Loans can be used to finance a small business and require the borrower to agree to specific repayment terms. Some business owners take out personal loans or, if they are homeowners, home equity loans. Others use small business loans from banks or credit unions, which often require at least two years of operating history, financial statements and tax returns of both the business and principal owners, and look at business financial ratios such as EBITDA (earnings before interest, taxes, depreciation and amortization) and debt to equity before offering lines of credit. Requiring financial statements going back two to three years often mean a bank will not issue loans for new start-ups. The Small Business Administration (SBA) backs loans from its lending partners, which means it sets guidelines and acts as a guarantor for loans, assuming some of the risk for newer businesses.

Besides commercial bank loans, non-bank lenders, such as peer-to-peer lending programs, micro-lenders, or online-only lenders, may also provide small business financing. In a 2019 report published by the Federal Reserve Bank of Cleveland External, business owners found the application process and long wait times for decisions from traditional banks challenging. Those that used non-bank lenders identified their drawbacks as high interest rates and unfavorable repayment terms. Newer firms (3-10 years) and smaller firms (less than $1M) used non-bank lenders more than start-ups, older firms, and larger firms, but as a whole, business owners primarily use banks for financing.