Best* small business loans of 2021

Getting a loan for your business today is a lot different than it was 20 years ago. Today, you have options beyond banks and other financial giants, but this means that finding a lender you can trust takes a bit more effort. To save you time, we’ve narrowed down the different types of business loans on the market today and provided five tips to help you find the right business loan for your needs.

SharpShooter Funding Business Loan

• Min. Loan Amount: $500
• Max. Loan Amount: $500,000
• Interest Rate: Fee based, Prime pricing starting at 9.00%
• Requirements: Annual business revenue of $120,000

• Free online loan quote
• Borrow $500,000+
• Quick application process

SharpShooter Funding Business Loan

SharpShooter Funding offers loans up to $500,000 for small business owners who have been business for at least 6 months and can show a minimum of $10,000 in monthly deposits.

• Min. Loan Amount: $500
• Max. Loan Amount: $500,000
• Interest Rate: Fee based, Prime pricing starting at 9.00%
• Requirements: Annual business revenue of $120,000

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Compare best* business loans in Canada

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Name	Product	Interest Rate	Loan Amount	Loan Term	Minimum Revenue	Minimum Time in Business	Loans Offered
OnDeck Business Loan		8.00% – 29.00%	$5,000 - $300,000	6 - 18 months	$10,000 /month	6 months	Secured Term, Line of credit, Merchant cash advance	OnDeck offers loans up to $300,000 for small business owners working in approved industries who have been in business for at least 6 months with a minimum monthly revenue of $10,000. Who it might be good for: Business owners looking to receive funds in as little as 24 hours.	Check eligibility More Info	Compare	loading Fetching your data...
SharpShooter Funding Business Loan		Fee based, Prime pricing starting at 9.00%	$500 - $500,000	6 months - 5 years	$10,000 /month	6 months	Unsecured Term, Merchant cash advance	SharpShooter Funding offers loans up to $500,000 for small business owners who have been business for at least 6 months and can show a minimum of $10,000 in monthly deposits. Who it might be good for: Business owners looking for a fast and simple application process.	Check eligibility More Info	Compare	loading Fetching your data...
Merchant Growth Business Loan		12.99% to 39.99%	$5,000 - $500,000	3-12 months	$10,000 /month	6 months	Unsecured Term, Line of credit, Merchant cash advance	Merchant Growth offers loans up to $500,000 for small business owners who have been business for at least 6 months and can show a minimum of $10,000 in monthly sales. Who it might be good for: Business owners looking for flexible financing options.	Check eligibility More Info	Compare	loading Fetching your data...
Loans Canada Business Loan		Prime Pricing from 9.00%, Long term financing from Prime + 2.00%	$2,000 - $350,000	3 months - 5 years	$4,166 /month	100 days	Unsecured Term, Secured Term, Line of credit, Merchant cash advance, Equipment financing	Loans Canada connects Canadian small business owners to lenders offering up to $350,000. Borrowers must have been in business for at least 100 days, have a credit score of 410+ and show a minimum of $4,166 in monthly deposits ($50,000/year). Who it might be good for: Business owners looking to use a broker to compare different financing options.	Check eligibility More Info	Compare	loading Fetching your data...

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Types of lenders

Here are some of the most common types of business loan lenders.

• Online direct lenders.

Online direct lenders have become increasingly popular among businesses in recent years — especially as banks have stricter eligibility requirements. Online lenders might come with higher interest rate and fees, but they also have higher acceptance rates and faster turnaround times. These lenders can sometimes provide funding in as little as 24 hours and don’t have nearly as tough qualification criteria.

• Peer-to-peer lenders.

Peer-to-peer lenders are similar to online lenders, except they don’t provide the funding themselves. Instead, they connect you to investors who will fund your loan through their online platform.

• Banks.

Bank loans are the Holy Grail of business lending: Everyone seems to want one, but most business owners can’t seem to find one. Banks seem like an obvious place to go for a loan, especially if you’ve been borrowing for a long time. However, bank business loans aren’t always what they’re cracked up to be. They usually take more time to receive and sometimes require interviews or even site visits before you can even be considered for a loan.

• Online marketplaces.

Online marketplaces are sometimes confused with peer-to-peer lenders, but they’re not quite the same. Rather than matching you with investors, online marketplaces match you with lenders. It’s an easy way to see a wide selection of lenders, but you’re typically limited to the marketplace’s partners, and therefore not exposed to all possible lenders and loans.

Top types of loans for small businesses

Click on one of the following loans to find out which type of financing might work best for your small business.

• 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 $1.25 million and pay it off between one and seven years — sometimes longer.

  Best for: Covering one-time expenses like hiring new staff, 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 actually borrow and have a certain time frame to pay it off. You can borrow up to your credit limit and then pay it off and continuously borrow as long as the line of credit is open.

  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 few years.

  Best for: Covering recurring expenses, picking up the slack during an off season or paying for ongoing projects where costs are difficult to predict.

  Get the low down on how business lines of credit work

• 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 1% 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 80% of the equipment’s value – sometimes more.

  Best for: Businesses buying heavy machinery, vehicles 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 $1,000 and can be repaid over three months or more.

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

  What to expect from business microfinancing

• Merchant cash advance

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

  How much you can borrow: Typically around 20% of your business’s monthly profits.

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

Find out how other business loan types work

What do lenders look for in a business?

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, especially if your business isn’t very old.
• 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. Some lenders require business owners to put personal assets up as collateral to secure the loan. This takes some of the risk off for the lender and can help you qualify for more competitive rates.

Business financing alternatives

Sometimes a business loan isn’t the best way to fund your business. If your business is new, you 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. Lenders usually offer up to $35,000 and 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.
• 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. Keep in mind you lose partial control over your company by doing this.
• Business credit cards. For small expenses or working capital, a business credit card is sometimes a lot easier to manage than a loan. Many business credit cards come with low annual fees and competitive APR’s.

Bottom line

There is no one “best” business loan for everyone, but there are better lenders and loan types for specific business needs.

Understanding the type of loan you need is the first step toward getting a business loan that fits your unique business needs. Check out our guide to learn more about business financing and find lenders you and your business qualify for.

Frequently asked questions

• How does a small business loan work?

  The most common type of small business loan is a term loan, where a lender gives you a lump sum that you pay back plus interest and fees.

  However, there are plenty of other small business loans that could better fit your business’s needs, so be sure to compare your options before signing for a loan.

• Can I get a small business loan without collateral?

  Yes. While many business lenders ask for a lien on your business assets as collateral — especially those with more lenient credit requirements — it’s possible to find an unsecured business loan.

  Collateral isn’t necessarily bad, however. You can often get lower rates when your loan is secured, since it’s less risky for the lender.

• Can I get a loan to start a business?

  Getting a business loan to start a business can be difficult — and it’s not always a good idea. New businesses are extremely risky: If you can’t pay back your loan, which is a high possibility, it could ruin your personal finances.

  That doesn’t mean you can’t get financing to launch your new business through other means. Sources like angel investors, venture capitalists and crowdfunding platforms might be better, less risky places to start.

• How long does it take to get a business loan?

  The short answer: It depends on the type of loan you want and the lender you ultimately decide on.

  Online lenders can get you funding as quickly as the next business day, while bank loans typically take at least a couple of weeks.

• What types of documents do I need to get a business loan?

  It can vary, but generally lenders will ask for the following documents:

  • A personal bank statement
  • A business bank statement
  • Your business’s most recent tax return
  • A business plan including financial projections
  • Your business’s license and information

  If you apply through a bank, your business might ask for many more documents, including a schedule of your business’s debts, proof of collateral and even your personal resume.