May 18, 2023 By Kristin Woodward

We’ve all watched interest rates gradually rise over the last several quarters. For small businesses seeking affordable financing solutions, this may seem daunting. But several options still exist to help you fund your day-to-day operations and growth. Learn more and decide which may be most suitable for your situation.

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SBA loans 

Even in good economic climates, small businesses frequently use SBA loans as an affordable financing option. The Small Business Administration's 7(a) loan program provides businesses with up to $5 million in funding that they can use for working capital, equipment purchases, or real estate acquisition.

These loans are typically easily accessible to borrowers, and because they are government-backed, they carry less risk for lenders. That makes them widely regarded as a win-win situation for borrowers and lenders, meaning securing funding this way may be easier for small businesses than other loan options. 

SBA loans tend to offer longer repayment terms than other forms of loans, typically 10-25 years. This generally makes managing cash flow easier for small businesses.

SBA loans often feature lower interest rates than other loans — even in an environment of high rates — helping small business owners save money over the long haul. Check our current rates and see if you pre-qualify in minutes.

Bank loans

Traditional bank loans generally remain an effective tool for financing small business operations even during times when interest rates are high. They may take many forms, from term loans repaid over an agreed-upon timeframe, lines of credit that allow businesses to draw funds as needed, and commercial mortgages used to buy or refinance property. These are the most sought-after options, and business owners may work closely with their banks to identify which fits them best.

Qualifying for a bank loan may be more difficult than getting an SBA loan. Banks may lend money based on credit history and collateral alone, so in some cases, strict requirements could make qualifying challenging. And, while interest rates on bank loans tend to be lower than those for other financing solutions like credit cards, they're typically higher than rates for SBA loans.

Credit cards

Credit cards typically offer small businesses a quick and convenient means of financing operations and covering expenses like office supplies, travel, and marketing costs. Some cards even provide rewards or cash back programs that allow small business owners to save money on expenses. Attractive 0% intro rates make using them for short-term financing — especially in times when interest rates are high — even more appealing. In the right circumstances, credit cards may be an ideal solution for small business owners with solid credit histories and additional collateral backing.

On the other hand, credit cards without those enticing perks may be one of the more costly financing solutions for small businesses, especially in an environment with high interest rates. Small business owners also must consider potential late payment fees and keep an eye out to ensure they aren’t exceeding their credit limit. Additionally, over-relying on credit cards may result in high levels of debt, which may be difficult for small companies to manage.

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Personal savings

Many small business owners who are just starting out turn to personal savings as an alternative means of financing equipment purchases, marketing costs, and other line items necessary to get their business off the ground. This approach may make sense as it helps avoid debt, saves on interest charges and fees, helps you maintain greater control of your business, and gives you more freedom and flexibility than bank loans and credit options can offer.

But using personal savings can be risky since success is not guaranteed. Even if your small business takes off, depending solely on your savings may not provide enough capital to meet all the costs related to running the business. Furthermore, using personal funds may limit your spending ability on personal needs and may lead to financial strain.


Crowdfunding platforms like Kickstarter®, Indiegogo®, and GoFundMe® generally allow anyone to raise money online from large numbers of contributors, which is typically ideal for raising small business funds from a wide range of donors. And interest rates aren’t a factor. This approach enables small businesses to reach a pool of investors that might be open to supporting their vision and mission. Crowdfunding campaigns may also help generate buzz that helps you build brand recognition and grow your customer base. Plus, some crowdfunding platforms provide loans or equity investments with more flexible financing solutions than traditional lenders.

Small business owners contemplating this strategy typically must be ready to invest a considerable amount of planning time, marketing resources, and networking efforts if they wish to succeed. You may also require upfront financial investments to produce compelling campaigns or expand your social media presence and engage potential investors to ensure that your efforts pay off.

Which option is right for you?

Although today's high interest rates may seem intimidating, viable financing solutions still exist to help your business regardless of its stage or phase. SBA loans, bank loans, credit cards, personal savings, or even crowdfunding may all offer viable funding solutions. Research each one and compare costs and benefits before selecting what fits best in your situation.

See how an SBA loan from a bank in the SmartBiz® network may help you get the funding you need to succeed, even when interest rates are high.

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