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Business borrowing guide stage 3: Loans for high-growth businesses

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Is your business growing more quickly than you can keep up with? This is your guide to the specific funding your business might need.

Being in a stage of high growth is the aim of every business owner, but it can also make business operations more difficult. High-growth businesses still encounter cash flow issues and have new needs for expansion and hiring. If you don’t want to put a strain on unpredictable cash flow, there are financing options you can consider.

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

    What is a “high growth” business?

    A high-growth business is a business of any size that is in a period of rapid growth. This type of business usually has a few employees and is past its initial stages, which are usually marked with high costs and uncertain profits. High-growth businesses can also be larger companies that are experiencing rapid growth after restructuring or launching a new product or service.

    What funding needs will a business experiencing high growth have?

    Businesses in this stage of growth have very specific funding needs:

    • Large loan amounts. While a high-growth business might need $50,000 today, they might need $500,000 tomorrow. Opportunities for large orders and expansions occur quickly, and these businesses rely on being able to keep up with demand.
    • Tailored repayments. What works for a startup business may not work for a business that is growing quickly. Tailored repayments help keep cash flow fluctuations manageable and put less of a strain on businesses.

    Types of finance to consider as a high-growth business

    Lenders prefer businesses that can demonstrate they’re able to repay the loan, so if your business is in a high-growth phase you are in a good position to borrow. There are a range of financing options available so it’s important to review your options and find the one that best fits your needs.

    Financing type Estimated amount able to borrow How you repay Advantages
    Line of credit $10,000–$1,000,000 Make the minimum payment based on the amount borrowed or pay in full as you borrow against your line of credit
    • Allows for a flexible borrowing amount
    • Generous repayment terms (usually up to 25 years)
    Term loan $5,000–$5,000,000 Regular repayments based on a fixed or variable interest rate
    • Automatic repayments — monthly, weekly or daily
    Invoice financing or factoring Up to 80% of the invoice amount Pay a monthly fee on the advance until you pay back the loan
    • Reduce waiting time for invoices to be paid
    • Invoice financing can be confidential
    Equipment loans Cost of the equipment Regular repayments based on a fixed or variable interest rate
    • Lease and loan options are available
    • Gets you quick access to equipment without using cash reserves
    Credit cards $500–$250,000 Pay the minimum balance or the entire balance if you’re able to
    • High credit limits
    • Only use as much as you need
    • Earn reward points and other perks

    Useful guides for high-growth businesses

    Compare top online business lenders who could finance your high-growth business

    Rates last updated December 16th, 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.
    Annual business revenue of at least $42,000, at least 9 months in business, personal credit score of 550+.
    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.
    Credibly Business Loans
    Funding to cover business expenses with daily or weekly repayments.
    500+ personal credit score, 6+ months in business, $15,000+ average monthly deposits
    Lendio Business Loan Marketplace
    Submit one simple application to potentially get offers from a network of over 75 legit business lenders.
    Must operate a business in the US or Canada, have a business bank account and have a personal credit score of 560+.
    National Funding Small Business Loans
    Working capital loans and equipment financing, some high-risk industries may be eligible.
    Be in business at least one year and make at least $100,000 in annual sales. Other loan types have additional requirements.
    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.
    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
    OnDeck Small Business Loans
    A leading online business lender offering flexible financing at competitive fixed rates.
    500+ personal credit score, 1+ years in business, $100,000+ annual revenue
    Fora Financial Business Loans
    No minimum credit score requirement and early repayment discounts for qualifying borrowers.
    Business age 6+ months. Monthly revenue $12,000+. No open bankruptcies.

    Compare up to 4 providers

    How you can compare your business loan options

    • When you will receive the funds. If your business is experiencing high growth, chances are you need the funds quickly. Some business lenders can provide funds within 24 hours of approval, but many take longer. Find out when you can expect to receive it.
    • How much you can apply for. Loan amounts differ between lenders. Some might offer a maximum of $500,000 while others will offer more. Ensure the lenders you are comparing are offering the amount of money you need.
    • How flexible is the loan? Can you repay the funds early without penalty? When will your business be required to make repayments? Make sure the loan is as flexible as you need it to be.
    • Is there a fixed term? This depends on the type of loan you’re looking for. Fixed term loans will mean your ongoing repayments pay back the loan at the end of the term, but a non-fixed term loan, such as a line of credit, will be more flexible and allow you to only take out as much as you need.
    • How is interest charged? Will interest be calculated on the principal or on how much you have left to repay? Will the rate be fixed or variable? This has a huge impact on the cost of your repayments so make sure you check this.

    Costs to be aware of with business loans

    Each lender will set different interest rates and fees for your loan. Keep an eye out for the following:

    • Interest rate. If the loan type you choose charges an interest rate, you need to check whether it is fixed or variable. It may also be a factor rate, which is expressed as a decimal figure and doesn’t compound.
    • Upfront fees. You may be charged an establishment fee or application fee. These will be added onto your loan amount and you don’t need to pay these unless you are approved and sign the loan contract.
    • Ongoing fees. Monthly and annual fees are common with business loans, so remember to incorporate these into the overall cost of your loan to see how much your repayments could be.
    • Other fees. You may be charged for making additional repayments or repaying your loan early, there could be a documentation fee or a direct deposit fee.

    Four important questions to ask before applying for a loan

    • How will the repayments affect my business’ cash flow?
      By answering this question you can find out how manageable the loan payments will be and if you should adjust the amount you are borrowing or the term.
    • Is my ability to repay the loan based on my current level of growth?
      It’s easy for a business to stagnate, so if you’re relying on your increasing cash flow to repay the loan, you need to consider how reliable those projections are.
    • How is my credit history?
      Have you checked your business credit score and personal credit report? It will give you an idea of your financial stability as well as the likelihood of your business being approved.
    • Do you have property or a vehicle to use as security?
      Many lenders give more competitive rates or terms for secured loans, and you may increase your chances of being approved if you offer an asset.
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