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Best small business loans of 2021

Not all business loans are created equal. Find the best lender for your specific financing needs.

Editor's choice: Lendio business loans

  • Network of over 300 lenders
  • 10 types of financing available
  • Positive reviews of customer service
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This article was reviewed by Doug Noll, a member of the Finder Editorial Review Board and award-winning lawyer, mediator and author with over 40 years of experience in the legal field.

A small business loan can help get your business off the ground and grow. It can also keep your doors open during a disaster like the coronavirus outbreak.

Our team of experts reviewed over 220 business lenders before making our selection for the best business loans of 2021. This includes lenders that offer pandemic assistance through the Small Business Administration (SBA), as well as those still offering their regular term loans, lines of credit, merchant cash advances and more.

We paid special attention to lenders that offer loans of $100,000 or less. That’s because more than half of small business loans fall into that range, according to a study by the Federal Reserve.

We then analyzed each business lender based on rates and fees, funding speed, lending limits and the application process. And we keep our list updated, regularly.

In May 2021, we replaced FundBox with FundThrough as our pick for invoice financing because it better meets our criteria. We also retired our bet peer-to-peer and best Paycheck Protection Program (PPP) loan categories — the COVID-19 assistance program is only available through Community Development Financial Institutions (CDFIs) until it closes on May 31, 2021. And we added back Bank of America as our choice for the best bank for small business loans.

10 best small business loans

SmartBiz business loans logo

★★★★★

Finder Rating: 4.3 / 5

Check eligibility

on SmartBiz business loans’s secure site

Best SBA loans: SmartBiz business loans

650
Min. Credit Score
6.25%
Starting APR
$5,000,000
Max Loan Amount

SmartBiz speeds up the SBA application process by streamlining the information you need to provide. By working with multiple banks and online lenders, it may take just a few weeks to get funding — rather than the normal multi-month waiting period. Prequalification takes a few minutes, and the rates its lenders offer start low. But you’ll need to borrow at least $30,000, and the process isn’t free. Smartbiz will charge a referral and packaging fee if you’re approved for a loan.

  • Compare regular bank loans and SBA loans
  • Cuts weeks out of SBA loan turnaround time
  • Simplified online application
  • Charges SBA referral and packaging fees
  • No loans under $30,000
  • Relatively high starting APR of 7.99% on non-SBA loans
Min. Loan Amount $30,000
Max. Loan Amount $5,000,000
APR 4.75% to 7.00%
Interest Rate Type Variable
Min. Credit Score 650
Minimum Loan Term 120 months
Maximum Loan Term 300 months
Lendio business loans logo

★★★★★

Finder Rating: 4.75 / 5

Check eligibility

on Lendio business loans’s secure site

Best marketplace: Lendio business loans

560
Min. Credit Score
6%
Starting APR
$5,000,000
Max Loan Amount

Lendio is a good option when you don’t know where to start. It has a network of over 300 lenders that offer a wide array of business loans, including SBA loans. You can even qualify with bad personal credit. But you may receive marketing calls and emails from lenders, even after you take out a loan.

  • Network of over 300 lenders
  • Wide range of business loan options
  • Bad personal credit accepted
  • Must pay origination fee after loan is finalized
  • May receive marketing material from lenders
Min. Loan Amount $500
Max. Loan Amount $5,000,000
APR Starting at 6%
Interest Rate Type Variable
Min. Credit Score 560
Minimum Loan Term 12 months
Maximum Loan Term 300 months
FundThrough Express business cash advances logo

Not yet rated

Check eligibility

on FundThrough Express business cash advances’s secure site

Best invoice financing: FundThrough Express business cash advances

None
Min. Credit Score
Not applicable
Starting APR
$10,000,000
Max Loan Amount

FundThrough is an online company that specializes in invoice financing that can advance you up to 100% on accounts receivables worth as much as $50,000. It also offers factoring up to $10 million if you have a larger invoice volume. The application is simple enough that you can apply using an app on your phone and get funded in as little as 24 hours. It offers a discount on its 0.5% weekly invoice financing fee if you pay back the advance early. And it charges a 2% monthly fee on factoring. While these fees aren’t the lowest out there, there’s no long-term commitment. That can help you avoid paying for an advance you don’t need.

  • May receive funds in 24 hours
  • Receive 100% of invoice’s value
  • No long-term contracts
  • Only offers invoice financing up to $50,000
  • May require specific accounting software for quick turnaround
  • Weekly repayments
Min. Loan Amount $500
Max. Loan Amount $10,000,000
APR Not applicable
Interest Rate Type Fixed
Maximum Loan Term 3 months

Best invoice financing: Kickpay e-commerce business loans

None
Min. Credit Score
Not applicable
Starting APR
$1,000,000
Max Loan Amount

Kickpay offers e-commerce businesses invoice financing in the form of an advance on what you would normally sell within 16 weeks. It charges a fee of 3% to 7% of your inventory’s manufacturing price, which is one of the lowest prices out there for this kind of product. And it sends the funds directly to your manufacturer, speeding up the process. But it has a high minimum advance of $20,000. And you’ll have to work with one of the 100 fulfillment centers it partners with to qualify.

  • Low fee of 3% to 7% of inventory price
  • Few hard requirements
  • Can send the funds directly to manufacturer
  • Extra fees if you don’t repay advance in 16 weeks
  • High minimum advance of $20,000
  • No customer service line before applying
Min. Loan Amount $20,000
Max. Loan Amount $1,000,000
APR Not applicable
Interest Rate Type Fixed
Turnaround Time 8 to 12 days
Fora Financial business loans logo

★★★★★

Finder Rating: 3.4 / 5

Check eligibility

on Fora Financial business loans’s secure site

Best merchant cash advance: Fora Financial business loans

670
Min. Credit Score
Varies
Starting APR
$500,000
Max Loan Amount

Fora Financial’s relatively low fees, early payoff discount and range of loan amounts make it a good choice for a merchant cash advance (MCA). Its factor rates start at a low 1.1 — where most providers charge at least 1.2. And while it charges an origination fee, there are no monthly maintenance fees that you might find with other MCA providers. It’s also relatively easy to qualify, even for an MCA: You only need to be six months in business and have $5,000 in credit card sales to meet the minimum requirements.

  • Loans from $5,000 to $500,000
  • Only requires six months in business
  • Early payment discount
  • Still more expensive than other types of financing
  • Doesn’t disclose rates online
  • 72-hour turnaround longer than other online lenders
Min. Loan Amount $5,000
Max. Loan Amount $500,000
APR Varies
Interest Rate Type Fixed
Min. Credit Score 670
Minimum Loan Term 4 months
Maximum Loan Term 15 months

Best line of credit: BlueVine business loans

650
Min. Credit Score
4.8%
Starting APR
$250,000
Max Loan Amount

Bluevine’s low starting APR and lack of fees makes it a good choice for small businesses and startups that need frequent access to funds. Its lines of credit are revolving, so you’ll be able to borrow and repay as needed. But repayments can be weekly — which can strain your budget during seasonal periods.

  • Starting APR compares to banks
  • Flexible credit and revenue requirements
  • Same-day funding available
  • Short terms of six or 12 months
  • Not all industries qualify
Min. Loan Amount $5,000
Max. Loan Amount $250,000
Interest Rate Type Fixed
Min. Credit Score 650
Minimum Loan Term 6 months
Maximum Loan Term 12 months
OnDeck small business loans logo

★★★★★

Finder Rating: 4.7 / 5

Check eligibility

on OnDeck small business loans’s secure site

Best short-term loan: OnDeck small business loans

600
Min. Credit Score
35%
Starting APR
$250,000
Max Loan Amount

OnDeck offers short-term business loans to businesses looking for quick funding and might not qualify for a bank loan. It focuses on alternative data like shipping numbers rather than your credit score, revenue or time in business to help serve businesses that otherwise might not qualify. While this online lender has raised rates to start at 35% during the COVID-19 outbreak, it still offers a better deal than other short-term loan providers. And repeat customers can qualify for a discount on the origination fee.

  • Accepts fair credit scores as low as 600
  • Origination fee discount for repeat customers
  • Minimal paperwork
  • High starting APR of 35%
  • Weekly or daily repayments
  • Not available to all industries
Min. Loan Amount $5,000
Max. Loan Amount $250,000
APR As low as 35%
Interest Rate Type Fixed
Min. Credit Score 600
Minimum Loan Term 3 months
Maximum Loan Term 12 months

Best microloan: Kiva business loans

None
Min. Credit Score
0%
Starting APR
$15,000
Max Loan Amount

Kiva’s interest-free microloans are ideal for entrepreneurs looking to turn an idea into reality. It doesn’t have any time-in-business requirements, and you can borrow up to $15,000 without paying any fees. But its loans are crowdfunded, so if you don’t have a large social network willing to make contributions, it could take up to 45 days to raise funds. Update: In light of the COVID-19 pandemic, Kiva has announced it will loosen its eligibility requirements and extend its maximum loan amount by $5,000 – to a total of $15,000. Additionally, borrowers will be granted a six-month grace period before payments are due.

  • No interest or fees
  • No credit or residency requirements
  • Loans as low as $25
  • Turnaround of up to 45 days
  • No loans over $15,000
  • Qualification depends on social network
Min. Loan Amount $25
Max. Loan Amount $15,000
APR 0%
Interest Rate Type N/A
Minimum Loan Term 1 months
Maximum Loan Term 3 months
Seek Business Capital loans logo

★★★★★

Finder Rating: 4.5 / 5

Check eligibility

on Seek Business Capital loans’s secure site

Best startup loan: Seek Business Capital loans

680
Min. Credit Score
Varies
Starting APR
$500,000
Max Loan Amount

Seek Business Capital is an online connection service that can help your business connect with startup financing. It works with a wide range of financing providers — including SBA lenders — to offer loans up to $500,000 with a time in business requirement of just six months. It can also help your business compare other types of financing like credit cards to make sure you’ve covered all of your options. This service won’t help if you have bad-credit startups, however — few startup loans are available to people with a credit score below 670. But otherwise its requirements are flexible.

  • Same-day financing available
  • Only requires six months in business
  • Preapproval without affecting your credit
  • Doesn’t offer financing to start a business
  • Requires 680 credit score
  • Not a direct lender
Min. Loan Amount $5,000
Max. Loan Amount $500,000
APR Varies by lender
Interest Rate Type Fixed
Min. Credit Score 680

Best bank loan: Bank of America business loans

670
Min. Credit Score
Starting at 4.75%
Starting APR
$100,000
Max Loan Amount

Bank of America offers a wide range of secured and unsecured loans and lines of credit for most business needs. It even offers business auto loans — which can be hard to find at large banks. It’s available nationwide and has some of the lowest starting rates out there for unsecured financing. But like with most big banks, it can be difficult to qualify. Especially if you aren’t already a banking customer. Smaller businesses might have more luck with their local community bank.

  • Low rates on unsecured loans compared to other banks
  • Special financing program for healthcare practices
  • Available in all 50 states
  • Not an SBA preferred lender
  • Not ideal for larger amounts of PPP funding
  • Might be difficult for smaller businesses to qualify
Min. Loan Amount $10,000
Max. Loan Amount $100,000
APR Starting at 4.75%
Fee $150
Interest Rate Type Fixed
Min. Credit Score 670
Minimum Loan Term 12 months
Maximum Loan Term 60 months

Summary of best small business loans

SmartBiz

4.75%

SBA loans

A service that helps you find the best SBA lender for your business and streamlines the application process.

Lendio

6%

Comparing multiple offers

A network of over 75 lenders that lets you quickly compare a wide range of offers.

FundThrough

Invoice financing

A seamless invoice financing or factoring application that can fund up to 100% of your accounts receivables in as little as 24 hours.

Kickpay

Not applicable

Inventory financing

Low fees and the option to receive the funds yourself or have it sent directly to your manufacturer.

Fora Financial

Varies

Merchant cash advances

Low factor rates, low fees and revenue requirements.

BlueVine

4.8%

Business lines of credit

A low starting APR, simplified application process and startup-friendly requirements.

OnDeck

As low as 35%

Short-term business loans

Flexible requirements, minimal paperwork and an emphasis on alternative data to help small businesses qualify for lower rates.

Kiva

0%

Microloans

A 0% interest rate and no fees with no time in business requirements.

Seek Business Capital

Startup financing

Helps startups quickly compare offers without affecting their credit.

Bank of America

4.75%

Bank loans

Some of the lowest rates available on unsecured financing. Plus a wide range of options available to small businesses across 50 states.

How to get the best small business loan

Increase your chances of approval and get the best rates and terms with these tips.

  1. Check your credit report. It’s good to know your personal credit score to figure out which lenders your small business qualify for. Beyond that, your credit report might contain mistakes. Get these straightened out before you apply for a loan. If your business is more established, you may have a business credit score that lenders consider as well.
  2. Over-prepare. Know your business’s finances backward and forward. Get all of your documentation together ahead of time and have it on hand. Remember, you want to appear the most qualified.
  3. Have a business plan that tells your story. Even if your lender doesn’t require it, a solid business plan means you’re on top of your business’s finances and future projections. Business plans make it easier to understand the types of financing you need, how much and what you might qualify for.
  4. Go to big lenders for big loans. Big banks are less likely to approve borrowers who need small amounts of financing. It's best to save banks and other big lenders for larger projects like real estate or buying large amounts of equipment.
  5. Take advantage of risk-free prequalification. The best way to get an idea of what rates you might qualify for is by prequalifying or calling your lender. It’s not guaranteed that you’ll get those rates, but it’s a smaller ballpark than the advertised APR and term range. And you can more accurately weed out lenders that won’t accept you in the first place.

Big banks cut back on business financing during COVID-19

Many large national banks like Bank of America and Wells Fargo have scaled back their small business lending programs since March 2020. And those that still offering funding might be more difficult to qualify with than before COVID-19. This is mainly because big banks see small business lending as too risky — especially when it comes to unsecured financing.

While it’s possible more small business lending programs will return after the economy stabilizes, it’s not a guarantee. If you’d prefer to work with a bank, consider applying with a community bank instead of a large national brand.

Top types of loans for small businesses

Look through the following loans to find out which type of financing works best for your small business.

PPP loan

How it works: This COVID-19 assistance program offers loans based on payroll expenses that are eligible for up to 100% forgiveness from an SBA-approved lender. And small businesses that saw an additional drop in revenue can qualify for a second round of funding. But due to a lack of funds, these are only available through CDFIs until the program closes on May 31, 2021.

How much you can borrow: Generally, 2.5 times your average monthly payroll expenses — up to $10 million for the First Draw loan and $2 million for a Second Draw loan. Some industries may be eligible for more funding.

Best for: Businesses with fewer than 500 employees with high payroll expenses and low operating costs. Also, self-employed individuals who want a PPP loan. They're now eligible for higher loan amounts during this second round of funding, thanks to a new payroll expenses formula.

SBA loan

How it works: The SBA guarantees business term loans, lines of credit and more for businesses that have had trouble getting funds elsewhere. Interest rates are relatively low, but the application process is more involved and guarantee fees up the cost.

How much you can borrow: You can generally borrow between $30,000 and $5 million and have as much as 25 years to pay it off.

Best for: Small businesses that have trouble qualifying elsewhere and could use more flexible terms.

Business term loan

How it works: Your business takes out a lump sum to cover a one-time expense. Pay it back in monthly repayments plus interest and fees. Term loans typically don’t come with many restrictions as long as you use them for business purposes.

How much you can borrow: You can generally borrow up to $500,000 and pay it off between one and ten years — sometimes even longer.

Best for: Covering one-time expenses, like buying office supplies or technology or other costs that your business doesn’t need to cover regularly.

Business line of credit

How it works: Similar to a credit card, opening a line of credit gives your business access to cash when it needs money. You only pay interest on what you borrow and have a certain time frame to pay it off. Lines of credit are generally renewable.

How much you can borrow: Your business can typically get access to between $2,000 and $500,000 with repayment periods of six months to a couple years.

Best for: Covering recurring expenses tied to your business's cash cycle, picking up the slack during an off season or paying for ongoing projects where costs are difficult to predict.

Invoice financing

How it works: A lender gives you an advance on unpaid invoices, which you pay back once the invoices are paid.

How much you can borrow: A percentage of the total value of your invoices. Lenders also typically charge an advance fee of between 2% and 5%.

Best for: Businesses that regularly rely on accounts receivable.

Equipment financing

How it works: A lender gives your business a term loan with relatively low rates to buy equipment, which it puts up as collateral.

How much you can borrow: Up to 100% of the equipment’s value.

Best for: Businesses buying heavy machinery and other expensive equipment.

Microloan

How it works: New and small businesses get a small amount of funding to help get off the ground.

How much you can borrow: Microloans can start as low as $500 and can be repaid over six months or more.

Best for: Small businesses that need financing for basic necessities but can’t qualify for a traditional business loan.

Merchant cash advance

How it works: Business owners get an advance on their future sales — usually credit card — which they pay back with a percentage of their profits plus interest and fees.

How much you can borrow: Typically up to around 25% or 50% of your business’s profits over the past year.

Best for: Retail or other businesses that rely on credit card sales.

How to get approved for a small business loan

Finding a competitive deal on a business loan doesn’t just depend on finding a lender that offers low rates and the right type of financing. No matter where you apply, your business is more likely to qualify for competitive terms if you and your business meet the following criteria.

  • Your business is at least one year old. Lenders like to see that your business has a track record of steady revenue coming in to reassure them that you can afford to pay off your loan.
  • You have strong personal credit. While business credit scores do sometimes come into play, your personal credit score typically plays a more important role in your loan application.
  • You’re personally invested. Some lenders require that owners invest a certain amount of their personal funds in the business. Even if it doesn’t, a personal investment is a vote of confidence that many lenders take into account.
  • You’re willing to put up collateral. Many small business lenders require business owners to put a lien on their personal assets as collateral. Securing your loan takes some of the risk off of the lender and can help you qualify for more competitive rates.

What kind of credit score do you need to get a small business loan?

Most providers prefer to work with business owners that have a credit score of 670 or higher — what most lenders consider to be good credit. Generally, business loans that require a personal guarantee from its owners require everyone with more than a 20% stake in the company to meet the credit score requirement.

But it depends on the provider and the type of loan. Startup financing heavily depends on your credit score because the lender doesn't have any financials to predict your business's ability to repay. Merchant cash advances and invoice factoring, on the other hand, are solely based on your business's future revenue and often don't consider your credit score at all.

Applications vary by lender, but you'll typically want to have at least the following on hand.

  • Business and personal tax returns for your business and all owners with a 20% or greater stake
  • Profit and loss statements and balance sheets for up to three years
  • Business and personal bank statements

How much of a loan can I get for my small business?

How much of a loan you qualify for depends on factors like your business's revenue, debts and what you're financing. Generally, your loan amount is based on the value of a self-liquidating asset that you're using the funds to purchase. So, for example, if you take out a loan for a piece of equipment, the value of the loan is based on the value of the equipment.

Business financing alternatives

Sometimes a business loan isn’t the best way to fund your business. If you’re new, have low revenue or poor credit, you might not be able to get the most competitive rate. Instead, you might want to consider one of the following options:

  • Personal loans. A personal loan is a popular choice for entrepreneurs trying to fund a startup. They typically max out at $100,000 and often require good credit, so they’re not right for all business owners and needs.
  • Crowdfunding. You might not need to take on debt or pay anyone back at all if your business needs to fund a project that’s easy to communicate in a short video. Crowdfunding can help you raise the money from your fans or investors. But keep up on regulations that are developing around it.
  • Equity investments. Get funding for your business that you never have to pay back in exchange for partial ownership in your company by bringing on an investor. Just make sure you have a lawyer on retainer to avoid getting in legal trouble with the Securities and Exchange Commission.
  • Business credit cards. For small expenses or working capital, a business credit card is sometimes a lot easier to manage than a loan. Plus, many business credit cards come with 0% APR promotional periods, giving you a window to make a big purchase and pay it off without interest over a few months or a year.

How COVID-19 has affected small business loans

The coronavirus outbreak has had a huge impact on the lending industry, but especially business lending. Between stay-at-home orders and government assistance programs like the PPP and disaster loans, lenders haven’t been able to go about business as usual.

Many lenders shut down their regular lending programs to focus on business funding. And while some are beginning to reopen slowly, it seems unlikely that business lending will return to a pre-coronavirus levels in the next year.

Fewer prime businesses force lenders to adjust

Close to 60% of small businesses said their financial situation was fair or poor in 2020, according to a survey by the Federal Reserve. And 78% saw a decrease in revenue from 2019 to 2020.

Changes in demand, government mandates and a need to adapt to safety guidelines were the main drivers behind these declines. And these disruptions in business made it difficult for lenders to predict a borrower’s ability to repay, which is essential to underwriting a loan.

Nonemergency programs that were still up and running sometimes came with built-in deferment to help small businesses avoid default. But many banks like Bank of America and Wells Fargo limited their business lending programs. And even online lenders like OnDeck shuttered until the fall, before slowly rolling out lending programs with tighter requirements.

Emergency financing, not business loans

Business lenders also paused their programs because there was a decline in demand for business loans. Over 90% of small businesses applied for emergency funding but only 31% applied for non-emergency funding — down from 43% in 2019.

And business lenders just couldn't compete with programs like the PPP and make a profit, which offers up to 100% forgiveness and a 1% rate on any remaining funds. While some lenders like U.S. Bank offered business loan programs with reduced rates, these weren’t common and many stopped accepting applications by the summer.

Approval rates decline

Before COVID-19 hit the US in 2020, about 80% of small businesses that applied for financing were able to get approved for some amount of funding — even if it was a high-risk option like a merchant cash advances. But only 70% of applicants were partially or fully approved for funds in 2020.

What's next?

Members of the lending industry have predicted that business lending is going to be focusing on growth as the country opens up. But the Federal Reserve survey found that the majority of businesses don’t expect revenue or levels of employment to increase over the next 12 months.

It’s difficult to predict what will happen, which tends to make lenders more cautious. It could be a lot more difficult to get approved for a loan over the next year — especially if your business is in an industry that was hit particularly hard by COVID-19.

If you’re struggling with securing financing, consider setting up a meeting with a counselor at a local small business development center. They often offer free consulting sessions where you’ll explore all of the options available to you.

Recap: Best small business loans

  1. SmartBiz: Best SBA loans
  2. Lendio: Best marketplace
  3. FundThrough: Best invoice financing
  4. Kickpay: Best inventory financing
  5. Fora Financial: Best merchant cash advance
  6. BlueVine: Best line of credit
  7. OnDeck: Best short-term loan
  8. Kiva: Best microloan
  9. Seek Business Capital: Best startup loan
  10. Kabbage: Best PPP loan

Bottom line

There is no one best business loan for everyone. But there are better lenders for specific business needs.

Understanding the type of loan you need is the first step toward getting a business loan that fits. Use our site to learn more about business financing and find lenders you and your business qualifies for.

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