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Small-Business Loans: Compare Financing and Apply

NerdWalletMay 21, 2020

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Compare online loan options for funding and growing your small business.

Small-business loans can be critical to your success as a business owner, whether you're stocking your shelves or expanding your footprint. Traditional banks are no longer the only sources of business financing. With online lending, you now have access to many funding options, from SBA loans and business lines of credit to term loans and invoice-based financing.

In response to the economic fallout from the coronavirus pandemic, small-business owners and self-employed workers have several relief options provided under the CARES Act, including forgivable loans.

Apply for the SBA Paycheck Protection Program.

Does your small business need COVID-19 relief? Learn about the program and apply on Lendio.

Get Started

on Lendio's website

Our picks for

SBA loans

A loan funded by participating lending institutions and backed by the Small Business Administration.

SmartBiz - SBA loan

SmartBiz - SBA loan

Est. APR

6.73 - 10.29%

Min. Credit Score

650

SmartBiz’s low-cost SBA loans work best for established businesses that want to finance an expansion or refinance debt.

Pros

  • Competitive rates among online lenders.
  • Faster than getting an SBA loan from a bank.

Cons

  • Must have strong financials, supported by personal and business tax returns for the past 3 years.
  • Stringent rules on use of proceeds.
  • Requires business lien and personal guarantee.
Read full review

Qualifications

  • Minimum credit score: 650.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: $50,000.
  • No bankruptcies or foreclosures in the past 3 years.
Live Oak Bank - SBA loan

Live Oak Bank - SBA loan

Est. APR

5.50 - 8.25%

Min. Credit Score

650

Live Oak Bank's SBA loans work best for established businesses looking to finance an expansion.

Pros

  • Competitive rates among online lenders.
  • Faster than getting an SBA loan from a bank.

Cons

  • Must have strong financials, supported by personal and business tax returns for the past 3 years.
  • Only for specific industries.
  • Stringent rules on use of proceeds.
  • Requires business lien and personal guarantee.
Read full review

Qualifications

  • Minimum credit score: 650.
  • Cash flow must be able to support the debt.
  • No bankruptcies or foreclosures.
  • No outstanding tax liens.

Our picks for

Online term loans

A loan repaid with interest over a set period of time.

BlueVine - Term loan

BlueVine - Term loan

Est. APR

18.00 - 78.00%

Min. Credit Score

600

BlueVine's term loan works best for newer businesses that need short-term funding.

Pros

  • Offers option for businesses less than a year old.
  • Cash can be available within 12 to 24 hours.

Cons

  • Short repayment term results in higher payment amounts.
  • Requires personal guarantee.
Read full review

Qualifications

  • Minimum credit score: 600.
  • Minimum time in business: 6 months.
  • Minimum annual revenue: $100,000.
Credibility Capital - Online term loan

Credibility Capital - Online term loan

Est. APR

19.99 - 24.99%

Min. Credit Score

680

Credibility Capital offers low-cost business loans that work best for small-business owners with strong credit.

Pros

  • Competitive rates among online lenders.
  • No prepayment penalty.
  • Extra monthly payments can save interest cost.

Cons

  • Short repayment term results in higher payment amounts.
  • Requires high minimum credit score and revenue.
Read full review

Qualifications

  • Minimum credit score: 680.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: $250,000.
  • No bankruptcies in the past 5 years.
Funding Circle - Online term loan

Funding Circle - Online term loan

Est. APR

12.18 - 36.00%

Min. Credit Score

660

Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.

Pros

  • Cash can be available within 3 business days.
  • Competitive rates among online lenders.
  • No minimum revenue requirement.

Cons

  • Requires high minimum credit score.
  • Requires business lien and personal guarantee.
Read full review

Qualifications

  • Minimum credit score: 660.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: None.
  • No bankruptices in the past 7 years.
OnDeck - Online term loan

OnDeck - Online term loan

Est. APR

9.00 - 99.00%

Min. Credit Score

600

OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.

Pros

  • Cash can be available within the same business day.
  • Requires low minimum credit score.
  • Less paperwork than most lenders.

Cons

  • Fixed-fee structure means early repayment will not save interest.
  • Requires frequent (daily or weekly) repayments.
  • Requires business lien and personal guarantee.
Read full review

Qualifications

  • Minimum credit score: 600.
  • Minimum time in business: 3 years.
  • Minimum annual revenue: $250,000.
  • No bankruptcies in the past 2 years.

Our pick for

Equipment financing loan

Financing specifically for purchasing equipment.

Currency - Equipment financing

Currency - Equipment financing

Est. APR

6.00 - 24.00%

Min. Credit Score

585

Currency is an option for business owners looking to finance the purchase of new equipment.

Pros

  • Competitive rates among online lenders.

Cons

  • Prepayment penalty in some cases.
  • Requires business lien and personal guarantee.
Read full review

Qualifications

  • Minimum credit score: 585.
  • Minimum time in business: 6 months.
  • Minimum annual revenue: $75,000.
  • Must have a net loss no greater than 10% over the past 12 months.

Our picks for

Lines of credit

Financing you can draw from up to a set limit. Pay interest only on borrowed amount.

BlueVine - Line of credit

BlueVine - Line of credit

Est. APR

15.00 - 78.00%

Min. Credit Score

600

BlueVine's line of credit provides fast working capital for short-term borrowing needs.

Pros

  • Offers option for businesses less than a year old.
  • Cash can be available within 12 to 24 hours.

Cons

  • Short repayment term results in higher payment amounts.
  • Requires personal guarantee.
Read full review

Qualifications

  • 6-month line of credit
  • Minimum credit score: 600.
  • Minimum time in business: 6 months.
  • Minimum annual revenue: $100,000.
  • 12-month line of credit
  • Minimum credit score: 620.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: $450,000.
Fundbox - Line of credit

Fundbox - Line of credit

Est. APR

10.10 - 79.80%

Min. Credit Score

500

Fundbox offers a business line of credit to fill a cash-flow gap, and qualifying is easier than with other lenders.

Pros

  • Cash can be available by the next day.
  • Low minimum credit score requirement.

Cons

  • Rates are high compared to traditional banks.
Read full review

Qualifications

  • Minimum credit score: 500.
  • Minimum time in business: 3 months.
  • Minimum annual revenue: $50,000.
Kabbage - Line of credit

Kabbage - Line of credit

Est. APR

24.00 - 99.00%

Min. Credit Score

560

Kabbage provides fast loans for business owners with bad personal credit, but rates can be high.

Pros

  • Financing up to $250,000 available within a few days.
  • Accepts low credit scores.

Cons

  • Rates are high compared to other online lenders.
  • Must have online checking or PayPal account to verify cash flow.
  • Fixed-fee structure means early repayment does not save interest.
Read full review

Qualifications

  • Minimum credit score: 560.
  • Minimum time in business: 1 year.
  • Minimum annual revenue: $50,000.
OnDeck - Line of credit

OnDeck - Line of credit

Est. APR

13.99 - 63.00%

Min. Credit Score

600

OnDeck offers a fast line of credit for small-business owners with less-than-stellar credit who need to manage cash flow or buy inventory.

Pros

  • Cash can be available within the same business day.
  • Requires low minimum credit score.
  • Less paperwork than most lenders.

Cons

  • Fixed-fee structure means early repayment will not save interest.
  • Requires weekly repayments.
  • Requires personal guarantee.
Read full review

Qualifications

  • Minimum credit score: 600.
  • Minimum time in business: 3 years.
  • Minimum annual revenue: $250,000.
  • No bankruptcies in the past 2 years.

Our pick for

Invoice factoring

Upfront cash at a reduced value for your unpaid invoices or receivables.

BlueVine - Invoice factoring

BlueVine - Invoice factoring

Est. APR

15.00 - 68.00%

Min. Credit Score

530

BlueVine’s invoice factoring works best for financing larger invoices, but only if your customers reliably pay on time.

Pros

  • Finances larger invoices.
  • Cash can be available within the same day.
  • Accepts low minimum credit score and short time in business.

Cons

  • Not for businesses that do not invoice on net terms.
  • Loan amount is tied to the value of your invoices.
  • Dependency on customers to pay their bills on time.
Read full review

Qualifications

  • Minimum credit score: 530.
  • Minimum time in business: 3 months.
  • Minimum annual revenue: $100,000.

Apply for the SBA Paycheck Protection Program.

Does your small business need COVID-19 relief? Learn about the program and apply on Lendio.

Get Started

on Lendio's website

Summary of Small-Business Loans: Compare Financing and Apply

LenderBest ForEst. APRMin. Credit Score
SmartBiz - SBA loan

SmartBiz - SBA loan

Best for: SBA loans

6.73 - 10.29%

650

Live Oak Bank - SBA loan

Live Oak Bank - SBA loan

Best for: SBA loans

5.50 - 8.25%

650

BlueVine - Term loan

BlueVine - Term loan

Best for: Online term loans

18.00 - 78.00%

600

Credibility Capital - Online term loan

Credibility Capital - Online term loan

Best for: Online term loans

19.99 - 24.99%

680

Funding Circle - Online term loan

Funding Circle - Online term loan

Best for: Online term loans

12.18 - 36.00%

660

OnDeck - Online term loan

OnDeck - Online term loan

Best for: Online term loans

9.00 - 99.00%

600

Currency - Equipment financing

Currency - Equipment financing

Best for: Equipment financing loan

6.00 - 24.00%

585

BlueVine - Line of credit

BlueVine - Line of credit

Best for: Lines of credit

15.00 - 78.00%

600

Fundbox - Line of credit

Fundbox - Line of credit

Best for: Lines of credit

10.10 - 79.80%

500

Kabbage - Line of credit

Kabbage - Line of credit

Best for: Lines of credit

24.00 - 99.00%

560

OnDeck - Line of credit

OnDeck - Line of credit

Best for: Lines of credit

13.99 - 63.00%

600

BlueVine - Invoice factoring

BlueVine - Invoice factoring

Best for: Invoice factoring

15.00 - 68.00%

530

Annual Percentage Rates (APR), loan term and monthly payments are estimated based on analysis of information provided by lenders and publicly available information. All loan information is presented without warranty, and the estimated APR and other terms are not binding in any way. Lenders provide loans with a range of APRs depending on borrowers' credit and other factors. Keep in mind that only borrowers with excellent credit will qualify for the lowest rate available. Your actual APR will depend on factors like credit score, requested loan amount, loan term, and credit history. All loans are subject to credit review and approval.

Small-business loans

Small-business loans are typically issued only for businesses with a year or more of history and revenue. Among the financing options for entrepreneurs who qualify are U.S. Small Business Administration loans, term loans, business lines of credit and invoice factoring. Startups operating for less than a year can consider other financing options.

Types of small-business loans

Coronavirus relief loans

Small-business owners impacted by the COVID-19 pandemic can apply for Paycheck Protection Program loans and Economic Injury Disaster Loans.

Designed to keep employees on the payroll, PPP loans are forgivable when used to cover payroll and operating costs. Financing up to $10 million is available through SBA-approved lenders, including banks, fintech companies and online lenders such as BlueVine.

The SBA also provides EIDLs up to $10,000 to businesses that are experiencing a temporary loss of revenue. The loan advance does not have to be repaid. As of May 4, the SBA is accepting EIDL applications only from agricultural businesses.

SBA loan

The government-guaranteed SBA loan program works with banks to offer low interest rates and long-term repayment. But the process is time-consuming, and the requirements are strict. Only those with good personal credit (690 or higher, although some SBA lenders may have lower score requirements), strong business finances and the flexibility to wait for funding should apply.

  • Loan amounts: $30,000 to $5 million.
  • Approximate APR range: 5.50% to 8%.
  • Good for large one-time and longer-term investments, purchasing real estate or equipment, buying existing businesses and refinancing debt.

Business term loan

Online lenders offer term loans of up to $500,000. For a short-term loan, the repayment period typically ranges from six to 12 months, while a long-term loan repayment can extend up to 10 years or longer in some cases. Business owners can also find financing that can be used for specific items, like equipment or inventory.

  • Loan amounts: Up to $500,000.
  • Approximate APR range: 9% to 99%.
  • Good for large one-time investments.

Business line of credit

A business line of credit provides access to flexible cash. Lenders give you access to a specific amount of credit (say, $100,000), but you don’t make payments or get charged interest until you tap into the funds.

  • Credit line range: $2,000 to $250,000.
  • APR range: 10% to 99%.
  • Good for managing cash flow, handling unexpected expenses and financing short-term business needs.

Invoice factoring and invoice financing

Invoice factoring turns business owners’ unpaid invoices into immediate cash. You sell the invoices to a factoring company, which is paid when it collects from your customers. If you prefer to maintain control over your invoices, invoice financing is an alternative to factoring.

  • Financing amounts: Up to $5 million.
  • APR range: 10% to 79%.
  • Good for managing cash flow, short-term financing.

Additional funding options

Business financing options other than traditional loans or lines of credit include personal loans for business or business credit cards. A personal loan for business is a good option if your business is still young and you don’t qualify for traditional financing. Personal-loan providers look at your personal credit score and income instead of your business history.

A business credit card offers revolving credit, making it a solid option for short-term expenses. It can also be easier to qualify for a business credit card than a small-business loan. While credit limits tend to be smaller than a line of credit, a business credit card may offer rewards, such as cash back or travel points.

How do I get a business loan?

Every lender has different underwriting guidelines, but they generally consider similar factors, including personal credit score, your time in business and annual revenue. Lenders also consider your cash flow and ability to repay the debt.

Depending on the lender, you’ll be asked to share financial documents like tax returns, and bank and cash-flow statements. Read more about how to get a small-business loan.

Additional steps to qualify for a small-business loan

Having strong personal credit can help you qualify for lower rates and give you more financing options. If you don’t need business financing right away, consider building your credit score.

If you don’t know your credit score or want to monitor it consistently, several personal finance websites, including NerdWallet, offer free credit score access. Track your progress and open more doors for financing your business.

Why online lenders?

Only about 1 in 5 businesses that apply for a loan from a big bank are approved. We help business owners by working with online lenders that simplify the loan application process and approve more small businesses. Many online lenders also offer competitive rates and faster funding than some banks.

How does NerdWallet make money?

We make money when you get the funding you need. Some of the loan providers on our site pay us a referral fee when customers get approved for a loan. We always try to find the best option for you, even if we don’t have a paying relationship with a lender. We also turn down offers from lenders that we feel take advantage of small-business owners. Read more about how we make money.

Last updated on May 21, 2020

To recap our selections...

NerdWallet's Small-Business Loans: Compare Financing and Apply

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