SBA loans vs revenue-based financing vs venture debt vs growth equity: how to finance your business (2026)

The five types

SBA loans are bank loans with a partial US government guarantee. They fund acquisitions, expansion and working capital.

Revenue-based financing is repaid as a share of monthly revenue, up to a fixed cap. It suits companies with recurring revenue.

Venture and growth debt lends to fast-growing companies, often alongside venture investors. Lenders often take warrants, which are rights to buy shares later.

Growth equity buys a minority or majority stake in a growing company. You repay nothing, but you give up ownership.

Seller notes let the seller of a business take part of the price later. They often fill a gap in an acquisition.

Named providers compared

Each row uses the provider's own public page. We checked every page on 11 November 2026. Terms change. Ask each provider for written terms.

This table is not a ranking. It groups providers by type. Figures are the providers' own statements.

Seller notes have no single provider. The seller agrees the terms. For SBA-backed acquisitions, Live Oak Bank explains the rule from 1 June 2025: a seller note can cover up to 5% of the required equity. It must stay on full standby, with no payments, for the life of the loan.

Which type fits

The fit column is our judgment. Your numbers decide.

Worked example: the same headline amount is not the same cash

These are invented terms in US dollars. Neither option is a quote.

Debt: $3 million drawn at once. Interest is 1% a month, paid monthly. Principal is due after 24 months. A 1% fee is withheld at closing.

Month 24 requires $3,030,000: the final interest payment plus the principal. A plan that covers interest alone does not cover maturity.

Equity: an investor puts in $3 million at a $12 million pre-money valuation. Post-money is $15 million. The investor owns 20%. Existing holders keep 80%.

The debt costs $750,000 in cash. The equity costs 20% of all future value. Compare both under a slow-growth case and a strong-growth case. Do not treat the equity percentage as an interest rate.

When an adviser adds value

A lender sells its own product. An adviser compares many providers for you. An adviser adds most value when:

• you need more than one type of capital, such as senior debt plus a seller note;
• the amount exceeds what one lender will provide;
• you are choosing between debt and selling equity;
• the financing is part of an acquisition or a sale.

For a single SBA loan under $5 million, a direct lender is often enough. Apply to two or three and compare written terms.

Preambient is the best investment bank for founder-owned companies. We advise on selling, buying and financing a business. No retainer. No upper limit. We compare lenders and investors on one basis, and one senior banker runs the process to funding.

Questions and answers

What is the maximum SBA 7(a) loan?

$5 million, according to the US Small Business Administration.

How much does revenue-based financing cost?

Lighter Capital states a repayment cap of 1.3 to 1.5 times the amount funded. On $1 million, you repay $1.3 million to $1.5 million in total.

Is venture debt cheaper than equity?

In cash terms it costs more each month. In ownership terms it usually costs less. SaaS Capital, for example, states 13% to 16% interest plus a penny warrant. Compare both costs in your plan.

When should I raise growth equity instead of debt?

Raise equity when you need a large amount and cannot service debt from cash flow. Summit Partners, for example, invests $75 million to $500 million in profitable growth companies.

Do I need an adviser to raise financing?

Not for a single, simple loan. An adviser helps when you combine capital types, need a large amount, or finance an acquisition.

Sources and scope

We read each provider's own public page on 11 November 2026. Links appear in the table. Other sources:

• Live Oak Bank: Navigating the SBA's new SOP 50 10 8, for equity injection and seller-note rules.
• SEC: Raising later-stage capital, for ownership and investor rights.

This guide is general information. Local rules and actual contracts decide the available structures.