Whether you need a long-term loan, a line of credit or a business cash advance, $25,000 loans come in all shapes and sizes. While you don’t necessarily need great credit to qualify for this amount, you generally need to be in business for at least six months to a year with a minimum annual revenue between $50,000 and $100,000.
Where to get a $25,000 business loan
Many lenders offer $25,000 business loans, including banks, credit unions, online lenders and marketplaces like Lendio. While established businesses could find more competitive rates at a large national bank, newer businesses might have better luck with an online lender or an SBA loan specialist.
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How to get a $25,000 business loan
The application process depends on the lender. While traditional bank loans might require a lot of paperwork, some online lenders offer “no-doc” loans that connect to your bank accounts to verify financials immediately.
Regardless of the lender, here are the general steps to apply for a $25,000 business loan:
- Determine the type of loan you need. Before you start comparing, decide what type of loan you need. If you’re funding a one-time expense, look for a term loan. If you have ongoing expenses or cash flow dips to cover, consider a line of credit or an MCA.
- Compare lenders. Find and compare lenders that offer $25,000 loans by reviewing the loan’s APR, terms and requirements. Do you need the money right now, or would you rather do more research first? Online lenders can get you funding faster than banks.
- Check your eligibility. Online lenders typically offer online prequalification so you can find out if you’re eligible and check your rates. But if you’re applying through a bank, you might have to call or apply in person.
- Ready your documents. For a bank, prepare to gather your personal and business tax returns, profit and loss statements and bank statements. For an online lender, you may get away with just three months’ worth of bank statements.
- Fill out the application. Completing the application can take a few minutes to over an hour, depending on the lender and type of loan. No doc lenders tend to have the fastest application processes, allowing you to connect to your bank accounts directly.
- Submit any additional information. Your lender will review your application and reach out for more information or documents if needed. Usually, you can submit these online, by mail or in person at a branch.
- Read and sign the contract. Review your final offer, making sure the rates, terms and monthly payments fit your business’s budget. If you agree, sign and submit your contract.
The turnaround time on $25,000 loans depends on the loan type. SBA loans can take weeks to process, while short-term loans from online lenders can take one business day or less. For the fastest application times and turnaround, consider a no-doc lender.
How to qualify for a $25,000 business loan
While a $25,000 business loan is well below the average business borrowing amount of $663,000, it’s still substantial enough that you’ll need to meet certain revenue and other criteria, including:
- At least six months in business. Many lenders require businesses to have a track record of six to 12 months. However, loans for very new businesses are generally short-term options like merchant cash advances, which can be expensive compared to other loans.
- Minimum monthly revenue. A general rule of thumb is that lenders will loan you 10% to 30% of your annual revenue. If you earn $100,000 a year, you could potentially borrow between $10,000 and $30,000.
- Good personal credit. Business lenders often rely on personal rather than business credit scores. Depending on the type of financing, you could qualify with a score as low as 520, although 670 and up is better.
- A personal guarantee. The lender may also ask you for a personal guarantee, especially for unsecured loans not backed by collateral.
How much a $25,000 loan costs
The cost of a $25,000 business loan varies depending on the type of loan you get. For example, a traditional bank term loan might start as low as 6.43% APR, while rates on SBA 7(a) loans are capped at the prime rate plus 8% for loans of $25,000 or less.
For shorter-term financing like lines of credit, APRs can run much higher — typically starting below 10% for the best credit borrowers and reaching as high as 60% APR or more for borrowers with lower credit scores.
Use the calculator below to find out how much your loan might cost based on different rates and terms.
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9 types of $25,000 business loans
Finding the right $25,000 business loan doesn’t have to be complicated. Whether you’re looking for fast cash or a long-term solution, there’s a loan type out there that can match your needs. Let’s break down the most common options, who they work best for and when it might make sense to look elsewhere.
1. Short-Term Business Loans
Short-term loans provide a lump sum that you repay over a period of up to 18 months. These loans are typically unsecured and come with higher interest rates due to their quick repayment terms.
Who it’s good for:
- Businesses with immediate, unexpected expenses
- Companies looking to cover a short-term cash flow gap
Who should consider other options:
- Businesses needing a longer repayment period
- Borrowers who want lower interest rates
2. Business Term Loans
A term loan gives you a set amount up front to repay with fixed monthly payments over two to 10 years. These loans can be secured or unsecured, depending on the lender.
Who it’s good for:
- Established businesses with steady revenue
- Companies funding larger, one-time expenses
Who should consider other options:
- Startups or businesses without a strong credit history
- Companies needing flexible, revolving funds
3. Business Line of Credit
A business line of credit gives you access to a revolving credit limit that you can draw from as needed. You only pay interest on the amount you use, making it a flexible option for ongoing expenses.
Who it’s good for:
- Businesses with fluctuating cash flow needs
- Companies looking for a safety net for unexpected costs
Who should consider other options:
- Borrowers who prefer fixed repayment terms
- Businesses needing a one-time lump sum
4. Merchant Cash Advances (MCA)
With an MCA, you receive an advance on your future credit card sales. Repayments are made daily or weekly as a percentage of your sales, making this a fast but often expensive option.
Who it’s good for:
- Newer businesses with limited credit history
- Companies with consistent credit card sales
Who should consider other options:
- Businesses with low credit card revenue
- Borrowers who want predictable repayment terms
5. SBA Loans
Small Business Administration (SBA) loans are partially backed by the government, offering competitive interest rates and flexible repayment terms. However, they have stricter qualification requirements and longer approval times.
Who it’s good for:
- Businesses with strong credit and solid revenue
- Companies needing affordable, long-term financing
Who should consider other options:
- Startups without established revenue
- Borrowers needing fast access to funds
6. Equipment Financing
Equipment financing uses the equipment you’re purchasing as collateral, which can make it easier to qualify. These loans are ideal for funding tools, machinery or technology upgrades.
Who it’s good for:
- Businesses needing to purchase equipment
- Companies looking for collateral-backed loans
Who should consider other options:
- Businesses without equipment needs
- Borrowers wanting unsecured financing
7. Invoice Factoring
Invoice factoring involves selling your outstanding invoices to a factoring company in exchange for cash up front. The company collects payments directly from your customers.
Who it’s good for:
- Businesses with large unpaid invoices
- Companies needing to free up cash flow quickly
Who should consider other options:
- Businesses without significant outstanding invoices
- Borrowers concerned about third-party customer interactions
8. Inventory Financing
Inventory financing allows you to borrow against the value of your inventory. This loan is often secured by the inventory itself and is ideal for restocking or preparing for seasonal demand.
Who it’s good for:
- Retailers needing to purchase inventory up front
- Seasonal businesses preparing for busy periods
Who should consider other options:
- Service-based businesses without inventory needs
- Borrowers who don’t want secured loan
9. Business Credit Cards
Business credit cards offer a revolving line of credit that you can use for everyday expenses or unexpected costs. They’re quick to apply for, often come with rewards programs and provide flexibility as long as you make at least the minimum monthly payment.
Who it’s good for:
- Businesses needing flexibility for smaller, ongoing expenses
- Companies that want to earn rewards or cash back on purchases
Who should consider other options:
- Businesses that prefer lower interest rates or a fixed repayment schedule
- Borrowers who may struggle to manage high-interest debt if not paid off in full each month
Secured vs. unsecured business loans for $25,000
When applying for a $25,000 business loan, you’ll need to decide between a secured or unsecured option. Secured loans require collateral, like equipment or other business assets, which can make it easier to qualify or get better rates.
On the other hand, unsecured loans don’t require collateral but may come with higher interest rates. Many online lenders offer unsecured loans for $25,000, making them a popular choice for businesses that don’t want to put assets on the line.
How to get a $25,000 business loan with bad credit
If you’re worried about getting a $25,000 business loan with bad credit, don’t be — there are options available.
The most common types of financing available to bad credit borrowers are merchant cash advances and invoice factoring because approval relies more on your business’s cash flow than your personal credit score. Loans backed by collateral, such as equipment financing and inventory loans, are also a good option if you have bad credit since the assets reduce the lender’s risk.
Some online lenders specialize in working with borrowers who have bad credit, focusing instead on factors like revenue and time in business — but be prepared for higher interest rates. You can also compare multiple offers through a loan marketing place, making it easier to find the best option for your business.
Bottom line
While it’s likely easier to qualify for a $25,000 loan than a larger amount, you’ll still need to meet the lender’s criteria. Compare the best small business loans to see the amounts and rates you may qualify for.
Frequently asked questions
Can I get an SBA loan for $25,000?
Yes, many SBA loan programs are available for $25,000, including the popular 7(a) and Express loan programs. Loans backed by the Small Business Administration (SBA) offer low rates and high loan amounts to businesses that have a hard time qualifying elsewhere. But they also come with some of the highest rejection rates in the market.
Can I get a loan for $25,000 to start a business?
Yes, but your options are basically limited to SBA 7(a) loans, SBA microloans and possibly SBA 504 loans to finance equipment. However, SBA loans tend to have somewhat stringent requirements. To qualify, you’ll need decent credit and a solid business plan showing how the business will generate revenue.
Because it can be hard to qualify for an SBA loan, some entrepreneurs use their own savings or take out a personal loan to finance a new business. Personal loans don’t have a time in business or revenue requirement, making them an ideal loan for startups — if the lender allows the funds to be used for this purpose.
What credit score do I need for a $25,000 business loan?
The credit score you need for a $25,000 business loan depends on the lender and loan type. Traditional lenders like banks usually look for scores of 670 or higher, but alternative lenders may accept scores as low as 520 if your business has strong revenue or collateral. It’s a good idea to shop around to find a lender that fits your situation.
How do payments on a $25,000 loan work?
It depends on your loan. Most $25,000 loans are term loans, lines of credit, merchant cash advances (MCAs) and invoice factoring and financing. Because these loan types are so different, payments vary widely.
They might be monthly for a term loan but weekly or even daily for an MCA. And if you use invoice factoring, you won’t repay the factoring company at all — rather, you sell your invoices to the company for a discount.
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