Financing

A 403(b) plan is a tax-deferred retirement plan offered by certain tax-exempt organizations and public schools. Employees save for retirement in a 403(b) plan by contributing to individual accounts, and employers may choose to contribute to employee accounts. When considering the best 403(b) company, certain 501(c)(3) tax-exempt organizations and public schools will look for providers with the widest array of cost-effective investment options, best customer service, and additional services to help employers and participants. Here are the six best 403(b) companies: : Best overall for low-cost 403(b) plan with access to a wide range of mutual funds : Best for employees wanting in-person guidance on 403(b) plans : Best for providing participants with high-quality market research : Best for streamlined process, which saves on administrative costs : Best for clients who want advisers to walk them through the process and manage mutual funds on their behalf : Best for real-time access to plan details through open-architecture platform Best 403(b) Companies at a Glance See fullscreen table × *Setup fees may vary by location, business type, and plan type. The value listed here is the most typical setup fee cost. If “varies” is listed, the provider doesn’t list a setup fee, so visit the provider websites for specific pricing information. Vanguard: Best Overall for Low-cost 403(b) Plan with Access to a Wide Range of Mutual Funds is the best overall 403(b) provider because it offers nationwide, inexpensive, diversified investments and retirement plans. It has more than 50 professionally managed mutual funds that are great for focusing on a long-term, passive investment. This well-established firm with a strong reputation is the second-largest mutual fund company globally―as of March 2022—with more than $8.1 trillion in assets under management. It’s the gold standard in the industry and even has four of the top five individual mutual fund accounts. Financial advisers drive Vanguard’s business. As a result, Vanguard doesn’t have offices around the country where clients can get help. It provides clients with customer service online and over the phone. However, those who need additional assistance can also enlist the help of an adviser, most of whom offer Vanguard products. Fidelity: Best for Employees Who Want In-person Guidance on 403(b) Plans is one of the best 403(b) companies because of its large network of offices, making it ideal for participants wanting in-person guidance and individual investment advice. It’s one of the largest financial service companies in the world and provides a host of banking and brokerage services in addition to 403(b) plans. With nearly $4.3 trillion under management, Fidelity also ranks high on the list of the largest mutual fund companies. While it’s one of the best 403(b) providers, it’s undoubtedly not the cheapest, nor does it offer investment options that aren’t available elsewhere. It has strong customer service when compared to most other national providers. Unlike most other companies on this list, it has an extensive network of investor centers where you can work with individual advisers. It also provides customer service through its website and over the phone. T. Rowe Price: Best for Providing Participants With High-quality Market Research is one of the best financial services firms for providing financial literacy and research tools to individual investors. It offers high-quality market research and investor education tools so that participants can make informed decisions about their saving and investment strategies. It even has its own line of mutual funds to 403(b) clients, high-value, independent research, and a host of additional services. Although its operation centers on fund management, it also provides a host of investment advisory and brokerage services, education savings plans, and additional investment services for assets outside of 403(b) plans. The firm doesn’t have retail offices. Its funds and investment products are available through independent financial advisers around the country. However, if you go directly to T. Rowe Price for a 403(b), you aren’t going to get a dedicated adviser. Customer service can be accessed by phone and its website. Human Interest: Best for Streamlined Process, Which Saves on Administrative Costs With easy setup and administration, provides a streamlined 403(b) plan process with upfront pricing. Administrative aspects, such as enrollment, payroll sync, and compliance, are streamlined or automated by the company. This makes Human Interest and its 403(b) plan great for small business owners willing to use an online provider for ease of use to save time and money. Compared to other 403(b) companies, this firm aims to keep administrative costs down and utilizes flat administrative fees so that business owners know what to expect. While it doesn’t offer payroll services in-house, it works well with most systems and efficiently provides a core group of services. It’s almost entirely online, with no retail offices around the country for clients to get guidance. Also, it doesn’t list additional services that many other providers offer. However, you’ll have a dedicated account management team to help you set up and administer your plan. You can message through the company’s website or contact a rep via phone. American Funds: Best for Clients Wanting Advisers to Walk Them Through the Process For customers wanting to use independent financial advisors to manage their 403(b) plan, is an excellent choice. In-depth questions and individual investment advice are provided by independent financial advisors licensed to sell Capital Group American Funds products. However, a member of The Capital Group Companies, the firm provides minimal customer service itself outside of routine account maintenance. With more than $2.7 trillion under management, American Funds is the third-largest mutual fund company on this list, falling just behind Vanguard and Fidelity. The company offers more than 40 mutual funds and sub-advisory services for large institutional investors. It’s one of the best 403(b) companies for nonprofits wanting to offer a small group of diversified mutual funds and keep participants from investing in more niche products. American Funds has a full lineup of more than 50 cost-effective mutual funds available in 403(b) plans. These funds invest in various assets and investment strategies to suit your objectives. They can be used individually or as part of a diversified portfolio. Aspire: Best for Real-time Access to Plan Details Through Open-architecture Platform With more than 10,000 investment options, offers a 403(b) plan with open investment choices for any size plan. It has a complete suite of smart retirement solutions featuring a web-based plan search and fund search through InvestLink. These searches allow for easy, real-time access to all plan details through its open-architecture platform. This access provides flexibility for advisors and participants with transparent and competitive pricing. The company works with school districts, religious organizations, nonprofit professionals, and healthcare workers to configure a 403(b) plan that best works for your organization. Aspire also promises access to money managers and investment strategists as part of its customer service. It offers help with vendor consolidation, participant education, and upfront and transparent pricing. You can contact the company through the mail, phone, online chat, and the online form on its website. How We Evaluated the Best 403(b) Companies Employers who utilize 403(b) plans have particular needs because setup and administration can be more difficult due to eligibility restrictions. To identify the best 403(b) providers, we considered the following criteria: Ease of setup: How easy employers can set up and administer a 403(b) plan Investment options: The diversity of investments permitted within a 403(b) from different providers; investment options for 403(b) plans are limited to annuities, mutual funds, and target date funds Costs: The relative costs of plan administration and investment options with different providers Customer service: The ability of providers to help with plan setup and administration as questions arise Additional services: What service providers offer in addition to 403(b) plans that might be helpful for an employer Assets under management: The amount of 403(b) assets managed by a provider Alternatives to a 403(b) Plan A 403(b) is only appropriate for certain nonprofits. If you want to set up a retirement plan for a small business, a 403(b) probably won’t work for you. Some small business alternatives to 403(b) plans include: Traditional 401(k): If you have more than 12 employees in your business, a 401(k) plan may be your best option. It allows you to contribute up to $61,000 per year from a combination of employee deferrals (max $20,500), employer matching (max $20,500), and discretionary employer profit-sharing ($19,500). Safe Harbor 401(k): For-profit companies wanting to structure 401(k) plans to make maximizing contributions easier can qualify their 401(k) as a Safe Harbor plan. Safe Harbor 401(k) plans include generous matching requirements for employee salary deferrals. In exchange, Safe Harbor 401(k) plans exempt themselves from nondiscrimination testing, making it easier for company owners and highly compensated employees to maximize their contributions even if rank-and-file employees don’t participate. Savings Incentive Match PLan for Employees (SIMPLE) IRA: A SIMPLE IRA is much less expensive and easier to administer. It allows participants to contribute up to $28,000 annually and to split between employee salary deferrals (limited to $14,000). It also has employer matching (up to another $14,000), and you must match employee deferrals up to 3%. You can reduce the match, but you have to match at least 1% and can’t match less than 3% in more than two years during a five-year period. Bottom Line Non-profit organizations that qualify for a 403(b) plan can provide employees with a great retirement investment plan. Each of the providers offers slightly different benefits and retirement strategies. Determine which benefits are most important to you and your employees and choose the provider that best aligns with your company's needs.

When looking to grow a small business, it’s critical to offer retirement benefits for your employees so that they can save for the future. A 401(k) plan allows you and your workforce to save up to $61,000 annually through tax-free salary deferrals, employer matching, and profit sharing. Choosing the best 401(k) provider largely depends on the level of plan management needed, the costs and fees involved, the customer service required, and the investment options available. Based on our evaluation, here are the eight best 401(k) companies: : Best overall for digital-only low-cost 401(k) plans : Best for simple pricing and full-service business banking : Best traditional 401(k) provider with a highly-customizable plan : Best for multiple 401(k) options and regulatory compliance assistance : Best for companies seeking the widest range of low-cost mutual funds : Best for owners looking for low-maintenance target date funds : Best for investors who want low to no fees on various trades : Best for small businesses looking for personalized service from dedicated account managers Best 401(k) Companies At a Glance See fullscreen table × *Setup fees may vary by location, business type, and plan type. The value listed here is the most typical setup fee cost. Visit the provider websites for more specific pricing information. ShareBuilder 401k: Best Overall for Digital-only Low-cost 401(k) Plans is our choice for the best overall 401(k) company due to its low-cost, digital-only retirement plans, making it easy for businesses of all sizes and locations to open an account. Whether you have just one employee or a whole corporation, it has a plan that can meet your needs. It offers four different 401(k) plans: Solo 401(k), Safe Harbor 401(k), Traditional 401(k), and Tiered Profit-sharing 401(k). Administration fees start as low as $25 for Solo 401(k) plans and $190 for Tiered Profit-sharing plans. ShareBuilder 401k is an excellent option for small businesses looking to get started with 401(k) as they grow. Its offerings include the lowest-cost, best-in-class investment options available. With it, small business owners can set up a plan online for a flat fee and start investing immediately. The company’s customer service can be reached via the toll-free phone number from 9 a.m. to 8 p.m. Eastern time Monday through Friday or via email. Merrill Edge: Best for Simple Pricing & Full-service Business Banking is another company that provides excellent 401(k) plans with a full-service business banking experience through its Bank of America partnership. Bank of America, one of our best banks for small business, offers one of the best small business checking accounts on the market. So, if you’re looking for excellent business banking to go with your investment services, the Merrill Edge–Bank of America partnership can be a one-stop shop for all your needs. Merrill Edge provides straightforward, up-front pricing, with a one-time setup fee of $390 and a monthly administration fee of $90. It offers 401(k) plans, including individual 401(k), small business 401(k), and several IRA plans, including SEP and SIMPLE. Its customer service is available by phone from 8 a.m. to 5 p.m. Central time Monday through Friday or in Merrill Edge and Bank of America branch locations. It’s a great online companion to Merrill Lynch, which typically caters to high-income investors. Through Merrill Edge, you can open smaller accounts that are more cost-effective and widely available than Merrill Lynch provides, yet those accounts are still outstanding retirement products. Wells Fargo: Best Traditional 401(k) Provider With a Highly Customizable Plan If you’re looking for a Traditional 401(k) provider with a wide range of plan options, physical locations, and a full range of banking products, is an excellent choice. It offers a full range of 401(k) investment options and services. Fees aren’t readily available on the company’s website but, generally, they’re in line with other national providers. In addition to the 401(k) products, Wells Fargo offers business banking and commercial lending options. It has business checking and savings accounts, credit cards, merchant services, payroll services, and other business resources. If you need commercial lending products, you can get several types of small business loans through Wells Fargo, including business lines of credit, Small Business Administration (SBA) loans, commercial real estate loans, and healthcare practice financing, among others. It also has 4,900 retail banking branches in 36 states and online access and customer service. The company’s toll-free customer service line is available 24 hours a day, seven days a week. Guideline: Best for Multiple 401(k) Options & Regulatory Compliance Assistance With three available plans to meet the varied needs of different sized businesses, provides multiple 401(k) options for your company. Its base-level option, the Core plan, offers payroll integration and automated recordkeeping. It allows Guideline to act as your 3(38) and 3(16) fiduciary and handle specific IRS and United States Department of Labor (DOL) reporting and filings. The mid-tier plan, Flex, offers all of Core’s benefits and allows you to open either a safe harbor 401(k) or traditional 401(k) plan. You also get profit sharing and vesting schedules, and Guideline assists you by conducting IRS nondiscrimination testing for traditional plans. The top-tier option, Max, gives you the benefits of the two previous plans plus custom features like comparability profit sharing, a dedicated onboarding specialist and client relationship manager, and support for controlled group plans. Guideline offers email and phone support, and its service can be reached by phone from 6 a.m. to 4 p.m. Pacific time Monday through Friday. It’s a great option for multiple plans with low-cost funds, excellent customer service, and simple management. Vanguard: Best for Companies Seeking the Widest Range of Low-cost Mutual Funds As a company with five of the top six largest mutual funds globally in 2021, is a popular choice for a 401(k) provider. Its largest fund, Vanguard Total Stock Market Index Fund, had more than $1.3 trillion in funds. This was approximately four times larger than its nearest competitor, Fidelity 500. Vanguard offers access to several types of 401(k) and IRA plans, including an individual 401(k) plan that’s our choice for the best solo 401(k) plan on the market. It also has a small plan 401(k), in addition to SEP-IRA and SIMPLE IRA plans. This provider offers simple, straightforward plans with options to meet the needs of businesses of all sizes. You can contact Vanguard through a toll-free phone number or its company website to start the process. Fidelity: Best for Owners Looking for Low-maintenance Target Date Funds is another large mutual funds provider offering securities brokerage services and business and personal banking, including credit cards and business loans. It’s the best target date funds provider for 401(k)s because of the 14 Freedom Funds plans the company offers. They have targeted retirement dates in five-year increments ranging from 2025 to 2065. The funds adjust automatically as the targeted retirement date gets closer. Small business owners can access 401(k) plan administration and recordkeeping services, a full trading platform, investment advisory services, and personal and business banking. Many of these services come from different business units but can all be provided by Fidelity as a full-service firm. You can reach the company through online chat, available Monday through Friday from 8 a.m. to 10 p.m. Eastern and 9 a.m. to 4 p.m. ET Saturday and Sunday. An automated virtual assistant and a toll-free phone number are also available 24/7. You can also stop by one of more than 200 investor centers available across the country. Charles Schwab: Best for Investors Who Want Low to No Fees on Various Trades offers a full-service 401(k) plan customized to your company with zero dollar trading fee, making it an excellent option for a low-fee provider and 401(k) owners wanting to trade stocks or bonds in their accounts. You also have the option to add investment advisory services to an existing 401(k). Because Charles Schwab has a broker-dealer and banking subsidiary, it can provide a full range of financial services. It also offers proprietary mutual funds and ETFs to plan participants and other investment options. The company offers individual and business 401(k) plans, SEP and SIMPLE IRAs, personally designed benefit plans, and company retirement accounts. It has a plan for your company, regardless of how many employees you have. You can call a toll-free number to start the process or stop by one of 360 Charles Schwab branches across the United States. Employee Fiduciary: Best for Small Businesses Looking for Personalized Service is a 401(k) plan administrator that caters to small businesses of all sizes. Every company that signs up for a 401(k) plan with Employee Fiduciary will go through a plan design consultation to create one that meets the company’s goals and budget. Companies with existing 401(k) plans will also benefit from Employee Fiduciary’s plan conversion services as they move to this new provider. The company is a bundled 401(k) provider, meaning that it provides all the administration services needed, including asset custody, participant recordkeeping, and third-party administration. On its website, you can compare Employee Fiduciary’s fees to more than 40 other leading 401(k) providers, or you can request a no-cost fee comparison for your current plan. Employee Fiduciary offers a detailed fee schedule with startup fees and annual base and custodial fees listed on its website. Startup fees range from $250 to $500, with annual fees at $500 or $1,500, plus 0.08% annually in custodial fees. You can reach the company through a web contact form or by phone at a toll-free number. How We Evaluated the Best 401(k) Companies When comparing the best 401(k) companies, we considered: Setup fees charged Annual fees charged Types of retirement accounts available Types of investment funds available Online-only or physical locations available Ease of account setup and management Customer service Customer reviews Bottom Line For small business owners looking to add retirement services to their companies, the 401(k) providers listed here can provide you with excellent investment accounts with a wide range of benefits. Whether you’re a sole proprietor or a corporation with hundreds of employees, one of our recommendations will meet your retirement account needs. Compare the providers and their strengths and choose the one that best fits your company's size and needs.

A Keogh plan, also known as an HR-10 or qualified retirement plan, is a retirement plan that allows self-employed individuals up to $61,000 per year in tax-deductible contributions. It used to be very popular among high-income earning self-employed workers, but this was before they were eligible for more common retirement plans. How a Keogh Plan Works Keogh plans were set up for self-employed individuals running unincorporated businesses. If you’re a W-2 employee, you must have income from independent business activities to qualify. However, tax laws changed to stop treating retirement plans for sole proprietorships and other companies differently, so Keogh plans fell out of favor. Tax rules for Keoghs are the same as individual retirement accounts (IRAs) and other qualified retirement accounts. Using a Keogh, contributions are tax-deductible. Once you contribute, your account grows tax-free, but qualified distributions are taxed as income. Keogh’s tax treatment is the same whether your plan is a defined contribution (DC) or a defined benefit plan. In addition to income taxes on withdrawals, any Keogh plan distributions taken before age 59½ are subject to a 10% early distribution penalty, the same penalty assessed on early withdrawals on 401(k) and IRA alternatives. Keogh Plan Contribution Limits Plan limits are set by the IRS and can change annually. As of 2022: Self-employed individuals can contribute 25% of their pretax income up to $61,000 If the Keogh is a defined benefit plan, or if you’re self-employed and the Keogh is your only retirement plan, then you can contribute up to 100% of your pretax income, up to $61,000, in tax-deferred contributions. A Keogh plan can be structured as either a defined contribution or a defined benefit plan like a pension. Contributions vary depending on how you structure your plan. Keogh Plan Rules The IRS has Qualified Plan rules, which apply to Keogh plans. These IRS rules include the following: Must be self-employed to set up: You must have self-employment income to be eligible. Having another plan at work doesn’t make you ineligible if you also have self-employment income. Can be a defined contribution or defined benefit plan: You can choose which to use, but costs will vary. Defined benefit plans have higher contribution limits as a percent of income, but they also have actuarial costs. Must offer to eligible employees: You must make the plan available to any employee who is 21 years old or over and works at least 1,000 hours per year for your business. Must be set up before year-end: Unlike IRAs, you can’t set up a Keogh plan between the end of the year and your tax-filing deadline. The plan must be set up during the year for which it’s effective. No withdrawals before age 59½: People with Keogh plans can’t withdraw money before age 59½, just like an IRA. Required minimum distributions at age 72: If you still have a balance in your Keogh when you turn age 72, you must start taking required distributions from your account. Pay taxes on distributions: Like with an IRA, you must pay income tax on Keogh plan withdrawals. Must file IRS Form 5500: Unlike IRAs, business owners with Keogh plans must file Form 5500 annually to report information on their plan to the IRS. Keogh Plan Deadlines Deadlines are similar to IRAs but more restrictive when you set up your plan: Setup: Keoghs must be established before the end of the year the plan takes effect Contribution: Keogh plan contributions must be made before your tax-filing deadline for the contribution year, just like a simplified employee pension IRA (SEP-IRA) Keogh Plan Costs Many providers no longer offer dedicated Keogh plans, so finding specific cost information may be difficult and vary widely from one provider to the next. In general, the costs of setting up a Keogh plan can be expected to fall in the following ranges: Keogh Plan Benefits There are benefits to a Keogh plan, although some are not exclusive benefits and can be found in other solo investing options: Tax-deferred contributions: A Keogh allows individuals and small business owners to make up to $61,000 in tax-deferred contributions each year. Tax-free account growth: Your account grows tax-free until you take withdrawals after age 59½. Higher potential contribution limits: Many IRAs limit contributions to 25% of income, but Keogh contribution limits can be higher if established as defined benefit plans. While there are benefits to Keogh plans, changes to tax laws have made them harder to find and not necessarily better than alternative retirement plans. In most cases, you can get the same benefits and fewer administrative headaches with other retirement benefit accounts. When To Use a Keogh Plan Many self-employed workers who might have previously turned to a Keogh are now investing in alternatives. Here are a few situations where a Keogh may benefit you if you can find a provider: Self-employed individual who has a high income: Keogh plans require self-employment income and have high contribution limits (individuals earning over $150,000 per year). Small business owners who want a pension: Most IRAs are only available as defined contribution plans, but Keoghs can be structured as defined benefit plans like a pension. Individuals with self-employment income and no other retirement plan: If you are self-employed and don’t have another retirement plan aside from a Keogh, you can contribute up to as much as 100% of your income—more than IRAs—up to $61,000. Keogh Plan Alternatives Keoghs are hard to find now and are very difficult to manage. If you might have considered a Keogh in the past, one of the four alternatives listed below will likely have the same benefits with far fewer administrative headaches: SEP-IRA: Unlike Keogh plans, SEP-IRAs can only be structured as defined contribution plans. However, SEP-IRAs have the same contribution limits as defined contribution Keogh plans. The biggest drawback to a SEP is that employers who establish it must fund contributions to employee accounts whenever they contribute to their own accounts. Solo 401(k): Solo 401(k) accounts are structured very similarly to other 401(k) plans but with fewer administration requirements. If you hire employees, a Solo 401(k) can be expanded quickly to add new participants. It has the same high contribution limits as Keogh plans and is much easier to administer. It can only be set up as a defined contribution plan, such as SEP-IRAs, and is much more flexible and cost-effective than Keogh plans. Savings Incentive Match PLan for Employees IRA (SIMPLE IRA): If you want to incentivize employee savings, a SIMPLE IRA can be a great alternative. It is very similar to 401(k) plans without the administration costs. Using a SIMPLE IRA, participants can contribute up to $25,000 between salary deferrals and employer matching contributions. For employers, the big drawback is that they’re required to match employee contributions up to 3% of employee compensation. Traditional IRA: A traditional IRA is the simplest and most cost-effective retirement account available. It isn’t an employer-sponsored plan—each individual is responsible for setting one up, and they can choose when and how much they contribute. Traditional IRA contribution limits are $6,000 per year, and account holders over age 50 can contribute an extra $1,000 in catch-up contributions. Bottom Line While Keogh plans used to be very popular among high-earning self-employed individuals, changes to tax laws have made them fall out of favor. Any of the Keogh alternatives listed here will likely serve your needs just as well with far fewer regulations and headaches. If you can find a provider still offering a dedicated Keogh plan, it can still be beneficial. However, any traditional individual or solo 401(k) plan and many IRA options will be more widely available and better fit your retirement plan needs.

Franchise financing allows you to fund the purchase of a franchise or provide working capital for day-to-day expenses. Rates and terms of different types of financing will vary widely depending on the amount of money borrowed, the length of the financing, and the risk to the lender the financing presents. There are many different ways to finance a franchise, each specifically geared toward a specific phase of the franchising process. Some loan types are best used to fund the initial franchise purchase while others provide your business with the working capital needed to keep growing. Here are the seven best types of franchise financing and what each is best used for: Franchisor financing: Receiving financing from the franchisor with negotiable terms Small Business Administration (SBA) loans: Well-qualified borrowers looking for low rates on government-backed loans Rollover for Business Startups (ROBS): Business owners with at least $50,000 in retirement savings to use for funding Working capital loan: Business owners looking for a quick source of working capital Home equity line of credit (HELOC) or home equity loan (HEL): Business owners with equity in their primary residence to use for funding Crowdfunding: Startups looking to raise money to buy into reputable franchises Friends and family loan: Business owners with friends or family willing to lend money Financing a Franchise: Loan Options at a Glance See fullscreen table × Franchisor Financing: Best for Receiving Direct Financing The best way to obtain financing for a franchise is directly through the franchisor, if available. There are two advantages to working directly with the franchisor: Negotiate startup and operating costs: When opening a franchise, there are items you’ll need to purchase before launching. The costs involved will be noted in the Franchise Disclosure Document (FDD), and negotiating those amounts upfront may encourage the franchisor to absorb some of them, such as franchise fees, which could get discounted. Work with the franchisor’s preferred lenders: Franchisors will partner with lenders and can refer you to them for financing. These lenders will be familiar with the brand and needs of the business you’re buying into, so they should be well-positioned to help you succeed. Terms and rates for any type of financing will be negotiable. While this often means getting great ones for funding, it might not necessarily be the lowest available rates. Be sure to compare the other loan types on this list to ensure you’re getting the best for your business. Generally, working with the franchisor for some level of financing will help your franchise get off the ground and assist you in building a good working relationship with them. If they don’t offer direct financing, you can often get invaluable advice from them about obtaining funding. Since they have a vested interest in assisting you, they should be a valuable resource. SBA Loans: Best for Well-qualified Borrowers Wanting Government-backed Loans With Low-interest Rates If you’re looking for the lowest possible interest rates on funding for your franchise, SBA loans are your best bet. There are two types most often used in franchise financing: SBA 7(a) loans can be used as working capital, for leasehold improvements, to refinance debt, or to buy a business or franchise, equipment, and commercial real estate. SBA 504 loans can only be used to buy land, renovate or expand facilities, pay for property improvements, and buy fixed assets. You cannot buy a franchise with an SBA 504 loan, but many of the costs of starting a new business can be funded with one. While SBA loans offer outstanding rates, the biggest obstacle is funding time, as it can take up to 90 days to close an SBA loan. Also, you can’t use funds from SBA loans to cover startup costs—these will have to be covered out-of-pocket. You also need to have a strong credit profile as you’ll need a personal credit score of 680 or greater to qualify. For more information on what you’ll need to know to obtain an SBA loan, check out our guide on how to get a small business loan. can help you with an SBA loan to help finance a franchise. It offers SBA loans between $30,000 and $5 million, with repayment terms of up to 25 years. You can apply in 5 minutes on the company’s website, so check it out for more information. ROBS: Best for Owners With Retirement Funds to Invest The most important thing about a ROBS is that it isn’t a loan, so there are no payments to make and no interest to pay back. It’s an investment from a personal retirement account used to fund a business. To qualify for and use a ROBS, you must Contribute $50,000 or more from your retirement savings Be an employee of the business Structure your business as a C corporation (C-corp) Be able to fund the setup costs of $5,000 from outside the deferred retirement account Setting up a ROBS can be very complicated. Before proceeding, check out our guide on ROBS and our list of the best ROBS providers. is an excellent ROBS provider. It can assist you with the proper setup and execution of a ROBS account. Visit its website for more information or to speak with a ROBS specialist. Working Capital Loan: Best for Owners Looking for Fast Funding for Short-term Needs Whether you need funds to make payroll, finance an equipment purchase, or use as a line of credit for day-to-day expenses, a working capital loan can help with the recurring costs of your new franchise. The most significant advantage to this option is funding time—you can receive a loan or access to a line of credit often within a matter of hours. Note, however, that terms and rates will vary depending on the type of loan or line of credit obtained. While working capital loan providers will lend to borrowers with credit scores below 600, those often come with very high interest rates and fees. The better your individual credit, the better rates and terms you would get. While you won’t fund large capital projects with a working capital loan, you can cover the smaller, often recurring expenses your business encounters. If you’re looking for a business line of credit, is an excellent choice. It provides business lines of credit of up to $250,000 at rates starting as low as 4.8%. Visit its website to get a funding decision within 5 minutes, and you can even get access to funding on the same day. HELOC or HEL: Best for Owners With Available Equity in Their Primary Residence Another alternative to a business line of credit or term loan is a HELOC or a HEL. The critical difference is that qualification for it’s based on the personal credit and income of the business owner. It also depends on the available equity in the business owner’s personal residence. A HELOC provides a revolving line of credit similar to a credit card. You receive a credit line and can take draws against the line during the draw period, usually 10 years. At the end, you can either pay the line of credit off and close it, renew the line of credit, or transfer it to an amortizing mortgage loan and pay it down in monthly installments. This is ideal for recurring small expenses like you would use a working capital loan. Meanwhile, a HEL is a lump sum loan based on the equity in your home. Rather than taking multiple draws against a line of credit, a HEL gives you the full amount of the loan at closing, with monthly principal and interest payments due until the loan is satisfied. This type is ideal for large expenses that you might incur when getting your franchise started. Regardless of which you apply for, is a great provider. It has an online marketplace to ensure you get the best rates and terms for your business needs, so visit its website to get the process started. Crowdfunding: Best for Startups Looking to Raise Funds to Buy Into Franchises Crowdfunding might be a good choice if you’re looking for larger financing than a working capital loan, cannot wait for up to 90 days for an SBA loan, have less than perfect credit, and don’t want to pay the extra fees and higher rates involved with alternative loans. It raises money from institutions and individuals and can often bridge the gap between traditional business loans and high-interest alternative loans. One crowdfunding provider that focuses on franchise financing is . In addition to crowdfunding, it provides SBA and conventional loans with both fixed and variable rates. Whether you’re looking to purchase new units, remodel, recapitalize, or finance equipment, it has financing options available. Visit its website to learn more. Friends & Family Loan: Best for Owners With Friends & Relatives Willing to Lend Them Money One final option to obtain financing for a franchise is a friends and family loan. This type has very lenient repayment terms and excellent rates. However, it often comes with unwanted involvement in the business by investors, so documentation is critical to safeguarding the business. The IRS sets the minimum rates expected from these types of loans in the IRS Index of AFRs, which is updated every month. Failure to charge the proper interest can lead to tax problems for your business, and if the family member or friend doesn’t charge interest at all, the IRS will see it as a gift—which can also cause tax issues. Unless your friends and family are sophisticated investors, taking money as a loan is generally cleaner than selling them a share of the business for three reasons: Unwanted business advice: If a family member or friend has shares in the business, they’ll also want input on the long-term business strategy. This may be less than ideal. Potentially unrealistic business valuations: Business owners often overvalue the new startup, which gives family and friends an unrealistic expectation of a return on their investment. Loan obligations for owners: Selling business shares to family or friends may require them to be liable personally for future financing applications. What To Know Before Applying for Franchise Financing There are several things to consider before applying for franchise financing. This section will break down the tips for applying, the costs of running a franchise, and the pros and cons of franchise financing. Tips for Applying for Franchise Financing Choose a good franchise: You should have a specific franchise in mind before approaching a lender. Consider location, historical performance, startup, and operating costs, and brand value when choosing a franchise. Check out the FDD: This is the most reliable way to figure out the estimated startup and operating costs for your franchise. Have a lawyer and accountant review the document before you agree to purchase a franchise. Request a regional FDD: This can help you understand how the franchise performs in your geographic location. Create a solid business plan: Many people assume that just because they’re starting a franchise, they don’t need a business plan. Even if a franchise has numerous locations throughout the country, each unit is an independent business with unique strengths and weaknesses. Improve your personal credit score: Your personal financial history and credit score will be critical when applying for financing, especially early in the history of your franchise. Pay bills on time, reduce the amount of credit you use, and be selective about how many loans you apply for. Maximize your personal investment: Bring as many personal resources as possible to the table. This decreases your reliance on external financing and shows a personal stake in the franchise. Gather collateral: Having collateral will go a long way towards getting approved for a franchise loan, particularly an SBA or bank loan. If you’re buying real estate, then it can serve as collateral. If not, then personal real estate, business equipment, or other assets will often work to secure your loan. Don’t do it alone: It’s important to find help in your financing process. The more people involved in your effort, the more resources you’ll be able to draw from during the process. Costs of Opening & Running a Franchise Once you receive an FDD, review it with your lawyer and accountant before you sign any paperwork. The franchisor must provide you legally with the FDD at least 14 days before buying a franchise. Here are some of the costs that should show up in the FDD: Initial franchise fee: One-time fee that often ranges from about $20,000 to $30,000 but can be higher for well-known national brands. Ongoing royalties: These generally range from 4 to 8% of gross revenues and may be paid weekly or monthly. Net worth/liquidity: Large franchisors won’t even consider you if you don’t bring a certain amount of net worth and liquid assets to the table. Hiring costs: In addition to the cost of hourly wages for employees, there’s a cost to the time it takes to hire and train employees and the costs of employee benefits, health insurance, and business insurance. Equipment, marketing, and other miscellaneous costs: You may be assessed a weekly or monthly marketing fee apart from royalties to pay the franchisor for marketing material. Equipment purchase is generally a high startup cost for a franchise. FranchiseGrade.com has a free tool that lets you compare the startup costs of different franchises and has data on more than 2,500 franchises. Visit their website for more information. Pros & Cons of Franchise Financing Bottom Line There are built-in advantages to purchasing an existing franchise rather than starting an entirely new business. However, it’s essential to know what to expect in the franchising process before getting financing. You’ll also need to know what kind of financing you need to obtain, impacting which lenders you use. Be sure to include your legal and financial advisors at every step to ensure your personal and business interests are protected.

Our equipment lease calculator allows you to estimate the costs of a potential equipment lease. You can calculate costs using the three most common lease types: fair market value, 10% buyout, and $1 buyout. Our calculator will show you the residual value, estimated monthly lease payments, the total cost of the lease, and the total cost of the buyout. How the Equipment Leasing Calculator Works Our equipment lease calculator will show you the estimated costs involved with an equipment lease. Inputs Select type of lease: You will choose one of the three types: Fair market value: This lets you rent equipment, with the option to either purchase the equipment at fair market value at the end of the lease or return it. This type will have the lowest monthly payments but the highest interest rates because the lessor has an increased risk of having to find another renter for the equipment. 10% buyout: This allows the borrower to make payments and have the option to purchase the equipment for 10% of its initial value at the end of the lease. However, the borrower would also have the option to walk away at the end of the lease, forgoing the 10% buyout and returning the leased equipment. $1 Buyout: Similar to an equipment loan, borrowers make payments to rent the equipment and, at the end of the lease, have the option to purchase the equipment for $1. Interest rates will typically be the lowest with this type of lease, and it should be used when you’re sure you want to own the equipment at the end of the lease. Price of equipment: This is the price or value of the equipment at the time of the lease. Down payment: This is the amount of money you’re putting down at the start of the lease. Interest rate: The interest rate being charged for the lease. Life of equipment in years: This isn’t the length of the lease and is instead the estimated life expectancy of the equipment at the start of the lease. Number of months: This is the length of the lease. The equipment is either purchased or returned at the end of this term. Outputs Residual value: This is the remaining cost of the buyout at the end of the lease. Otherwise known as the remainder, you need to pay to purchase the equipment at the lease end. Monthly lease payments: This is the estimated monthly lease payment for the duration of the lease. Total cost of lease: This is the estimated amount you will spend on payments throughout the lease. It is approximately the estimated monthly payment multiplied by the number of months of the lease, although rounding in the lease payment formula can make these numbers slightly different. Total cost of the buyout: This is the true cost of buying the equipment by paying the lease to the end of the term and then buying the equipment. It’s the total cost of the lease plus the residual value. Equipment Leasing Examples For our two samples below, we show a chart comparing three lease types using the same equipment price, down payment, equipment life, and number of months. The first example uses the same interest rate, whereas the second has different rates corresponding to each type's risk to the lessor. Each is compared side-by-side, showing estimated residual value, monthly lease payments, total cost of lease, and total buyout cost. Note that typical interest rates for equipment leases are between 7% and 16%, with down payments for well-qualified borrowers starting at 5%. Lease terms are typically between two and five years and can go up to 90% of the estimated life of the equipment. Example 1: Same Interest Rates Price of equipment: $50,000 Down payment: $10,000 Life of equipment in years: 15 Interest rate: 8% Number of months: 48 As you see in this example, fair market value offers the lowest monthly payment and the lowest total cost of lease. However, if you decide to purchase the equipment, it has the highest buyout cost. The highest monthly payments belong to the $1 buyout lease—but its total cost of buyout is the lowest. Example 2: Different Interest Rates Price of equipment: $50,000 Down payment: $10,000 Life of equipment in years: 15 Interest rate: Varies (see below) Number of months: 48 In the example above, the $1 buyout is calculated with an 8% interest rate while a 10% buyout has a 9% rate and fair market value at a 10% rate. While it doesn’t change the order of which has the lowest payments or the cheapest buyout, it does show what different rates would do to those totals. Bottom Line Equipment leases are a great way to obtain new or used heavy equipment at a cheaper monthly cost than an equipment loan. However, before deciding to lease equipment, make sure you calculate the costs involved to make sure it fits into your short- and long-term budgets. Additionally, consider whether you intend to purchase the equipment at the end of the loan—or if you’ll return it. Those factors will help you decide whether to lease or get a small business loan and what type of lease fits your needs.

A rollover for business startups (ROBS) allows you to invest funds from an existing 401(k) or individual retirement account (IRA) into your business without paying early withdrawal penalties or taxes. A ROBS isn’t a business loan or a loan from your 401(k), which means there are no interest payments to make or debt to repay. It’s a way for you to leverage retirement funds to provide capital to your business. A ROBS can also be used to purchase or invest in an existing business or franchise. A C corporation (C-corp), which allows for shareholders, is established, and a new 401(k) plan is set up. Most small business owners utilize a ROBS provider to help them navigate this transaction. We compared several of the best ROBS providers and ranked Guidant as the best overall because it offers a free consultation and provides very good customer service. Pros & Cons of ROBS There are risks and rewards associated with starting or purchasing a business. A common concern of potential business owners is that if they use retirement funds and their new venture isn’t successful, they could lose their investment. However, the financial risk involved with any business startup and the risk of failure isn’t unique to a ROBS. According to the Bureau of Labor Statistics (BLS), roughly 45% of corporations cease to exist within five years. Who a ROBS Is Right For A ROBS is best suited to individuals wanting to start or fund a new or existing business and also have a large amount of money saved for retirement. While you may not need to use your entire retirement portfolio to fund your business, most ROBS plans require at least $50,000 to start, and some franchises or business startups require much more to get up and running. Prohibited Uses of ROBS Funds Most operational business expenses are allowed with a ROBS. These include lease and mortgage payments, payroll, and other normal expenses that the business incurs. However, some expenses aren’t allowed: Personal use of business property: The IRS prohibits the use of business property for personal use. This would include a company car or company-owned real estate. Any transaction where an owner or family member is the recipient of business property is also subject to a 15% tax. Direct compensation to the owner: Having a ROBS requires an owner to be an active employee in their business. However, you cannot pay yourself a salary that isn’t considered appropriate for the role you serve nor appropriate for the company’s revenue. Note that your salary must come from operating expenses and not directly from the ROBS. ROBS Costs A ROBS isn’t a startup business loan, which means there’s neither debt nor interest to pay back. However, there are some costs associated with a ROBS. You could use an attorney and an accountant to set up and help administer your ROBS; however, a ROBS provider is more knowledgeable about the nuances of IRS regulations and would be a better option. Setup fees: Setting up a ROBS plan typically costs around $5,000. These funds must be paid out-of-pocket and cannot come from the monies you’re using for the ROBS. The setup costs will generally include setup of the C-corp, creation of the retirement plan, and submission of paperwork to the IRS. Ongoing maintenance fees: The average ROBS plan costs around $130 a month to manage but can increase based on the number of employees you have taking advantage of your company’s retirement plan. Maintenance fees include filing paperwork with the IRS to ensure compliance with 401(k) rollover rules and notifying and educating eligible employees about the company’s retirement plan. These fees may be assessed annually instead of monthly, depending on the ROBS provider, but—like the setup cost—cannot come from the retirement plan. ROBS Compliance & Audits ROBS plans are held to compliance standards with the IRS and United States Department of Labor and ROBS plans may be audited. Those plans not in compliance with government regulations could face tax penalties and fines. While the risk of an audit is rather low, an audit by the government will check for the following: That the retirement plan was set up correctly: Also, that your business is set up in the correct corporate structure (C-corp). That all annual filings have been completed and submitted: Among the required filings is IRS Form 5500. That you meet all employee requirements: This means you’re an employee of the organization, you’re providing eligible employees access to the company’s retirement plan, and all necessary plan documents are provided to your employees. Rollover for Business Startup Requirements Before you dive in and establish a ROBS, it’s important to know that there are some eligibility requirements regarding your current retirement account, how much money you have in it, and your status as an employee in your new business: Eligible retirement plan that’s current: You must have a retirement plan that’s tax-deferred and eligible for conversion to a ROBS. Unfortunately, Roth IRAs and Roth 401(k)s wouldn’t be eligible. However, a 401(k), a 403(b), a Keogh plan, a simplified IRA (SEP-IRA), a thrift savings plan (TSP), and a traditional IRA all are eligible. Sufficient money in your retirement account: ROBS plan providers typically require a minimum of $50,000 to start. However, your business may need more capital than that to fund initial operations. Being an employee of the new business: You’re required to be an active employee in your business and draw a salary. However, taking too much compensation may be considered a ROBS-prohibited transaction and could put you at risk for an IRS audit. Eligible employees must have the opportunity to invest in company’s retirement plan: If your business will have additional employees, you may be required to offer those employees the ability to participate in your company’s retirement plan. Eligibility requirements for retirement plans vary by state and plan design but often are based on the employee’s age, length of employment, and employment status (full time vs part time). How To Set Up a ROBS How To Unwind a ROBS Starting a business with a ROBS is one way to use your financial assets to your benefit without needing to take out a small business loan. When it’s time to exit your business, whether through a sale or through closing the business down, many steps—which vary based on the situation—are necessary to unwind your ROBS. Regardless, each scenario requires compliance reporting to the IRS that a ROBS provider will assist you with: Frequently Asked Questions (FAQs) About a ROBS Is a ROBS a good idea? A ROBS is a good way to secure funds for your new or existing business in the event that you don’t have the credit or collateral to obtain other types of business financing. It can be risky, as you’re putting your retirement funds in jeopardy, and you’ll need a large amount of money saved for retirement. You need at least $50,000 available from your retirement to fund a ROBS. How long does the ROBS process take? It can take anywhere from two to four weeks to set up a ROBS account. The amount of time will vary depending on which ROBS provider you choose. What are the risks of a ROBS? The biggest risk of a ROBS is that your retirement funds are in jeopardy if the business fails. Because you’ll need at least $50,000 available from a retirement fund to start a ROBS, that would be the minimum amount you would lose if the business doesn’t succeed. That money doesn’t have to be repaid to the retirement fund, but you’ll lose the money. Bottom Line A ROBS can be an excellent option for funding a small business. If you have sufficient funds in a retirement plan and feel that the potential rewards outweigh the risks, it may make sense to consider using a ROBS to help finance the start of or acquisition of a small business.

Our Small Business Administration (SBA) loan calculator is designed for SBA 7(a) and SBA Express Loans. Upon inputting the loan term, desired loan amount, expected interest rate, and annual net operating income, the calculator will generate an estimated monthly payment and a projected amortization schedule. SBA Loan Payment Calculator Inputs When using our SBA loan calculator, there are four essential pieces of information you’ll need to enter: Loan amount: The first and most important input into the calculator is the loan amount for which you’re applying. This should be as accurate as possible. SBA Express loans are available in amounts up to $350,000 and 7(a) loans in amounts up to $5 million. Term (in years): This is the estimated repayment term of the loan for which you’re applying. Loan terms are generally up to 10 years for working capital and up to 25 years for real estate. The longer the repayment term is for your loan, the lower the monthly payments will be. Expected interest rate: The calculator will only accept interest rates up to the maximum SBA loan interest rate. The interest rate on your loan impacts your payment amount; a higher interest rate yields a higher payment. Annual business income: Input the gross revenue that your business generates annually. Make sure to include your salary. For best results, use an average of the past two years, as most lenders use an average instead of a single year. How To Read Your SBA Loan Calculator Results Monthly payment: The primary output of the SBA loan calculator is the monthly payment. It’s important to review this number to ensure that you can afford the amount and that you feel comfortable with a payment of this size. The monthly payment is impacted by the interest rate on the loan as well as the loan amount and length of the term. Debt service coverage ratio (DSCR): The DSCR is a metric that compares your business debt to income. A DSCR of at least 1.25 is preferred by lenders. Note that our DSCR output only includes your SBA loan and doesn’t include any other business debt you may have. Amortization schedule: The SBA loan calculator generates an estimated amortization schedule based on the information entered. The amortization schedule breaks down each monthly payment into principal and interest over the course of the loan. This allows you to see how interest rates and terms affect your payments. Do you need an SBA loan? connects you to more than 75 loan providers, offering SBA loans and also non-SBA financing. Their competitive marketplace can get you pre-qualified in a matter of days with a quick application online, providing you with choices on the best financing options available for your business. What’s Not Included in the SBA Loan Payment Calculator Our SBA loan calculator is a great tool for estimating your monthly SBA 7(a) or Express loan payment. However, it isn’t an all-inclusive calculator. Our calculator doesn’t take into account the fees associated with SBA loans. These fees include costs for lender origination, SBA loan guarantee, loan packaging, and closing the loan. Some fees may be able to be rolled into your total loan amount, while others may require that you pay them upfront. Additionally, our SBA loan calculator doesn’t provide information to help you determine if you qualify for the SBA 7(a) or SBA Express loan programs should you wish to apply. SBA Loan Payment Factors We’ve briefly discussed the various inputs and outputs of the SBA loan calculator, how it works, and the items that the calculator doesn’t address. With those basics established, we can delve deeper into how each of these facets plays a part in the calculations. It’s important to understand how much an SBA loan is going to cost each month and over the life of the loan before you make a financing decision. SBA loan costs and monthly loan payments are typically affected by the following. 1. Loan Amount & Terms In general, interest rates are lower for larger loan amounts and shorter repayment periods. SBA loans have a maximum loan amount of $5 million and maximum repayment terms of 10 years for working capital and 25 years for real estate. 2. SBA Loan Interest Rates The government sets maximum SBA interest rates that lenders can charge on SBA 7(a) loans. The maximum interest rates are determined by the length of the loan term and the size of the loan amount being borrowed. The interest rate on 7(a) loans can be fixed or variable. With a variable rate, the interest rate you’re charged changes with market interest rates. If market rates rise, the loan’s interest rate and payments will also rise. This change in interest rate is typically gradual, occurring over the course of several years. 3. SBA Loan Fees The largest SBA loan fee is usually the guarantee fee. Initially paid by the lender, the fee is almost always passed on to the borrower at closing and typically is rolled into the whole loan. The guarantee fee is based on the size and term of your loan and can be as high as 3.75% on loan amounts over $1 million. Bottom Line In most cases, SBA loans offer the most affordable option for small business owners seeking financing. The SBA business loan calculator will help you estimate the monthly payment for an SBA 7(a) loan for either working capital or commercial real estate and provide you with an amortization schedule for your loan.

Startups looking for equipment loans and leases should choose a provider with a short time-in-business requirement and low annual revenue requirement. You should also choose a lender with good interest rates with terms that work with your business needs. The six providers that provide the best equipment loans for a startup business are: : Best overall for long-term equipment financing : Best for lower credit score borrowers : Best lease options for businesses with poor credit : Best for flexible options for small startup businesses : Best for access to many leasing companies : Best for competitive rates for qualified startups Best Equipment Loans at-a-Glance See fullscreen table × * - No minimum credit score requirement if the borrower has been in business for at least six months with at least $120,000 in gross annual sales. Smarter Finance USA: Best Overall for Long-term Equipment Financing With financing for up to seven years, a short time-in-business requirement, and low starting interest rates,  is our choice for the best equipment loan or lease for startup businesses. The minimum time in business required is six months, making this a good choice for startups. Smarter Finance USA offers flexible lending options and competitive rates. Businesses with a personal credit score of at least 600 that can put at least 5% down can qualify for an equipment loan or lease with Smarter Finance USA. While you cannot apply directly through its website, Smarter Finance USA offers a form to submit your information. There’s also a toll-free number to call if you want more information. National Funding: Best for Lower Credit Score Borrowers is an excellent choice for an equipment loan for startup businesses mainly due to credit availability to borrowers with a credit score of at least 575. National Funding is more willing to lend to lower credit borrowers than others on this list, including some providers that list a lower minimum credit score. With at least $250,000 in annual revenue and at least six months in business, you can qualify for an equipment loan. In addition, National Funding has an easy application process, quick decision and funding timeline, and early payoff discounts. National Funding allows you to apply through its website or a toll-free number. The application process involves just a one-page application and three months of bank statements. A decision and funding are promised within 24 hours. eLease: Best Lease Options for Businesses With Poor Credit offers equipment leases up to $500,000, with terms of up to five years. eLease is a viable option for startups that are tight on cash or have poor credit, given that there’s no minimum-time-in-business requirement nor a minimum-revenue requirement. Each application is reviewed on a case-by-case basis. You can download an application from the eLease website or scan a quick response (QR) code from the website to start the application. If approved, you can receive funding within 24 hours. Currency Finance: Best for Flexible Options for Small Startup Businesses Startup businesses that have good credit but are tight on cash can benefit from , as it doesn’t require a down payment. However, the interest rates may be higher. Loans may be approved and funded in just one day, making Currency Finance a viable option if you need financing quickly. Currency has one of the longer time-in-business requirements of any provider listed. The company prefers businesses to have at least two years in operation. You can start your application directly on Currency Finance’s website. Businesses approved for equipment financing could see funding the same business day. National Business Capital: Best for Access To Many Leasing Companies is an online business loan broker that offers a variety of unique financing programs. It emphasizes personalized service and custom-tailored financing. No minimum credit score is required as long as you have at least $120,000 in gross annual sales and at least six months in business. If you don’t meet those requirements, National Business Capital requires at least a 650 credit score. Your application will be shopped to more than 75 potential lenders to allow you to get the best rates and terms for your equipment loan or lease. You’ll need to submit three months' worth of bank statements, but tax returns aren’t required. You can call a toll-free number, schedule a call or apply directly on National Business Capital’s website. Smaller loans can be funded within 24 hours, while larger loan amounts may take up to five days. CIT: Best for Competitive Rates for Qualified Startups Borrowers with great credit and financials may be eligible for equipment financing through . Starting rates of 5.49% are among the best available for startup businesses. Newer businesses may need to put 20% or more down to obtain financing, making this option appropriate only for those with sufficient reserve capital or prior industry experience. With just an application, you can qualify for an equipment loan or lease of up to $500,000. That amount increases to $1 million if you submit financials. The financing term can go up to 72 months and funding can be as quick as one business day. You can apply directly through the CIT website. The application takes as little as three minutes. Contracts are sent to you for electronic signatures if approved. How We Selected the Best Startup Equipment Loans When considering the best equipment loans for startup businesses, we chose providers with limited time in business requirements and lower annual revenue requirements. We also chose some options for low credit borrowers and some providers with higher credit score requirements. Lower credit borrowers will likely pay higher rates and fees while higher credit borrowers will see low fees and low interest rates. In addition, we chose providers with easy online or phone applications and fast funding times. Many providers offer both equipment loans and leases. Before selecting a financing type, check out our guide comparing equipment loans and equipment leases. If you choose a loan, check out our guide on how to get a small business loan. When Equipment Loans for Startup Businesses Make Sense Most businesses need equipment when starting out. Manufacturing businesses need specialized plant equipment to fulfill orders, construction businesses require heavy equipment, and doctors’ offices need medical equipment. Many startup business owners prefer to use equipment loans as they provide access to needed equipment without paying the entire amount upfront. Typically, equipment with a long-expected use life is best suited for an equipment loan. Equipment that has a short shelf life, such as computers, copiers, and other types of technology, might be suited better to equipment leases. Additionally, some manufacturers may offer direct financing or lease arrangements that are competitive with the terms, costs, and conditions of banks and online lenders. Bottom Line Getting equipment financing can be difficult for a startup business. The providers listed here offer equipment loans and leases to startup businesses that may be too new or don’t bring in enough revenue to get approved for other types of equipment financing. Compare rates, terms, and financing options from multiple providers and choose the one that works best for your business needs.