Lendio business loans
Finder Rating: 4.75 / 5 ★★★★★
Loan amount | $500 – $5,000,000 |
---|---|
APR | Starting at 6% |
Min. Credit Score | 560 |
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As a small business owner, a business loan can help you add to your inventory, free up cash flow or even open a site or storefront. With rising interest rates, and recent bank failures, the Federal Reserve is warning of a looming credit crunch, where it may become more difficult to find all the financing you need.
The latest report on median variable interest rates for new small business term loans is 7.44%, up from 6.25% in the prior quarter. Fixed-rate new term loans are standing at 6.44%, up from 5.56% in the prior quarter. But no one knows how long rising rates will last, and you’ve got choices beyond your local bank to find the funding you need.
Online lenders are built to support the smallest businesses with fewer than 10 employees, which can struggle to qualify for traditional financing. Government-backed loans may offer slightly larger firms a great way to grow even more. Online lenders and microlenders also offer financing programs catered to startups with less rigid requirements. The best lender for your business ultimately depends on factors like its finances, why it needs the funds and how long it’s been around.
Lendio business loans
Finder Rating: 4.75 / 5 ★★★★★
Loan amount | $500 – $5,000,000 |
---|---|
APR | Starting at 6% |
Min. Credit Score | 560 |
OnDeck short-term loans
Finder Rating: 4.6 / 5 ★★★★★
Loan amount | $5,000 – $250,000 |
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APR | 29.9% to 65.9% |
Min. Credit Score | 625 |
SmartBiz business loans
Finder Rating: 4.5 / 5★★★★★
Loan amount | $30,000 – $500,000 |
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APR | 8.99% to 24.99% |
Min. Credit Score | 660 |
Bluevine business loans
Finder Rating: 4.45 / 5 ★★★★★
Loan amount | $5,000 – $250,000 |
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APR | Estimated 8% to 86% |
Min. Credit Score | 625 |
Credibly business financing
Finder Rating: 3.8 / 5★★★★★
Loan amount | $5,000 – $400,000 |
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APR | Not applicable |
Min. Credit Score | 500 |
Bank of America business loans
Finder Rating: 3.6 / 5 ★★★★★
Loan amount | $10,000 – $100,000 |
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APR | Starting at 6.50% |
United Capital Source business term loans
Finder Rating: 4.8 / 5 ★★★★★
Loan amount | $10,000 – $5,000,000 |
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APR | Starting from 5% |
Min. Credit Score | 475 |
National Funding business loans
Finder Rating: 4.65 / 5★★★★★
Loan amount | $5,000 – $500,000 |
---|---|
APR | Not stated |
Min. Credit Score | 600 |
Finance Factory business loans
Finder Rating: 4.1 / 5★★★★★
Loan amount | $5,000 – $1,000,000 |
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APR | 0% to 8.75% |
Min. Credit Score | 600 |
Kiva business loans
Finder Rating: 3.7 / 5★★★★★
Loan amount | $25 – $15,000 |
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APR | 0% |
Our lending experts analyze dozens of business loan providers to narrow down the best for business owners and startups. We search for lenders that suit a range of lending needs, highly-rated lenders that offer loans of $100,000 or less because most small business loans fall into that range.
We weigh lenders against 12 key metrics:
A business loan is a form of financing designed to help you start, grow or operate your small business, offering access to capital to cover payroll, purchase real estate, invest in equipment or other business needs.
Most business loans are secured, requiring collateral to back the loan. Even lenders that advertise unsecured business loans typically require a lien on business assets, meaning they can seize the assets if your business defaults. On top of this, almost all lenders ask for a personal guarantee from majority business owners, which means you’re responsible for the loan if the business fails.
You can find business loans through traditional banks and credit unions, online lenders and marketplaces, and community lenders. While a traditional business loan is a lump sum of funds you repay in monthly installments plus interest and fees, there are several other types of financing that lenders may refer to as loans, even if they’re structured differently. Rates vary widely by business loan type, ranging from 5% to 300% APR.
Term loans and lines of credit may be the most popular types of financing. But several other options might be better suited to certain businesses — especially those that struggle to qualify for traditional bank financing.
There are several benefits to using a small business loan or another type of debt financing:
While small business loan requirements depend on the financing you need, you’ll get the lowest rates and strongest terms by meeting general requirements that include:
Don’t meet these requirements? Set up an appointment at a local bank. Community banks tend to have more flexible requirements than their larger counterparts. Even if you don’t qualify for financing, the bank can point you toward other options and advise you on how to strengthen your application. Or, consider a personal loan from a lender like Upstart if you need funding fast.
Prepare to submit personal and business documents when applying for a small business loan, including:
Yes, you can find lenders that accept self-employment income for personal loans and small business loans, including the SBA.
How much of a loan you can 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 you’re using the funds to purchase.
If you own a newer business, haven’t yet reached $100,000 in revenue or have poor credit, you may not qualify for the lowest rates. Look to other financing options to grow your business.
A personal loan is a popular choice for entrepreneurs looking to fund a startup. These loans typically max out at $50,000, though sometimes reach $100,000. The best personal loans require good credit — so they’re not right for all business owners and needs.
Use our table to compare rates, credit score requirements and loan amounts to see if a personal loan is the right choice for your business. Select Compare for up to four loan products to see their benefits side by side.
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. Friends, fans or investors can help you raise money through crowdfunding. But keep up with regulations that are developing around it.
For example, all crowdfunding transactions must be done online through a Securities and Exchange Commission (SEC)-registered intermediary, and you can’t raise more than $5 million through crowdfunding offerings in a 12-month period, as stated by the U.S. SEC.
You could finance your business needs by bringing on an investor. An investor allows you to get funding for your business that you never have to pay back in exchange for partial ownership in your company. But make sure you have a lawyer on retainer to avoid getting in legal trouble with the SEC.
For small expenses or working capital, a business credit card can be 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.
This alternative type of financing is an advance on unpaid accounts receivables — also called accounts receivable financing. It’s an asset-based loan to help give your business cash flow while you wait for invoices to be paid. However, invoice financing is an advance, so it can get expensive.
Got orders but not enough inventory? Typically, inventory financing is a line of credit that you use to purchase product, and the inventory is collateral on the loan. However, if you need to buy perishables like produce, you can find inventory financing options for which the inventory doesn’t secure the loan.
Considered an alternative borrowing option, a merchant cash advance is a lump sum loan based on a percentage of your business’s card sales. It’s often for emergencies, used to cover expenses in a pinch or during slow seasons. Merchant cash advances don’t charge traditional interest. Instead, you’re charged a fee called a factor rate expressed as a decimal — usually between 1.09 to 1.5 — and the factor is multiplied by the amount borrowed.
This type of financing can get expensive, and many providers require weekly repayments.
Whether you’re just starting out or need help with crafting a business plan, check out these no- or low-cost resources:
Business owners may not be strangers to debt. But if you’re looking to take on your first business loan or you’re struggling to manage multiple credit lines, keep these tips in mind:
Debt consolidation works by paying off one or more loans with a new loan, usually to save on interest charges. Most business debt consolidation loans are term loans, but it’s also common to consolidate debt with a low-rate credit card, a balance transfer credit card. You can also consolidate business debt with a personal or home equity loan, though you’ll be responsible for repayment if the business fails.
Debt consolidation might be a good idea if you have good credit and you have high-interest debt. But if you have poor credit and your company isn’t profitable, your business isn’t likely to qualify for a low rate on the consolidation loan. Even if you do, it may not save you money in the long run.
Visit our guide to business loans to learn more about how it works.
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