Best Of
Online lenders often provide faster and easier access to small-business loans than banks, though at higher rates.
Online business loans have become a popular financing option over the past decade as banks have scaled back on loans to small businesses.
With the help of algorithms and technology, online lenders analyze traditional credit standards, such as personal credit score and cash flow, and may also use nontraditional metrics, including social media interactions and online customer reviews. As a result, they can offer quicker and easier access to capital than traditional lenders like banks and credit unions. Borrowing costs, though, are typically higher for online business loans.
Borrowing from online lenders isn’t for everyone, however. If your business is just getting started, you probably won’t qualify. You’ll have to consider other startup-financing options. But if you’ve been in business at least a year and need quick access to cash or can’t qualify for a bank loan, online small-business loans are worth exploring.
You can compare online financing options by product below: term loans, lines of credit and invoice factoring.
For pandemic-related aid, small businesses have a few options, including Paycheck Protection Program loans, which received new funding in late December.
Our picks for
Online business term loans
6.99 - 24.99%
650
Pros
Cons
Qualifications:
12.18 - 36.00%
660
Pros
Cons
Qualifications:
9.00 - 99.00%
600
Pros
Cons
Qualifications:
Our picks for
Business lines of credit
15.00 - 78.00%
650
Pros
Cons
Qualifications:
11.00 - 61.90%
600
Pros
Cons
Qualifications:
Our pick for
Invoice factoring
15.00 - 68.00%
530
Pros
Cons
Qualifications:
| Lender | Best For | Est. APR | Min. Credit Score | Next Steps |
|---|---|---|---|---|
Credibility Capital - Online term loan | Best for Online business term loans | 6.99 - 24.99% | 650 | See Your Loan Options
with Fundera by Nerdwallet |
Funding Circle - Online term loan | Best for Online business term loans | 12.18 - 36.00% | 660 | See Your Loan Options
with Fundera by Nerdwallet |
OnDeck - Online term loan | Best for Online business term loans | 9.00 - 99.00% | 600 | See Your Loan Options
with Fundera by Nerdwallet |
BlueVine - Line of credit | Best for Business lines of credit | 15.00 - 78.00% | 650 | See Your Loan Options
with Fundera by Nerdwallet |
OnDeck - Line of credit | Best for Business lines of credit | 11.00 - 61.90% | 600 | See Your Loan Options
with Fundera by Nerdwallet |
BlueVine - Invoice factoring | Best for Invoice factoring | 15.00 - 68.00% | 530 | See Your Loan Options
with Fundera by Nerdwallet |
Term loans provide a lump sum of cash that you repay over a fixed period. Because you can pay them off over a longer period, term loans are usually the better choice for larger investments and long-term growth.
Term loans include the popular SBA 7(a) program, which are loans guaranteed by the Small Business Administration but issued by traditional banks and online lenders.
If you’re looking for financing flexibility, a business line of credit is a better option. You draw on the line — up to a specified amount — as needed and pay interest only on the money you’ve borrowed. Lines of credit are a better choice for short-term expenses. Although the APR may be slightly higher than for term loans, lines of credit provide the flexibility to take out money only when, and as often as, you need it.
Invoice factoring is a way to get immediate cash by borrowing against your unpaid customer invoices, which can help you fill cash-flow gaps while you wait for customers to pay. This type of financing is only for companies that sell goods and services to other businesses and, therefore, have invoices. Typically, invoice factoring costs are higher than with term loans and lines of credit.
To help you compare loan options, NerdWallet has a list of small-business loans that are best for business owners. All of our recommendations are based on the lender’s market scope and track record and on the needs of business owners, as well as rates and other factors, so you can make the right financing decision.
To recap our selections...