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Written by Carissa Chesanek and Melissa Wylie | Edited by Kurt Adams | Updated on December 12, 2022
Small business loans can cover real estate, equipment, payroll or nearly any need. For this guide, we selected the best small business loans that offer transparent rates and repayment terms, maximum loan amounts of at least $150,000, funding within two weeks or less and lenient requirements for personal credit scores and time in business. Learn more about how we chose the best small business loans here.
Down payment required
Businesses must show at least two years of operating history
These popular government-backed loans are available for most business uses, with terms up to 25 years and moderate interest rates. SBA loans are widely available through banks, though the application process can take anywhere from five days to two months or more.
$100,000 annual revenue required
Lowest APRs reserved for strongest applicants
Short-term loans have repayment terms of a few months to a year or more, good for when you expect a quick return on what you’re investing in with the loan funds. Loan approval can be as fast as a few days, even for business owners with poor credit — however, higher rates are often a trade-off for speed and accessibility.
Read our Funding Circle review
Requires collateral
Average Funding Circle borrower makes about $1.4 million in annual sales
Traditional long-term business loans offer relatively low-rate financing for lasting investments, such as machinery or business acquisition. Repayment terms can typically last as long as 10 years, with approval times that tend to take multiple weeks; in addition, lenders will usually require you to have strong credit.
$120,000 in annual revenue required
Weekly interest in a short repayment time frame can make Bluevine an expensive option
Though not technically a loan, a line of credit is capital that you can draw upon as needed, and you’ll only have to pay interest on what you borrow. You can use business lines of credit for short- or long-term needs, and they can be secured or unsecured. Lenders can fund lines of credit as quickly as the next day or within weeks.
Six months in business required to qualify
Average of $15,000 in monthly bank deposits required
Working capital loans are short-term loans disbursed within 24 hours to a week of approval and designed to fund your company’s day-to-day operations during a time of reduced activity. When the lull ends and business booms again, you should have enough revenue to repay the working capital loan.
Read our Taycor Financial review
Typically requires 2 years in business
Down payment is required
Equipment financing allows businesses to pay for equipment, such as commercial trucks, a restaurant oven or an office copier, a little at a time for relatively low rates; in exchange, the equipment is used as collateral. Equipment financing is ideal for borrowers who need hard assets quickly, but can’t afford to purchase them outright.
Read our Elevation Capital review
$150,000 in annual revenue required
10 days to receive funds
Exchange unpaid invoices for immediate cash, minus a fee. AR financing, also known as “invoice factoring,” may be a good option for risk-averse or poor-credit borrowers, or those without a lengthy business history.
Read our Reliant Funding review
Faster-than-normal repayment terms could lead to higher daily payments
Six months in business required
While it’s not a loan, a merchant cash advance may be an attractive financing option for businesses with high sales volume — it’s a lump sum of funding that businesses repay through their daily transactions. However, be prepared for your lender to take daily payments out of your sales, which could cause cash flow issues if you don’t have a good grasp of your daily revenue and operating costs.
Read our Uplyft Capital review
Required to provide three months of past bank statements
Required to deposited at least $12,000 per month
Getting a business loan with bad credit can be challenging — but it’s not impossible. Some lenders, including Uplyft Capital, look at more than just your credit score when determining your qualifications to borrow funding. However, a lower score can come with higher interest rates and additional requirements from the lender.
Must have a business checking account
Must make at least $100,000 in annual revenue
If you need fast funding for your business, same day business loans may be a good option for you. Fundbox can transfer the funds for a line of credit as soon as the next business day after you’re approved — as a trade-off, however, be prepared for shorter repayment times.
Read our Fora Financial review
No open bankruptcies
Must have at least $12,000 in gross sales
With many lenders requiring a minimum of two years in business, it can sometimes can be hard to get a startup business loan. Fora Financial’s business loan only requires you to be in business for six months to receive funding of up to $750,000.
Read our National Funding review
Must obtain a quote from equipment vendor
Must pay a doc fee of 1% equipment cost
Looking for a loan to help expand your business? National Funding’s equipment loans could be a great option. For example, if you’re a restaurant, hardware store or another physical storefront business looking to expand to an additional location, an equipment loan could help you get the necessary equipment needed to scale. Equipment loans from National Funding do not require a down payment, though making one could help to lower your monthly payments.
We chose small business loans from online lenders that could cover small, medium or large expenses. Small business lenders that appear on this list meet the following criteria:
Small business loans help entrepreneurs build, maintain or expand their companies. Getting business loans for your company doesn’t always require walking into a bank and securing funds — there are also a variety of online small business lenders to consider, which may have easier qualifications and faster applications.
Small businesses account for a significant chunk of American economic activity — the U.S. Small Business Administration (SBA) estimates that there are 32.5 million small businesses across the country. While the nature of each one varies, many hold one major thing in common: the need for business financing.
Women entrepreneurs can apply for business grants or debt financing reserved for women-owned businesses. Women-owned businesses have grown at a faster rate than U.S. businesses overall in recent years, but when women are approved for business loans, the average annual loan size is about 33% less than men.
Capital is available for business owners of color in the form of business grants or loans. Compared to their counterparts, those in historically marginalized communities face more entrepreneurial hurdles related to funding. Organizations and lenders across the U.S. allocate funds to support minority-owned businesses.
There are several resources and funding options for veteran business owners. After leaving the military, many veterans often have trouble transitioning their military training to civilian careers and instead choose to start their own ventures. Business loans for military veterans are among the keys to success.
TIME IN BUSINESS
In general, a business that’s been around for a couple of years is more stable than a startup. This is key for lenders, as a business that has a proven track record of revenue over the past two years is a more attractive borrower than a company with spotty revenue over the past six months.
CREDIT SCORE
Your credit score is a data point lenders use to determine your reliability as a borrower. In most cases, you’ll need a credit score in the 600s to qualify for financing, although certain lenders and loan types may allow scores as low as 500.
CASH FLOW
A cash-flow projection shows when money is collected, when cash goes out and what’s left. Lenders typically like to see that the borrower has a thorough understanding of the financial operating cycle of the business.
COLLATERAL
Collateral is an asset that lenders can legally seize if you can’t make payments, including company buildings, equipment and accounts receivable. Some business owners choose to use their personal assets — including their homes — as collateral on a business loan.
DEBT-TO-EQUITY RATIO
Your company’s debt-to-equity (D/E) ratio measures the proportion of your company’s debt divided by shareholders’ equity. This metric helps a lender understand how likely you are to cover new debt based on the debt you’re already paying. While high D/E’s are common in some industries, your goal should be to keep your business’s D/E ratio as low as possible.
WORKING CAPITAL
Your working capital refers to the available money you have to fund your company’s day-to-day operations. You can calculate your working capital by subtracting the business’s debt liabilities due within a year from current assets that you can convert to cash.
Lenders may analyze your personal and business credit history when reviewing your company’s business loan application; if your business is new, your personal credit profile would carry more weight.
Borrowers should expect to have good personal credit to qualify for traditional business loans.
Check Your Credit Score: It’s free, and won’t affect your credit score
Business owners can take out small business loans — generally between $5,000 and $500,000 or more — to finance expenses like payroll, inventory, equipment and other costs. Repayment terms could be as short as three months or as long as 25 years. Both traditional financial institutions and alternative online lenders offer small business loans.
Several types of business loans are available for small business owners, including term loans and business lines of credit for general business expenses. Financing is also available for specific purchases like equipment and commercial real estate. In addition, invoice factoring and accounts receivable financing are available for businesses that collect a high volume of invoices.
Yes, bad credit business loans are available for business owners with personal credit scores as low as 500. However, lenders may assign high interest rates to low-credit borrowers.
A personal guarantee is a common feature of small business loans, which requires the business owner to be personally responsible for their company’s debt in case of default. A personal guarantee lowers the risk for a lender, but for the business owner, it may limit any protections your business structure offers.
Online lenders may be the best option for a startup business loan. They typically require only a few months in business, as opposed to brick-and-mortar banks that often have stricter eligibility requirements. Other options for startup capital include crowdsourcing, self-funding or grant funding.
It depends. Each lender will have its own criteria, sometimes varying based upon the loan type. The lowest interest rates are often reserved for applicants with higher credit scores, however. If this doesn’t fit your business, online lenders may be more lenient with credit score requirements.
If your application for a business loan is denied, revisit the reason why. Focus on repairing your credit if your credit score was too low; if you haven’t operated in business long enough, simply wait until you’re eligible. In the meantime, consider a small business credit card to get access to the capital you need.
