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Small-Business Term Loans: Where to Find Options

Steve NicastroNovember 21, 2019

At NerdWallet, we strive to help you make financial decisions with confidence. To do this, many or all of the products featured here are from our partners. However, this doesn’t influence our evaluations. Our opinions are our own.

Business term loans can finance one-time investments for your small business. Your options include SBA loans and business loans from online lenders.

Easily get real, personalized small business loan rates to compare -- not just ranges or estimates.

It's free and won't affect your credit.

Get Started

on Fundera's website

Our picks for

Term loans from online lenders

Credibility Capital - Online term loan

Credibility Capital - Online term loan

Est. APR

10.00 - 25.00%

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.
  • Requires business lien and may require personal guarantee.
  • Not available in Nevada, North Dakota, South Dakota, or Vermont.
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.
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.
Funding Circle - Online term loan

Funding Circle - Online term loan

Est. APR

11.67 - 36.00%

Min. Credit Score

620

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 business lien and personal guarantee.
Read full review

Qualifications

  • Minimum credit score: 620.
  • 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: 1 year.
  • Minimum annual revenue: $100,000.
  • No bankruptcies in the past 2 years.
QuarterSpot - Online term loan

QuarterSpot - Online term loan

Est. APR

30.00 - 70.00%

Min. Credit Score

550

QuarterSpot's short-term business loans provide a financing option for borrowers with poor credit, but at high rates.

Pros

  • Requires low minimum credit score.
  • Cash can be available within the same day.
  • No prepayment penalty.

Cons

  • Rates are high compared to other online lenders.
  • Short loan terms.
  • Requires personal guarantee.
Read full review

Qualifications

  • Minimum credit score: 550.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: $200,000.
  • Average at least 10 monthly revenue-producing deposits.
  • Minimum $2,000 average daily account balance.
SmartBiz - SBA loan

SmartBiz - SBA loan

Est. APR

9.28 - 10.52%

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.
StreetShares - Online term loan

StreetShares - Online term loan

Est. APR

8.00 - 39.99%

Min. Credit Score

600

StreetShares offers a business term loan for newer businesses that need to finance an expansion.

Pros

  • No prepayment penalty.

Cons

  • Requires weekly repayments.
  • Financing amounts limited to 20% of annual revenue.
Read full review

Qualifications

  • Minimum credit score: 600.
  • Minimum time in business: 1 year.
  • Minimum annual revenue: $25,000.
  • No bankruptcies in the past 3 years.

Easily get real, personalized small business loan rates to compare -- not just ranges or estimates.

It's free and won't affect your credit.

Get Started

on Fundera's website

Summary of Small-Business Term Loans: Where to Find Options

LenderBest ForEst. APRMin. Credit Score
Credibility Capital - Online term loan

Credibility Capital - Online term loan

Term loans from online lenders

10.00 - 25.00%

680

Currency - Equipment financing

Currency - Equipment financing

Term loans from online lenders

6.00 - 24.00%

585

Funding Circle - Online term loan

Funding Circle - Online term loan

Term loans from online lenders

11.67 - 36.00%

620

OnDeck - Online term loan

OnDeck - Online term loan

Term loans from online lenders

9.00 - 99.00%

600

QuarterSpot - Online term loan

QuarterSpot - Online term loan

Term loans from online lenders

30.00 - 70.00%

550

SmartBiz - SBA loan

SmartBiz - SBA loan

Term loans from online lenders

9.28 - 10.52%

650

StreetShares - Online term loan

StreetShares - Online term loan

Term loans from online lenders

8.00 - 39.99%

600

LenderBest ForEst. APRMin. Credit Score
Credibility Capital - Online term loan

Credibility Capital - Online term loan

Term loans from online lenders

10.00 - 25.00%

680

Currency - Equipment financing

Currency - Equipment financing

Term loans from online lenders

6.00 - 24.00%

585

Funding Circle - Online term loan

Funding Circle - Online term loan

Term loans from online lenders

11.67 - 36.00%

620

OnDeck - Online term loan

OnDeck - Online term loan

Term loans from online lenders

9.00 - 99.00%

600

QuarterSpot - Online term loan

QuarterSpot - Online term loan

Term loans from online lenders

30.00 - 70.00%

550

SmartBiz - SBA loan

SmartBiz - SBA loan

Term loans from online lenders

9.28 - 10.52%

650

StreetShares - Online term loan

StreetShares - Online term loan

Term loans from online lenders

8.00 - 39.99%

600

How a business term loan works

If you have a car loan, student loan or a mortgage, then you likely already know how a term loan works. You borrow a lump of cash upfront for a specific purpose and repay the loan over a set period of time with fixed, equal payments.

Requirements, rates and speed of funding vary between banks and online lenders. Term loans range in size from $2,000 to $5 million, with annual percentage rates ranging from 6% to 99%.

Banks offer low rates on term loans, but typically carry stricter requirements — such as a strong personal credit score and high annual revenue — and take longer to fund. Bank term loans typically have long repayment terms of up to 10 years.

Online lenders offer speed and convenience, but typically carry higher costs. They also tend to have looser qualifications than banks. In addition, you can get short-term loans with repayment terms between three months and three years from online business lenders.

Both banks and online lenders provide Small Business Administration loans, which are guaranteed by the federal agency. This type of term loan provides up to $5 million and carries repayment terms of up to 25 years, depending on what the money is for. SBA loans also have some of the lowest APRs, making them a good option for long-term financing.

Like mortgages and car loans, term loans typically follow an amortization schedule. This means most of your payment goes toward paying interest at the beginning of the loan, and more toward principal near the end. Term loans can usually be repaid early to save on interest, although lenders may charge a prepayment penalty.

Term loan example: On a $100,000 term loan with a five-year repayment period at 20% APR, you’d make fixed monthly payments of $2,649 and pay total interest and fees of $58,963. Use NerdWallet’s business loan calculator to figure out the costs and repayments on a term loan.

For information on other financing options, read our guide on business loan types.

Business term loans: Pros and cons

Pros

  • You can borrow large amounts of money to finance expansion or growth.
  • Long repayment terms can make big investments more affordable.
  • Repaying term loans on time may help you build business credit.
  • Loans at online lenders can be approved and funded quickly, usually within a few days to a week.
  • Qualification requirements for online lenders may be looser than those for traditional banks.

Cons

  • Less flexibility than business lines of credit, as payments begin immediately after funding.
  • Shorter term loans may carry high costs and frequent repayments, although this depends on the lender.
  • SBA loans are low-cost, but carry strict requirements and can take a while to fund.
  • Collateral may be required — this would be an asset, such as equipment or real estate, that the lender can sell if you can’t make payments.

Find and compare small-business loans

NerdWallet has created a comparison tool of the best small-business loans to meet your needs and goals. We gauged lender trustworthiness, market scope and user experience, among other factors, and arranged them by categories that include your revenue and how long you’ve been in business.

Last updated on November 21, 2019

To recap our selections...

NerdWallet's Small-Business Term Loans: Where to Find Options