Finder is committed to editorial independence. While we receive compensation when you click links to partners, they do not influence our opinions or reviews. Learn how we make money.
Business loan ratings methodology
Transparency, costs and customer experience factor into our scoring system.
We give lenders a star rating to help you make a quick comparison between similar products. Instead of just relying on costs, our star ratings take into account some of the most important factors you should consider when picking a business loan provider.
What our star ratings can’t tell you is if a lender is right for your specific business. We don’t consider factors like eligibility criteria, state availability or payment frequency. You’ll have to read our reviews to get a fuller picture of what a lender has to offer.
We rate business loan providers using a scale of 1 to 5 stars:
★★★★★ — Excellent
★★★★★ — Good
★★★★★ — Average
★★★★★ — Subpar
★★★★★ — Poor
11 factors we consider for our star ratings
How we rate minimum loan amounts
★★★★★ — $5,000 and under
★★★★★ — $5,001 to $10,000
★★★★★ — $10,001+
Since lenders offer a wide range of minimum loan amounts, the lowest score we give for this one is a 3-star rating. It’s hard to find a lender that offers business loans under $5,000, which is why that amount and anything under earns the highest rating. Any loans above $10,000 earn a 3-star rating, since they still likely meet many borrowers’ funding needs — just not all.
How we rate maximum loan amounts
★★★★★ — $5 million+
★★★★★ — $500,001 to $4.99 million
★★★★★ — $100,000 to $500,000
★★★★★ — $99,999 and under
The most common business loan is $100,000. Any business lender that offers loans under that amount gets our lowest rating for this category: 2 stars. We don’t include a 1-star rating to avoid penalizing lenders that specialize in small-dollar loans for startups.
It’s hard to find a loan over $5 million. Any lender that offers loans of that amount or higher scores a full 5 stars for this category.
How we rate minimum turnaround time
★★★★★ — Next business day or sooner
★★★★★ — 2 to 4 business days
★★★★★ — 5 business days to 2 weeks
★★★★★ — 2 weeks to 1 month
★★★★★ — Over 1 month
We define turnaround time as the time it takes to apply for the loan and get your funds. Since it can vary depending on loan amounts and other factors, we look at the minimum turnaround, rather than the whole range.
Lenders that offer funding as fast as the next business day — or sooner — get the best rating. Those that take more than a month get the lowest score. With SBA lenders, we skip this category altogether to avoid penalizing them for a notoriously slow government program.
How we rate starting APR
★★★★★ — Below 10%
★★★★★ — 10% to 19%
★★★★★ — 20% to 29%
★★★★★ — 30% to 39%
★★★★★ — 40% and up
Business loans tend to come with higher APRs than personal loans, and lenders often aren’t up front about them. We consider APRs that start below 10% to be highly competitive. Those starting at 40% and above get the lowest score. We skip this category for lenders that don’t disclose APRs.
How we rate fees
★★★★★ — Origination fee — or no fees altogether
★★★★★ — Prepayment penalties — with or without an origination fee
★★★★★ — Extra fees — like documentation, closing or annual fees
Origination fees are standard on a business loan. Any lender that only charges an origination fee — or no fees at all — gets our highest rating. A lender that charges a penalty if you pay off your loan early gets a 2-star rating, with or without an origination fee. And a lender that charges extra fees in addition to an origination fee — such as documentation, closing or annual fees — gets a 1-star rating.
We don’t consider late or returned check fees for this rating, since those are common among all business loan providers.
How we rate transparency
★★★★★ — Displays APR, fees, loan terms, loan amounts and eligibility requirements on website
★★★★★ — Displays 3 or 4 of the criteria for a 5-star rating
★★★★★ — Displays 2 of the criteria for a 5-star rating
★★★★★ — Displays 1 of the criteria for a 5-star rating
★★★★★ — No product details available on its website
Transparency measures how much information is available about a business loan before providing personal information. Those that display the most product details on their website score 5 stars. Those that don’t provide product details at all earn 1 star.
How we rate customer service options
★★★★★ — Live chat, phone number, email and social media accounts
★★★★★ — 3 of the criteria for a 5-star rating
★★★★★ — Phone number and email
★★★★★ — Phone number or email — not both
★★★★★ — No contact information or just an email form on its website
Our customer service score is based on how easy it is to get in touch with a lender. Those that have the most ways to reach out get the highest scores. Those that only have an email form on their website or no contact information at all earn just 1 star.
How we rate customer reviews
★★★★★ — Excellent customer service
★★★★★ — Good customer service
★★★★★ — Average customer service
★★★★★ — Subpar customer service
★★★★★ — Poor customer service
We look to reviews on Trustpilot and the Better Business Bureau for this rating — both sites use a 1- to 5-star rating system. We go with the customer rating from whichever site has the most reviews, since that paints a more accurate picture of the average experience. We skip this category if a lender doesn’t have over 100 reviews on either of these sites.
How we rate online applications
★★★★★ — Offers a fully online application
This is a chance for lenders to earn an extra 5 stars. Lenders that offer a fully online application earn 5 stars, since it’s rare. We skip this category for those that require a branch visit or extensive phone exchange, since it’s not necessarily uncommon among business loan providers.
How we rate prequalification
★★★★★ — Prequalify with soft credit check
★★★★★ — Prequalify with hard credit check
★★★★★ — No prequalification
Prequalification allows you to check your rates before you apply for a loan. Lenders that allow you to prequalify for a loan without a hard credit check that lowers your credit score get the full 5 stars. Those that run a hard credit check get a 3-star rating. Lenders that don’t let you prequalify at all earn 1 star.
How we rate bonus features
★★★★★ — Offers at least 1 perk
We want to give lenders that offer something extra to borrowers a chance to have that reflected in their star rating. If a lender checks off any of the following features, it earns a bonus 5 stars:
- Works with high-risk industries, franchises or nonprofits
- Works with poor-credit borrowers, businesses less than 6 months old or startups
- Offers SBA or USDA loans
- Has lenient revenue requirements equivalent to $10,000 a month or lower
How we rate microloans
Microloans serve a different purpose than a term loan, so we use a slightly different criteria for these star ratings. This includes a lower range of loan amounts: Lenders need a minimum of $100 and a maximum of $250,000 to earn a full 5 stars. Our minimum rate criteria was also a little tighter — lenders that charge no interest do the best.
We’re also more forgiving with turnaround time. But we don’t give out bonus points for perks — all microlenders offer extra support to borrowers.
How we rate merchant cash advances
Merchant cash advances give your business an advance on future sales, which you pay back over a fixed number of months — plus a fee. For this type of financing, we consider many of the same criteria as business term loans — with two key differences. Instead of interest, we look at the factor rate and whether the company charges additional fees that add to the total cost of the advance.
How we rate factoring companies
Factoring is generally designed for larger amounts of financing than a business term loan and acts as an advance. Instead of looking at minimum amounts, we consider the maximum percentage of an invoice you can have advanced.
We also look at the minimum factoring fee or its equivalent at a monthly rate. And companies that offer nonrecourse factoring earn a few extra points, since you aren’t responsible for the invoice if your client doesn’t pay.
How we rate Rollovers For Business Startups
The criteria for companies that offer Rollovers For Business Startups (ROBS) is also different, as they perform a very different service than a lender. Rather than rating APRs and fees, we consider setup costs and the minimum monthly maintenance costs. We also don’t consider turnaround.
We give an extra 5 stars if the provider helps you apply for SBA funding along with your ROBS. And perks like free legal and compliance assistance, tax preparation services and discounts also earn a provider extra points.
What we don’t consider
Our star ratings don’t consider everything you need to know about a lender. Read our reviews to check out the following features before deciding to apply with a lender.
- Loan terms. Look for a term that offers monthly repayments your business can easily afford without staying in debt longer than it needs to. Terms generally range from 1 to 10 years.
- State availability. Check to make sure a lender offers loans to residents of your states. Many have restrictions.
- Eligibility requirements. Most lenders consider your credit, time in business and revenue at a minimum.
- Specializations. Some lenders specialize in funding certain industries or types of businesses, which might make them a better fit for your specific needs — even if they have a lower star rating.
- Repayment frequency. Term loans typically come with monthly repayments. However, some providers charge bi-monthly, weekly or even daily repayments. Make sure the pay frequency fits your business’s cash flow before signing on.
- Business hours. If you expect a lot of back and forth on your application, make sure the lender is open at a time when you’re available to talk on the phone or stop by a branch.
Types of financing we don’t currently rate
Our rating system is designed for your standard term business loan. Since many types of business financing don’t fit that mold, it wouldn’t be fair to rate them based on the same criteria. These include:
- Short-term business loans
- Alternative business loans
- Real estate financing
Ask an Expert