Small Business Loans Arizona

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Arizona is the 6th largest and the 14th most populous of the 50 States. The capital and largest city and metropolitan area in Arizona is Phoenix, listed as the 5th most populous region in the United States.  Other areas of economic activity and interest in Arizona include Flagstaff, Alpine, and Tucson, as well as the internationally known Grand Canyon National Park, which is one of the world’s seven natural wonders, and several other national forests, parks, and monuments.

Arizona is one of the fastest-growing states in the nation with a gross state product of over 321 billion. The major employment sectors in Arizona include aerospace, electronics, and semiconductor manufacturing. Tourism, business services, and back-office operations are also important sectors. Arizona’s original export activities of agriculture and mining remain significant in many rural parts of Arizona. Check out the Arizona economic profile provided by the Arizona Department of Commerce.

With all that Arizona has going for it from an economic perspective, small business owners still face many challenges getting business financing from traditional banks that have stringent guidelines, credit requirements, mountains of paperwork, and limited products to offer.

AdvancePoint Capital has a business funding marketplace full of business funding alternatives for Arizona small businesses. Let’s explore the ten most popular business funding options.

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The 10 Best Small Business Financing Options for Arizona Small Businesses

1. Long-Term Business Loans for Arizona Small Business

Long term small business loans are small business loans with a duration of greater than two years. Businesses are offered a fixed amount of upfront and charged principal & interest. Unlike a business line, a business owner cannot draw money as you go with a long term loan. Typically, long term business lending is for business expansion and growth or to finance large long term projects. This business funding option is used for long term projects and needs

Product Overview

Rates: Interest rates starting at 5.50% or treasury index plus 1% to 2.5% 

Terms: 2 to 10 years

Fees: Origination fees range from 0% to 3%

Payment: Monthly or bi-weekly

Credit Standards: Good to excellent preferred. All types considered.

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Long Term Business Loans

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2. Business Line of Credit for Arizona Small Business

A Business line of credit is an open revolving line. This type of funding allows business owners to draw funds when needed on-demand or make purchases—a business line charges a principal & interest rate. Business lines of credit do have a credit limit that cannot be exceeded without approval and are not open-ended forever and require renewal either semi-annually or annually to be extended. This business funding is primarily used for small purchases and working capital.

Product Overview

Rates: 5.50% interest rates or treasury index plus 1% to 2.5%

Terms: Open revolving line

Fees: Origination fees ranging from 0% to 3% 

Payment: Monthly, bi-weekly or weekly

Credit Standards: Good to excellent preferred. All types considered.

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Business Line of Credit

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3. Small Business Credit Cards for Arizona Small Business

Business credit cards are open revolving credit lines that charge a principal & interest rate with a limit. A card is issued that can be used for making payments or purchases. Arizona business owners utilize business credit cards in conjunction with other small business financing products. The primary use of this financial product is for purchase of small items or working capital

Product Overview

Rates: Introductory rates starting at 0% up to 28.99% principal & interest

Terms: Open revolving line with a  limit 

Fees: $0 to $500 Annual fees

Payment: Flexible monthly

Credit Standards: Must have good to excellent and deep history

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Business Credit Cards

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4. Short Term Small Business Loans for Arizona Small Business

Short term business loans are defined as loans that are typically repaid within 6 to 18 months. This small business funding features a lump sum offered up front with a fixed payback amount calculated using a factor rate over a short term of time. Rates are not principal & interest but a “factor rate” that costs more than traditional loans. Most businesses choose short term business loans when they do not qualify for traditional business funding. Short term small business loans charge more for costs and are shorter-term, and the payments are more frequent to compensate for the greater risks business lenders take in offering this product. These loans are popular with small businesses because of the reduced documentation requirements and credit tolerances that are laxer than traditional loans. This business funding option can be used for a variety of short term needs, including working capital.

Product Overview

Rates: Factor rates range from 1.09% up to 1.45%

Terms: 6 to 18 months in duration (typically 12 months or less)

Fees: 0% to 5% origination fees

Payments: Weekly, bi-weekly and in some cases daily Monday-Friday

Credit Standards: All types considered

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Short Term Business Loans

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5. Business Cash Advance for Arizona Small Business

Business Cash Advances (BCA) is also known as the Purchase of Future Sales Agreement that advances future sales at a discount to a business. The business is responsible for paying back a fixed payback amount known as a specified amount, which is higher than the amount that was advanced to the business. This difference between the advance amount and the payback amount is called the “factor rate” or “cost,” which is a fixed cost. This is not principal & interest costs. The advance is repaid by taking a fixed percentage of future overall deposits called the specified percentage. The payments are collected by an ACH fixed daily or weekly payment, deducted from a business bank account based on the specified percentage of future sales. At the end of every month, reconciliation can occur. If the fixed payments taken are more than the set future percentage of sales, a business owner can request a refund back to the business for overpayment so that the set specified percentage of sales collected for the business matches the revenue volumes. Repayment continues until the payback amount is paid back in full. There is no term limit with advances as the fixed payback percentage ever changes due to fluctuating revenue. This type of business funding is primarily used for working capital needs.

Product Overview

Rate: Factor rates range from 1.09% up to 1.45% 

Terms: No term limits. Payments continue until paid in full based on specified percentage collection method and are dependent on future revenues

Fees: Origination fees that range 0% to 5% 

Payment: Weekly or daily Monday-Friday Fixed ACH

Credit Standards: Poor to excellent accepted. All types considered.

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Business Cash Advance

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6. Merchant Cash Advance for Arizona Small Businesses

A Merchant Cash Advance (MCA) is also known as a Purchase of Future Sales Agreement that operates very similarly to BCA’s. Still, the most significant difference is the repayment process, which is connected to future credit card revenues instead of overall sales. MCA’s take a set percentage of future credit card sales at the time of batch of credit cards until the advance is paid back in full. Business owners find this valuable when they have fluctuating revenues and don’t want to be locked into a fixed payment that could negatively impact capital or margins of profit if revenues decline or fluctuate. This small business funding is used primarily for working capital needs.

Product Overview

Rate: Factor rates that range from 1.09% up to 1.45% 

Terms: No term limits (payoff depends on future credit card sales)

Fees: Origination fees range from 0% to 3%

Payment: Set fixed percentage of future credit card revenues

Credit Standards: All types considered from poor, fair, good, or excellent.

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Merchant Cash Advance

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7. Equipment Financing for Arizona Small Businesses

Arizona area businesses that use equipment to operate their business will typically turn to equipment financing for the purchase of equipment that uses the machinery as collateral. Business owners must have very good to excellent credit, but the good news is limited paperwork is necessary to get approved. 

Product Overview

Rate: Factor rate ranging from 1.09% up to 1.45%

Terms: 2 to 7 years

Fees: Origination fees range from 0% to 3% 

Payment: Weekly or daily Monday-Friday fixed ACH

Credit Standards: All types considered.

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Equipment Loans

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8. Small Business Administration (SBA) Loans for Businesses in Arizona

The Small Business Administration (SBA) provides programs, guidelines, and loan guarantees to approved lenders for businesses throughout Arizona. The Small Business Administration SBA’s mission is to help Americans start, build, and grow their businesses successfully. The Small Business Administration (SBA) is not a lender. The Small Business Administration (SBA) provides a guarantee that gives the approved lender the ability to take on the risk of business lending under Small Business Administration (SBA) terms, which they may not ordinarily do on their own. It has rights reserved for any recourse need. The Small Business Administration (SA) loans are highly sought after by Arizona small businesses.

Product Overview

Rate: Interest rates starting at 5.50%, treasury index plus 1% to 2.5%  

Terms: 3 to 25 years 

Fees: Origination fees 0% to 3%

Payment: Fixed monthly

Credit Standards: Good to excellent preferred, but all credit considered. 

Small Business Administration (SBA) Loan Programs

SBA Standard 7 (a) Loan Program:

SBA loan 7(a) is the SBA’s primary program is designed to provide financial assistance to small businesses. The terms and conditions, like the guaranty percentage and loan amount, may vary by the type of loans to small businesses.

SBA Loan Program 504:

The SBA 504 Loan is a powerful economic development loan program that will provide small businesses another avenue for business funding while promoting business growth and job creation. The use of proceeds from SBA 504 Loans must be used for fixed assets such as construction, commercial real estate, land or land improvements (and certain soft costs), or can also be used to refinance existing debt.

SBA Disaster Loans:

Economic Injury Disaster Loans (EIDL)-This type of SBA loan not only provides assistance after natural disasters like tornadoes, wildfires, or floods but when President Trump declared Covid-19 a nationwide emergency on March 13th, small businesses were able to access this program for emergency financing.

SBA Paycheck Protection Program (PPP) Loan:

The Small Business Administration (SBA) has established the SBA Paycheck Protection Program loan. This SBA loan provides loans to small businesses affected by the COVID-19 crisis and needs financial help.

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Small Business Administration (SBA) Loans

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9. Invoice Financing for Arizona Small Businesses

Invoice financing advances the outstanding balance to a business owner to increase the speed of cash flow to the business. This solution provides cash quickly, and there is no need to wait for outstanding invoices to be collected and received by the client with invoice financing in place. Invoice financing has affordable costs ranging from 1% to 2.5% fee off of the face value of the invoice advanced.

Product Overview

Rate: None

Terms: No term limits 

Fees: 1% to 3% fee based on the invoice. Monthly service fees may apply depending on the volume of invoices factored

Credit Standards: Credit of the clients need to be favorable, NOT the business owner advancing off invoices.

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Invoice Factoring

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10. Purchase Order Financing for Arizona Small Businesses

Purchase Order financing offers businesses the ability to raise capital to pay suppliers upfront for verified purchase orders. Purchase order loans will finance an entire order or a portion of it, depending on the purchase order funder. When the supplier is ready to ship the order, the purchase order financing company collects payment directly from the customer. The purchase order funder will subtract their fees and then sends the balance of the invoice to your business. 

Product Overview

Rate: None 

Terms: No term limits 

Fees: 1% to 3% fee for each purchase order. Monthly service fees depending on volume may also apply.

Credit Profile: All parties need favorable business credit history but all credit considered

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Purchase Order Financing

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U.S. Small Business Administration

Start, Grow, Expand Your Business
View the Arizona Small Business Resource Guide for information and assistance in growing your local business, exploring funding options, and contracting.

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Why Does Your Arizona Area Business Need Business Funding?

The most common use of proceeds from business funding:

  • Working capital loans
  • Equipment loans
  • Business expansion
  • Business development
  • Cash flow shortages
  • Emergencies
  • Advertising and marketing
  • Any legitimate business purpose or use

Frequently Asked Questions

It is not difficult to obtain business financing in Arizona. There is no down payment required for most small business loans or alternative business funding.

There are many business funding options available for business owners with bad credit. Products and terms will vary depending, and the risks associated with this type of funding will impact terms, pricing, and costs.  

Business Credit Cards are the only true no documentation product. Other business funding products have less or reduced documentation requirements you may want to consider because the less documentation you provide, the more likely terms will be less favorable. 

Getting start-up business funding can be extremely difficult and challenging. SBA loans are the most traditional financing choice, but they are challenging to get approved for. A small business owner’s search will need to include non-traditional means to raise capital like private sources or investors.

Additional Resources and Information about Arizona Small Business Loans City of Phoenix -Grants and Funding

City of Phoenix -Grants and Funding

AZ Step Program– AZ Small Business Grants  Funded in part through a grant with the U.S. Small Business Administration (SBA) and matching funds contributed by the Arizona Commerce Authority (ACA), the ACA runs Arizona’s State Trade Expansion Program (STEP).

AZ STEP assists Arizona small businesses to enter export markets for the first time or to expand into new markets. This will enable these businesses (which account for 98% of the businesses in Arizona) to increase their revenues via international sales and to be thereby even more significant engines for job creation and economic growth in Arizona.

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