA 7(a) loan if you're making a long-term investment such as real estate, an acquisition or major equipment, you have time to wait, and your credit and financials are strong.

Consider revenue-based capital if you need funds soon, your revenue is steady but your credit or history is limited, or the money will quickly generate the revenue to repay it.

Many businesses use both: revenue-based capital for a near-term opportunity, and an SBA loan for the long-term plan.

GoSwiftFund connects businesses with revenue-based capital partners for $5,000 to $250,000, and with SBA 7(a) lenders from $30,000 to $5,000,000.