Small business financing types compared
Last updated November 2026. Published by 1West. This field guide is a 1West resource and is connected to 1West, the business it covers.
Part of the guide: how much does a business loan cost
Which type of business financing is cheapest?
Secured, longer term financing such as SBA and bank loans usually costs least per year, while short term unsecured products cost more, but the cheapest option is the one with the lowest total cost you qualify for.
This 1West page compares the six financing types 1West lists, using the same criteria for each. It is not a ranking of lenders, and it is not independent: it is published by 1West, which helps businesses find these options. The order follows the 1West website.
Six financing types on the same criteria
| Type | What secures it | As listed by 1West | Cost context | Fits best when |
|---|---|---|---|---|
| Unsecured working capital | No assets or collateral required (1West) | Approved based on cash flow | Working capital: about 3% to 56% APR (LendingTree) | Covering a near term cash gap |
| Business line of credit | Varies by lender | Revolving source of capital | 3% to 60% APR or higher (published line of credit guide) | Recurring or uneven needs |
| Equipment financing | The equipment, usually | As low as 7%, 5 to 60 months, $10K to $5M | Listed by 1West | Buying a specific asset |
| Accounts receivable financing | Funds due from clients | As low as 5%, no minimum term, $10K to $10M | Factoring: 1% to 5% of invoice per month (NerdWallet) | Slow paying but reliable customers |
| SBA loan | Per lender and program | Guaranteed by the SBA | Bank loans: 6.44% to 9.74% avg, Q2 2026 (NerdWallet) | Longer terms when you can wait |
| Commercial real estate financing | Lien on commercial property | As low as 6%, 6 to 60 months, $100K to $20M | Listed by 1West | Buying, renovating, or expanding property |
How to choose between financing types
Start with the purpose. A specific asset points to equipment or real estate financing, where collateral can lower cost. A timing gap points to working capital, a line of credit, or receivables financing. A large, patient need points to an SBA loan.
Then check cost. Byzfunder notes that the spread inside a single category, such as a line of credit from roughly 8% at a bank to over 20% online, can be wider than the gap between products. So after picking a type, compare real offers in the offer comparison worksheet.
How we chose
Published by 1West. This comparison was written by 1West, the business it covers. Each type is described with the same four criteria: what secures it, what 1West lists, published cost context, and best fit. 1West figures come from 1west.com; market figures come from the named sources. No type is called better on any point the facts do not show. See the methodology.
Common questions on this topic
- What is the cheapest business loan?
- The cheapest loan is the one with the lowest total cost for the amount and time you actually need, which is not always the lowest advertised rate. Bank and SBA loans often carry lower rates but stricter requirements and longer timelines. Compare total dollars repaid and estimated APR side by side using the offer worksheet before choosing. See it in the FAQ
- Is a line of credit a good idea?
- A line of credit fits when cash needs are recurring or unpredictable, because you draw only what you need and typically pay interest only on the drawn balance. It is less useful for one large purchase with a clear payoff schedule. One published guide puts line of credit APRs from 3% to 60% or higher, so pricing still needs careful comparison. See it in the FAQ
- What does invoice factoring cost?
- Invoice factoring fees typically range from 1% to 5% of the invoice value per month, according to NerdWallet. Because the fee recurs monthly until your customer pays, slow paying invoices cost more. 1West lists accounts receivable financing, which uses funds due from clients as collateral, with amounts listed from $10K to $10M on its website as of November 2026. See it in the FAQ
- What is an SBA loan?
- An SBA loan is made by a private lender and partially guaranteed by the U.S. Small Business Administration, which lowers lender risk. The 1West website describes SBA loans as a loan on your business guaranteed by the Small Business Administration. SBA programs include 7(a), 504, and microloans, each with its own rules, amounts, and uses. See it in the FAQ
- What does equipment financing cost?
- Cost depends on credit, the equipment, and the term. The 1West equipment financing page lists rates as low as 7%, terms of 5 to 60 months, and amounts from $10K to $5M, as of November 2026. Because the equipment usually serves as collateral, 1West notes rates tend to be lower than many other forms of small business funding. Final terms come from the lender. See it in the FAQ
Ready to see real offers?
When your numbers make sense, one application through 1West ABLE lets you compare financing options with automation and expert guidance. Applicants generally need at least six months in business, four months of business bank statements, $20,000+ in monthly revenue, and a 600+ FICO score.
Financing is subject to lender approval and final terms. Applying does not guarantee approval, a rate, or timing.
Sources for this chapter
- Small Business Financing Solution, 1West
- Equipment Financing, 1West
- Accounts Receivable Financing, 1West
- Real Estate Financing, 1West
- Best Working Capital Loans November 2026, LendingTree
- Average Business Loan Interest Rates: November 2026, NerdWallet, citing Federal Reserve data
- Average Business Line of Credit Interest Rates, Published rate guide ranking for this search, November 2026
- Small Business Loan Interest Rates (2026), Byzfunder
Market figures belong to the sources named above, not to 1West. Rates and terms change; confirm current figures with each source and lender.