Most small business owners think about two options when they need capital: a bank loan or an SBA loan. Both are solid choices — but they're also the most competitive and hardest to qualify for. Meanwhile, billions of dollars in business funding sits in programs that most owners have never heard of.
Here are five funding types that are underused, genuinely useful, and fit a wider range of business profiles than traditional lending. We'll cover how each works, who it's best for, and what it actually costs.
Equipment Financing
Equipment financing lets you purchase business equipment — vehicles, machinery, technology, medical devices, restaurant equipment — using the equipment itself as collateral. Because the asset secures the loan, lenders take on less risk, which means qualification is easier and rates are closer to traditional loans than most alternative funding.
This matters a lot if your credit or time in business would disqualify you for a conventional loan. Equipment lenders care more about the value and useful life of the equipment than your credit score. Many equipment financing deals can close in 1–3 business days.
- Lower rates than MCA or RBF
- Equipment is the collateral
- Fast funding (1–3 days)
- Tax advantages (Section 179)
- Only for equipment purchases
- Lender can repossess equipment
- Not useful for working capital
Best for: Businesses that need to purchase or replace equipment — construction, restaurants, medical practices, transportation, manufacturing. Also useful as an alternative if you're waiting for an SBA loan to process.
Merchant Cash Advance (MCA)
A merchant cash advance is technically a purchase of your future credit card or debit card receivables. You receive a lump sum, and the lender takes a fixed percentage of your daily card sales until the advance is repaid — typically with a factor rate of 1.2x to 1.5x.
MCAs can fund in 24 hours with minimal paperwork. There's no fixed repayment schedule — payments flex with daily sales volume. But this flexibility comes at a steep price. Effective APRs on MCAs often range from 80% to 400%, making them one of the most expensive forms of business capital available.
MCA Warning
MCAs are not loans — they're not regulated under usury laws in most states. Some providers are predatory. Before signing any MCA: calculate the effective APR, ask about prepayment (many have no benefit), and never stack multiple MCAs on top of each other. Stacking is how businesses end up in debt traps.
- Extremely fast (24 hours)
- No fixed monthly payment
- Flexible with revenue swings
- Almost no credit requirements
- 80–400% effective APR
- Daily repayment drains cash flow
- No regulatory protections
- Stacking is a debt trap
Best for: Businesses with strong daily credit card volume (restaurants, retail) that need emergency capital and have exhausted all lower-cost options. MCAs are rarely the right first choice.
Which funding type fits your business right now?
OnPoint matches you to the right option based on your revenue, credit, and timing — before you sign anything expensive.
Get your personalized funding match Free · No account required · No hard credit pullCrowdfunding
Business crowdfunding has matured significantly since Kickstarter launched in 2009. Today there are three distinct models: rewards-based (customers pre-purchase products), equity-based (investors receive shares), and debt-based (also called peer-to-peer lending).
For most small businesses, rewards-based crowdfunding is the most accessible — and the most overlooked. Instead of going to a bank, you go to your future customers. If enough of them pre-purchase your product or service, you fund production without taking on debt or giving up equity. The validation data also helps with future fundraising.
- No debt, no interest (rewards model)
- Validates product demand
- Builds customer base while fundraising
- No bank qualification needed
- Requires marketing effort to succeed
- All-or-nothing on many platforms
- Not for working capital needs
- Campaign management is time-intensive
Best for: Product-based businesses, businesses with an existing community or following, and businesses launching a new product line. Not suitable for working capital or operational expenses.
Small Business Grants
Grants don't require repayment, don't accrue interest, and don't dilute ownership. They're also far more accessible than most business owners realize — particularly for businesses owned by women, minorities, veterans, or businesses in specific industries or geographic areas.
Federal grants (SBA, SBIR, STTR), state economic development grants, foundation grants, and corporate grant programs collectively award billions annually to small businesses. The application process is competitive and time-consuming, but the cost of capital is zero.
Where to Find Business Grants
Start with Grants.gov for federal programs, your state's economic development office for state programs, and the SBA's SBIR/STTR programs if you're in tech or R&D. Corporate grant programs (from companies like FedEx, Visa, and Amazon) run annual competitions with awards of $10K–$250K.
- No repayment required
- Non-dilutive (no equity given up)
- Can be stacked with other funding
- Boosts credibility with lenders
- Highly competitive
- Application process is time-intensive
- Restrictions on how funds can be used
- Long timelines — not for urgent needs
Best for: Businesses in tech, agriculture, healthcare, or those with WOSB, SDVOSB, or minority-owned certifications. Also worth pursuing for businesses with operational capital covered — grants are best as a supplement, not a primary funding source.
SBA Microloans
While most people know about SBA 7(a) loans, the SBA Microloan program is far more accessible and far less discussed. Microloans are administered through nonprofit intermediary lenders — community development financial institutions (CDFIs) and nonprofit organizations — and can fund up to $50,000 with terms up to 6 years.
The Microloan program has looser eligibility requirements than 7(a) loans. Many microloan lenders work specifically with underserved borrowers: startups, women-owned businesses, businesses in low-income areas. They also often provide technical assistance, mentorship, and business development support alongside the funding.
- Accessible for startups and new businesses
- Reasonable interest rates (8–13%)
- Technical assistance often included
- Builds credit history
- Capped at $50,000
- Can't be used for real estate or paying existing debt
- Limited lenders in some regions
Best for: Startups and early-stage businesses, businesses needing working capital under $50K, and owners who want mentorship alongside funding. A strong stepping stone to larger SBA 7(a) loans down the road.
Quick Comparison: All Five Funding Types
| Funding Type | Best For | Cost (APR) | Speed | Max Amount |
|---|---|---|---|---|
| Equipment Financing | Equipment purchases | 8–25% | 1–3 days | $5M |
| Merchant Cash Advance | Emergency capital, card-heavy businesses | 80–400% | 24 hours | $500K |
| Crowdfunding | Product launches, consumer businesses | ~5% fee | 30–90 days | Unlimited |
| Grants | Tech, underserved markets, certifications | Free | 3–12 months | $2M+ |
| SBA Microloan | Startups, small working capital | 8–13% | 30–60 days | $50K |
How to Choose the Right Funding for Your Business
The right funding type depends on four variables: how much you need, when you need it, what your credit and revenue profile looks like, and what you'll use the money for. A restaurant needing $30K to replace kitchen equipment has a different optimal solution than a tech startup needing $200K for product development.
OnPoint's capital matching assessment takes these variables into account. Rather than applying blindly to a bank and getting rejected — or paying 200% APR on an MCA when you could have qualified for equipment financing — the assessment identifies your best path based on your actual numbers.
You might also want to layer funding types. Grants don't count against your debt-to-income ratio and can be stacked with revenue-based financing or equipment loans. SBA Microloans and equipment financing can be used simultaneously for different business needs. OnPoint's assessment surfaces these combinations when they apply to your profile.