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Best nonbank business loans

Can't meet the size or credit requirements of a traditional lender? These alternative business loan providers may be able to help.

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The coronavirus pandemic has had an unprecedented impact on Americans’ finances. If you lost your job and are considering taking out a personal loan to cover bills, you might have a difficult time qualifying. Read our financial guide to COVID-19 to explore other options available to you.

Nonbank lenders typically specialize in funding small businesses that don’t meet size, time-in-business or credit criteria to get a bank loan. But they’re generally more expensive. In the best cases, nonbank lenders aim to help your business grow so it can later qualify for a bank loan.

6 best nonbank business loans

Best term loan: SBG Funding small business term loans

500
Min. Credit Score
5%
Starting APR
$5,000,000
Loan Amount
SBG Funding has a high annual revenue requirement — but for startups that are at least six months old, it's still one of the better deals. Not only does it accept businesses in high-risk industries, but it's also willing to work with business owners with a personal credit score of just 500. However, it's not transparent about fees. And you could get stuck with weekly repayments.
  • APRs max out at 35%
  • Accepts bad credit and high-risk industries
  • Not transparent about fees
  • Potential weekly repayments
Min. Loan Amount $5,000
Max. Loan Amount $5,000,000
APR 5% to 35%
Interest Rate Type Fixed
Min. Credit Score 500
Minimum Loan Term 6 months
Maximum Loan Term 60 months
Turnaround Time As soon as 3 business days

Best line of credit: BlueVine business loans

600
Min. Credit Score
4.8%
Starting APR
$5,000,000
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 $5,000,000
Interest Rate Type Fixed
Min. Credit Score 600
Minimum Loan Term 6 months
Maximum Loan Term 12 months
LendingClub business loans logo
Finder Rating: 4.5 / 5

★★★★★

Check eligibility
on LendingClub business loans's secure site

Best peer-to-peer loan: LendingClub business loans

580
Min. Credit Score
12.15%
Starting APR
$500,000
Loan Amount
As a peer-to-peer lender, LendingClub is able to offer faster financing than a bank without the strict requirements. Your business only needs to be around for a year and bring in $50,000 annually to qualify. And it's willing to work with business owners with fair credit. However, its high origination fee and maximum APR can make it expensive for businesses that just barely meet these requirements.
  • Accepts fair credit
  • Only requires $50,000 in annual revenue
  • Requires collateral on loans over $100,000
  • High origination fee of up to 8.99%
Min. Loan Amount $5,000
Max. Loan Amount $500,000
Interest Rate Type Fixed
Min. Credit Score 580
Minimum Loan Term 6 months
Maximum Loan Term 60 months

Best nonbank SBA loan: Newtek business loans

650
Min. Credit Score
6%
Starting APR
$10,000,000
Loan Amount
Newtek is the only online lender that ranks in the top 10 list of the SBA's most active 7(a) lenders. It offers financing up to $10 million with terms as long as 25 years. Instead of having business owners apply for an SBA loan specifically, it has you prequalify for a term loan, line of credit or commercial real estate loan. You then discuss your options with a loan specialist to decide if an SBA loan or other type of financing is the best fit. It's not a good choice for startups, though: Your business must be around for at least two years to qualify.
  • Only nonbank lender on the SBA top 100 list
  • Accepts fair credit
  • Must be least two years in business
  • Can take more than two weeks to get funds
Min. Loan Amount $10,000
Max. Loan Amount $10,000,000
APR Starting at 6%
Interest Rate Type Variable
Min. Credit Score 650
Minimum Loan Term 84 months
Maximum Loan Term 300 months
Turnaround Time 6 to 8 weeks

Best microloan: Kiva business loans

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

  • 0% APR
  • Accepts all credit types
  • Partially crowdfunded
  • Not ideal for emergencies
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

Best connection service: United Capital Source business term loans

550
Min. Credit Score
5%
Starting APR
$5,000,000
Loan Amount
This connection service specializes in helping businesses connect with alternative lenders. Its partners offer rates on term loans that compare to what you'd find at a bank. And you can get funded in one to three days after you apply. It also works with businesses in high-risk industries — including cannabis.
  • Only requires six months in business
  • Bad credit and high-risk industries OK
  • Competitive starting APR
  • Not a direct lender
  • High minimum loan amount
Min. Loan Amount $10,000
Max. Loan Amount $5,000,000
Interest Rate Type Fixed
Min. Credit Score 550
Minimum Loan Term 36 months
Maximum Loan Term 120 months

How we picked these best lenders

We reviewed over 130 lenders to come up with this list of providers that would best serve the needs of businesses that can’t qualify for a bank loan. We favored lenders with flexible requirements and competitive rates. And we also took into consideration the pitfalls of bank lending, like slow turnaround times and extensive documentation requirements.

Pros and cons of borrowing from nonbank lenders

It can be easier to get a loan from an alternative lender than going to a bank. But there are some drawbacks — namely, the cost.

Pros

  • Options for all credit types and industries
  • Available for businesses as young as six months
  • Low revenue requirements compared to bank loans

Cons

  • Higher APRs than bank loans
  • Potentially low funding amounts
  • Not all lenders are transparent about costs

Compare more nonbank business loans

Data indicated here is updated regularly
Name Product Filter Values Loan amount APR Requirements
First Down Funding business loans
$5,000 – $300,000
Fee Based
At least 1 year in business, an annual revenue of $100,000+, and a minimum credit score of 400
Alternative financing up to $300K with highly competitive rates.
Lendio business loans
$500 – $5,000,000
Starting at 6%
Operate business in US or Canada, have a business bank account, 560+ personal credit score
Submit one simple application to potentially get offers from a network of over 300 legit business lenders.
ROK Financial business loans
$10,000 – $5,000,000
Varies
Eligibility criteria 3+ months in business, $15,000+ in monthly gross sales or $180,000+ in annual sales
A connection service for all types of businesses — even startups.
OnDeck small business loans
$5,000 – $250,000
As low as 9.99%
600+ personal credit score, 1 year in business, $100,000+ annual revenue
A leading online business lender offering flexible financing at competitive fixed rates.
Rapid Finance small business loans
$5,000 – $1,000,000
Fee based
Steady flow of credit card sales, bad credit OK
Fundbox business loans
$1,000 – $100,000
4.99
You must have an established business.
Get flat rate, short-term financing based on the financial health of your business, not your credit score.
Kickpay e-commerce business loans
$20,000 – $1,000,000
Not applicable
At least $250,000 in the past 12 months of revenue, e-commerce business, use a 3rd party fulfillment center for storing and shipping inventory, at least one US location.
Get a loan for your e-commerce business based on your sales history.
LendingClub business loans
$5,000 – $500,000
12.15% to 29.97%
12+ months in business, $50,000+ in annual sales, no bankruptcies or tax liens, at least 20% ownership of the business, fair personal credit score or better
With loan terms that vary from 12 to 60 months, enjoy fixed monthly payments and no prepayment penalties through this award-winning lender.
Monevo business loans
$500 – $100,000
3.99% to 35.99%
Credit score of 500+, legal US resident and ages 18+.
Use this connection service to get paired with a loan you can use for business.
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Where can I get a nonbank business loan?

The following types of lenders offer alternatives to bank loans.

  • Online direct lenders. These lenders usually process your application by using algorithms that work a lot faster than banks’ traditional underwriting process. They also typically consider alternative information like shipping records to help you qualify for a more competitive deal.
  • Peer-to-peer lenders. Peer-to-peer platforms connect business owners with investors who fund the loan and collect on the interest. From the borrower’s perspective, they work a lot like online direct loans, but have a longer turnaround.
  • Microlenders. These nonprofits often offer small-dollar financing to businesses that are just starting out, usually at a low cost. They typically also offer other services like free business training and support.
  • Nonbank CDFIs. Community development financial institutions (CDFIs) are lenders that aim to develop the economy in the areas they serve. They often offer loans with favorable rates to businesses that can’t qualify at a bank.
  • Credit unions. Credit unions are owned by their members and can be more flexible when it comes to business requirements. But they have some of the pitfalls of borrowing from a bank, like a slow turnaround.
  • Connection services. While technically not a lender, some connection services can help you with the process of finding a lender and applying for a loan. Some like SmartBiz can also speed up the process of applying for a bank loan.

What types of non-bank business loans are available?

From lines of credit to peer-to-peer business loans, here are a few options available:

  • Lines of credit. Business lines of credit work a lot like a credit card — you get access to funds up to a certain credit limit that you can withdraw as you need. As you pay back the loan, you regain access to your full limit.
  • Unsecured loans. This type of loan doesn’t require you to back your loan with collateral, making it more of a risk to the lender if you default. This added risk results in higher rates than you’d find with secured business loans.
  • Secured loans. This type of loan requires you to attach assets as security for your lender, like a business equity loan. Since the lender can seize your collateral if you default, that mitigated risk typically results in lower rates.
  • Peer-to-peer business loans. This loan is funded by an individual investor through an online marketplace.
  • Short-term business loans. This is an upfront lump-sum loan with a fixed repayment schedule that you typically pay back in less than a year.

How to find the best nonbank business loan

There’s no one business loan that’s right for everyone. But you can rule out lenders that aren’t a good fit by asking yourself the following questions:

  • Can my business qualify? The best way to tell is to fill out an online prequalification form, which usually doesn’t affect your credit.
  • What’s the APR? The APR tells you how much your loan will cost over a year and is the easiest way to compare costs. Some nonbank lenders aren’t up front about the cost until after you prequalify.
  • What are the fees? Some nonbank loans come with a fixed fee instead of interest. Others come with an origination fee or closing fee on top of interest. Consider how this will affect the total cost of your loan before you borrow.
  • How often are repayments? Some nonbank loans come with daily, weekly or biweekly repayments, which might not fit every business’s cash flow.
  • Do I need collateral? Many nonbank loans are unsecured, but some might require collateral. Keep in mind this is different from a personal guarantee, which is standard on all business loans.

What should I avoid?

Nonbank lenders sometimes face fewer regulations as the law catches up to the new underwriting technology they use. Because of this, watch out for the following:

  • Borrowing without comparing APRs. If a lender only discloses the cost as a flat fee, ask about the equivalent APR — often those loans are the most expensive.
  • Hard credit checks to check your rate. Stay away from lenders that don’t allow you to get a ballpark estimate of your rate without running a hard credit check, which affects your credit score.
  • Payments your business can’t handle. Daily or weekly repayments offer less flexibility and increase the likelihood that you’ll miss a payment and have to pay a fee.
  • Taking on too much debt. Many of these lenders will offer financing to businesses that already have debt. If you have a loan, be sure you can handle another repayment before you apply.
  • Brand new lenders. Nonbank lenders have to meet fewer requirements than a bank to open their virtual doors. Try sticking with a more established provider to avoid working with a lender that shutters its doors.

Not sure any of these lenders are right for you? Compare even more financing options with our guide to business loans.

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