Business credit · funding instruments

Nine ways to fund a business — and what each one actually costs.

Not every funding instrument fits every business stage. Here is the full landscape — underwriting factors, documentation, funding ranges, and the honest risk warnings behind each one, including the real annualized cost behind a merchant cash advance's factor rate.

Sourced from Finely Cred's business-credit doctrine repository — general market education, not a guarantee of approval, limits, or terms.

Funding instruments compared

9 instruments

Expand an instrument for its typical underwriting factors, required documentation, and the risks/cautions worth reading before you sign anything.

Typical underwriting factors

Every owner must be a U.S. citizen or U.S. national whose main home is in the United States (SBA rule since March 1, 2026)
Personal credit score of the majority owner(s), typically expected in the good-to-excellent range by most participating lenders
Business (and often personal) tax returns for the last 2-3 years
Debt-service coverage ratio (DSCR) showing cash flow can support the new payment
Collateral availability (SBA does not require collateral on loans of $50,000 or less; above that, lenders take collateral under SBA rules, but a loan is not to be declined solely for inadequate collateral)
Use-of-funds narrative and business plan for startups or acquisitions

Documentation generally needed

SBA Form 1919 (Borrower Information Form)
Personal financial statement (SBA Form 413)
2-3 years business and personal tax returns
Business formation documents (Articles of Incorporation/Organization, EIN letter)
Business debt schedule
Year-to-date profit & loss and balance sheet
Business bank statements (typically 6-12 months)

Risks & cautions

Almost always requires a personal guarantee from owners with 20%+ equity stake, and sometimes a lien on personal residence for larger amounts.
Approval timelines commonly run 30-90+ days, which can be a mismatch for urgent working-capital needs.
SBA guaranty fees and closing costs add to the effective cost of the loan beyond the stated interest rate.

Nine ways to fund a business — and what each one actually costs.

Funding instruments compared

Related reading