Compare business loans for established businesses in 2018 | finder.com

Business borrowing guide stage 4: Loans for established businesses

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How to find financing when your business has cemented its position.

It’s not only startups that need financing. If you’ve worked hard to establish your business and have had the ball rolling for some time, you still might find periods where cash flow fluctuates or times when you need to make a purchase or investment to increase your profits. This guide is for finding the right financing for those needs.

LoanBuilder, A PayPal Service Business Loans

Our top pick: LoanBuilder, A PayPal Service

Customizable business loans with no hidden fees.

  • Min. Amount: $5,000
  • Max. Amount: $500,000
  • One-time fixed fee charged over the life of the loan
  • Acclaimed customer service
  • Requirements: $100,000+ annual revenue, 1+ years in business, 600+ personal credit score

    How do you define an “established” business?

    Established businesses are well past the startup phase and have found a position for themselves in the market. These businesses have an existing customer base and are earning a profit that has allowed them to expand their operations. The product or service these businesses offer has been tested and is in demand in the market.

    Common financing needs for established business

    Established businesses have different funding needs than startups or businesses in their early stages. Established businesses are already earning a profit, so the funds they’re looking for are usually to fund a new venture, invest in expanding their operations or ease cash flow fluctuations.

    • Cash flow. Each business has cash flow challenges at one time or another, and depending on the nature of the business, established businesses can go through periods of big fluctuations that affect their profitability.
    • Investing. The investment could be to refurbish your office space, develop a new product or expand your marketing activities. Established businesses need to be able to grow just as much as startups, and financing can help businesses achieve this.
    • Expanding. If the business is growing, owners might need funds to hire new staff, purchase new equipment or move to a new business location. Business expansion funds can also be used to purchase an additional store location.

    What types of finance are available?

    There are three main types of financing that an established business can consider using: debt finance, equity finance or funding from internal funds (business profits).

    Debt finance Equity finance Internal funds/business profits
    Where to find it
    How much you can borrow Usually between $1,000 to $5,000,000 However much the business can raise, can depend on valuation As much liquid cash is available depending on profitability
    How it works You pay the debt back over the loan term with fees and interest The investor may hold part of your business or get a say in decision-making You withdraw the funds from your business account
    Pros
    • You don’t give up control in the business
    • Established businesses are more likely to meet eligibility criteria
    • There’s a range of loan types available
    • You may be able to raise higher amounts than debt finance
    • You don’t need to repay the funds
    • Your business doesn’t take on debts
    • Investors may provide strategic benefits
    • You don’t give up any control in the business
    • You don’t need to repay the funds
    • Your business doesn’t take on debt
    Cons
    • You may need to provide collateral as security for the loan
    • Business profits need to be used to repay the debt
    • Finding equity finance can be a slow and difficult process
    • You may be required to give up some control of the business
    • You may have conflicts with investors
    • You may not get all the funding you require
    • This will affect your business cash flow
    • If you experience a downturn you will not have the same level of cash to fall back on

    Want a business loan for debt finance? Compare these top lenders

    Rates last updated October 18th, 2018
    Unfortunately, none of the business loan providers currently offer loans for these criteria.
    Name Product Product Description Min Loan Amount Max. Loan Amount Requirements
    LoanBuilder, A PayPal Service Business Loans
    Customizable loans with no origination fee for business owners in a hurry.
    $5,000
    $500,000
    Annual business revenue of at least $42,000, at least 9 months in business, personal credit score of 550+.
    Credibly Business Loans
    Funding to cover business expenses with daily or weekly repayments.
    $5,000
    $250,000
    At least 6 months in business, average $10,000 in monthly deposits.
    Lendio Business Loan Marketplace
    Submit one simple application to potentially get offers from a network of over 75 legit business lenders.
    $500
    $5,000,000
    Must operate a business in the US or Canada, have a business bank account and have a personal credit score of 560+.
    LendingClub Business Loans
    With loan terms that vary from 1 to 5 years, enjoy fixed monthly payments and no prepayment penalties through this award-winning lender.
    $5,000
    $300,000
    2+ years in business; $50,000+ in yearly sales; No bankruptcies or tax liens; At least 20% ownership of your business; Fair or better personal credit
    OnDeck Small Business Loans
    A leading online business lender offering flexible financing at competitive fixed rates.
    $5,000
    $500,000
    Must have been in business for at least one year with annual revenue of $100K+. Must have a personal credit score of 500+.
    Lending Express Business Loan Marketplace
    $5,000
    $500,000
    At least 3 months in business and $10,000+ in monthly revenue. Your business might also qualify if it's been in business at least 6 months with $3,000+ in monthly revenue.
    Fora Financial Business Loans
    No minimum credit score requirement and early repayment discounts for qualifying borrowers.
    $5,000
    $500,000
    Business age 6+ months. Monthly revenue $12,000+. No open bankruptcies.
    LendingTree Business Loans
    Multiple business financing options in one place including: small business loans, lines of credit, SBA loans, equipment financing and more.
    Varies by lender and type of financing
    Varies by lender and type of financing
    Varies by lender, but you many require good personal credit, a minimum business age and minimum annual revenue.

    Compare up to 4 providers

    How to compare business loans

    It’s important to compare different types of financing and find the right one for you. Use the points below to guide your comparison:

    • Does it have a fixed term? Fixed term loans are a great option if you only want to borrow a lump sum and want to make regular repayments. If you aren’t 100% sure on how much you need to borrow, a line of credit might be more suitable.
    • How much will your repayments be? Business loan interest rates are calculated in a few ways. Find out how the lender will calculate your rate and also what ongoing costs apply to determine your repayments. This will help you compare a loan’s competitiveness.
    • What loan amounts are available? Lenders usually have a set minimum and maximum amount. Make sure the loan you need is within that range.
    • How quickly will you receive funding? Depending on why your business needs the loan, you may require funding by a certain date. Be sure the lender can get you the funds you need in time.

    What fees and rates should I expect?

    Each business loan product will come with a separate set of fees and a different type of interest rate. Here are some costs to watch out for:

    • Interest rate. The rate may be structured as a standard rate, that is, charged on your outstanding balance, or it could be a factor rate, which is a decimal figure that’s charged on your principal and doesn’t compound. Check whether the rate is fixed or variable, as well.
    • Upfront costs. See whether you will be charged an application or establishment fee, which will likely be a few hundred dollars.
    • Ongoing fees. These can be daily, monthly or annual fees and are charged as a cost for servicing the loan.
    • Late and default fees. If you fail to make a repayment on time, your direct deposit fails or you default on the loan, you will be charged a fee.
    • Other fees. See if you will be charged to repay the loan early or make additional repayments.

    Six questions to ask before deciding on finance

    How much do you need to borrow?

    Depending on how certain you are about this amount, it may affect your loan type choice. If you need a significant amount of finance it may be worth looking into equity finance or a large line of credit. If it is a large loan amount, consider the debt your business will be taking on.

    How will you repay the loan?

    Will you use projected or actual business revenue? What will happen if your business experiences a downturn? These are the questions you need to ask and factor into your projections before you apply for the loan.

    Do you have an asset to use as security?

    This could be a real estate property, either residential or commercial, or it could be a vehicle. Offering security for the loan can lower your rate and let you borrow more.

    How good is your business credit score?

    You will have a personal credit file and a business credit file along with a business credit score. Each could affect whether you’re approved and the rate you’re ultimately offered.

    Will personal and business credit files be checked?

    Some lenders will need to verify your personal credit position as well as your business’s credit position. Make sure you will be able to meet the credit criteria for both.

    Can you repay the loan early?

    Your business may be in a position to repay the loan early, and doing so could help you save money on interest. Find out if this is possible without a fee.

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