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Big bank alternatives – here’s how to get small business funding

Other lenders with higher approval rates can help — but only if you have the cashflow to support repayments.

Big banks approved less than half the number of business loans this year compared to a year before. The Biz2Credit Small Business Lending Index found that 13.2% of business loan applicants were approved in November 2020, down from 28.1% in November 2019.

Loan approval rates are down across the board due to COVID-19 restrictions. But big banks are historically the hardest to qualify with and have the lowest approval rates. Here are your options if you’ve been rejected by one of these national lenders.

Community banks

If your business has enough cashflow to cover loan repayments, consider applying for a loan from a community bank. Unlike borrowing with a big bank, community banks give you the opportunity to sit down with a loan officer and discuss which financing options are the right choice for your business.

“Larger banks use a credit scoring model that is impersonal and often takes into consideration non-cashflow factors like personal credit scores,” Brad Stevens, President of Stevens Risk Management, told Finder. “Community banks are able to dig deeper, see the opportunity and have flexibility in providing financing. They will recognize the level of cashflow that could repay the debt.”

Even if you don’t get approved, applying with a community bank provides the opportunity to ask what you can do to strengthen your application.

Online lenders

Online lenders have higher approval rates than most banks and are useful when you need funding for an emergency expense — or just don’t have the time to spend on a bank loan application. They rely on algorithms they use to process your loan application and can fund your loan as soon as the next business day.

But these loans are often more expensive than funding from a traditional bank lender. They also aren’t as regulated. Read reviews and compare multiple lenders before you submit an application. And avoid applying if you aren’t confident that your business will continue to have strong cashflow for the length of your loan term.

“Firms that are doing well, such as in manufacturing or other areas that have cashflow and need funding for growth, are the only firms that should be seeking financing at this time,” Stevens said.

Compare online business loans

Name Product Filter Values Loan amount APR Requirements
OnDeck small business loans
Finder Rating: 4.7 / 5: ★★★★★
OnDeck small business loans
$5,000 – $250,000
As low as 35%
600+ personal credit score, 1 year in business, $100,000+ annual revenue
A leading online business lender offering flexible financing at competitive fixed rates.
Fora Financial business loans
Finder Rating: 3.4 / 5: ★★★★★
Fora Financial business loans
$5,000 – $500,000
6+ months in business, $12,000+ monthly revenue, no open bankruptcies
Get qualified for funding in minutes for up to $500,000 without affecting your credit score. Great for SBA loan applicants.
Lendio business loans
Finder Rating: 4.75 / 5: ★★★★★
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
Finder Rating: 4.7 / 5: ★★★★★
ROK Financial business loans
$10,000 – $5,000,000
Starting at 6%
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.
LendingClub personal loans for business
LendingClub personal loans for business
$1,000 – $40,000
8.05% to 35.89%
US citizen or permanent resident, verifiable bank account, steady source of income, ages 18+.
Get prequalified for a personal loan up to $40,000 to help you grow your business. Great for new business owners with at least fair credit.
Rapid Finance small business loans
Finder Rating: 3.74 / 5: ★★★★★
Rapid Finance small business loans
$5,000 – $1,000,000
Fee based
Steady flow of credit card sales, bad credit OK
Fundbox business loans
Finder Rating: 4.76 / 5: ★★★★★
Fundbox business loans
$1,000 – $150,000
You must have an established business.
Get flat rate, short-term financing based on the financial health of your business, not your credit score.

Compare up to 4 providers

Grants and local resources

Businesses struggling through a second round of shutdowns to prevent the spread of the virus can benefit more from assistance programs than a loan. In fact, they likely won’t get approved with a legitimate lender.

“Firms that are under restrictions and have exhausted their PPP funds have no source of cashflow to repay a new debt, so they will be declined by any bank,” Stevens said. “These types of firms need to seek out grant funds that do not have to be repaid, essentially compensation from the government that will cover the losses that the restrictions are causing.”

Many local governments have launched new grant programs as they order businesses to close during coronavirus shutdowns. Industry organizations like the Restaurant Strong Fund are also offering grants to cover COVID-related costs, like winterizing outdoor dining spaces.

Regularly check with your local government for updates on new grant programs, and sign up for mailing lists for updates. Also reach out to your local small business development center to get personalized advice on the grant and other assistance programs available to you.


If you’re a consumer-facing business, a crowdfunding campaign can help you raise money from your customer base. GoFundMe is offering $500 grants to small businesses that raise that amount or more using the platform. And other sites might be offering similar incentive programs.

Crowdfunding might not be as effective as it was during the beginning of the pandemic – without a lack of government assistance programs, many of your customers are likely strapped for cash too. But it can help reduce the amount of other types of assistance you need.

Look out for more assistance

It’s possible that another round of federal assistance will come — though it’s unclear when that will happen or what type of assistance we’ll see. Keep tabs on the news so you can get your application in for any new programs as soon as you can.

Photo: Getty Images

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