Online business loans are a type of business financing that you can apply for completely online. Although any lender can use an online application, this term typically refers to business loans offered by nonbank lenders.
Compared with traditional lenders, online business lenders generally have more flexible qualification requirements and streamlined underwriting processes. As a result, these small-business loans are typically easier to qualify for and faster to fund — but the cost of borrowing is higher.
Below, compare some of the best online business loans and learn more about this type of funding.
How much do you need?
We’ll start with a brief questionnaire to better understand the unique needs of your business.
Once we uncover your personalized matches, our team will consult you on the process moving forward.
Here are 8 online business loans
Lender | Best for | Max loan amount | Min. credit score | Next steps |
|---|---|---|---|---|
Kabbage - Line of credit on Kabbage's website | Best for Online business lines of credit | $250,000 | 640 | on Kabbage's website |
OnDeck - Line of credit with Fundera by NerdWallet | Best for Online business lines of credit | $100,000 | 600 | with Fundera by NerdWallet |
OnDeck - Online term loan with Fundera by NerdWallet | Best for Short-term online business loans | $250,000 | 600 | with Fundera by NerdWallet |
Credibility Capital - Online term loan with Fundera by NerdWallet | Best for Online business loans for established companies | $500,000 | 650 | with Fundera by NerdWallet |
Funding Circle - Online term loan with Fundera by NerdWallet | Best for Online business loans for established companies | $500,000 | 660 | with Fundera by NerdWallet |
Bluevine - Line of credit with Fundera by NerdWallet | Best for Online business loans for startups | $250,000 | 625 | with Fundera by NerdWallet |
Fundbox - Line of credit with Fundera by NerdWallet | Best for Online business loans for bad credit | $150,000 | 600 | with Fundera by NerdWallet |
Triton Capital - Equipment financing with Fundera by NerdWallet | Best for Online equipment loans | $250,000 | 600 | with Fundera by NerdWallet |
Our picks for
Online business lines of credit
Kabbage - Line of credit
Max Loan Amount
$250,000
Min. credit score
640
Kabbage loans are a good option for business owners with fair credit who want quick access to working capital.
OnDeck - Line of credit
Max Loan Amount
$100,000
Min. credit score
600
Est. APR
29.90-65.90%
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.
May fund quickly
Our pick for
Short-term online business loans
OnDeck - Online term loan
Max Loan Amount
$250,000
Min. credit score
600
Est. APR
29.90-97.30%
OnDeck offers a fast term loan for small-business owners with less-than-stellar credit who want to expand.
May fund quickly
Our picks for
Online business loans for established companies
Credibility Capital - Online term loan
Max Loan Amount
$500,000
Min. credit score
650
Est. APR
7.99-24.99%
Credibility Capital offers low-cost business loans that work best for small-business owners with strong credit.
Funding Circle - Online term loan
Max Loan Amount
$500,000
Min. credit score
660
Est. APR
10.64-31.85%
Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.
May fund quickly
Our pick for
Online business loans for startups
Bluevine - Line of credit
Max Loan Amount
$250,000
Min. credit score
625
Est. APR
15.00-78.00%
Bluevine's line of credit provides fast working capital for short-term borrowing needs.
May fund quickly
Our pick for
Online business loans for bad credit
Fundbox - Line of credit
Max Loan Amount
$150,000
Min. credit score
600
Est. APR
10.10-79.80%
Fundbox offers a business line of credit to fill a cash-flow gap, and qualifying is easier than with other lenders.
May fund quickly
Our pick for
Online equipment loans
with Fundera by NerdWallet
Triton Capital - Equipment financing
with Fundera by NerdWallet
Max Loan Amount
$250,000
Min. credit score
600
Est. APR
4.99-25.00%
Triton Capital offers fast equipment loans up to $250,000 for businesses in a range of industries.
How Much Do You Need?
An online business loan is generally offered by nonbank lenders, also called alternative lenders. Unlike banks or credit unions, which may require you to visit a branch to complete the financing process, alternative lenders typically process and fund small-business loans entirely online.
Online business loans are usually fast to fund, with more flexible qualification requirements than other types of business financing. Some online business lenders work with startups or businesses with bad credit.
Speed and flexibility come with a cost, however. Online business loans tend to have higher interest rates than bank or U.S. Small Business Administration loans. Annual percentage rates can start as low as 7%, but reach as high as 97%.
Online loans can also have lower maximum funding amounts and shorter repayment periods than bank loans — although terms ultimately vary by lender.
There are several types of online loans that you can use to fund your small business. Here are some of the most common options.
Business term loans
Small-business term loans provide a lump sum of cash that you repay, with interest, over a fixed period of time. Some online lenders offer short-term loans, with terms of 12 months or less — while others offer longer repayment terms.
Because you can repay business term loans over an extended period, these online loans are usually a good choice for larger investments and long-term growth.
Business lines of credit
A business line of credit allows you to draw from a set limit of funds, as needed, and only pay interest on the money you’ve borrowed. You repay the funds over a specific period of time, typically on a monthly or weekly schedule.
Compared with term loans, business lines of credit are a more flexible form of financing — making them well-suited for managing cash flow, covering payroll and other short-term needs.
Equipment financing
Equipment financing is a type of small-business loan designed specifically for the purchase of machinery or equipment. Equipment loans are often structured as term loans — with repayment periods based on the anticipated life of the equipment you’re looking to buy.
With equipment financing, the equipment you purchase serves as collateral on the loan, which means you may not have to rely as heavily on your credit or financial history to qualify.
Invoice financing and invoice factoring
Invoice financing allows you to borrow capital against your outstanding invoices. A lender gives you a percentage of your unpaid invoices upfront in the form of a loan or line of credit. Once your customer pays the invoice, you pay the lender back the amount borrowed, plus fees and interest.
With invoice factoring, on the other hand, you sell your outstanding invoices to a factoring company at a discount. The factoring company then collects payments from your customers directly.
Both of these types of financing are good options for business-to-business companies that need to cover cash flow gaps. Invoice factoring and financing can also be easier to qualify for than other types of business loans — but may have higher interest rates.
Merchant cash advances
A merchant cash advance, or MCA, provides you with a lump sum of capital that you repay using a percentage of your future credit and debit card sales, plus a fee. A merchant cash advance isn't technically a loan — instead, an MCA company is buying future sales at a discount.
Although merchant cash advances are fast to fund and easy to qualify for, they’re one of the most expensive forms of online business financing. You should consider all other options before turning to an MCA.
Pros
- Fast to fund. While bank and SBA loans can take weeks to fund, some online business loans can provide capital in as little as 24 hours. And even if you don’t receive a loan that quickly, many online lenders offer funding within days.
- Streamlined applications. Online business loans often offer streamlined application processes with minimal documentation. While traditional lenders tend to rely on a manual review system to evaluate loan applications, many online lenders leverage technology so that they can underwrite your business more quickly and provide a faster application decision.
- Variety of loan options. There are many different types of online business loans available — depending on your business size, funding needs, qualifications and more. Among these choices, small-business lenders offer a range of interest rates, repayment terms and loan amounts, so you can compare your options to find the right loan for your business.
- Flexible qualification requirements. To qualify for a business bank loan, you’ll generally need strong credit and several years in business. With online business loans, on the other hand, qualification requirements are typically more flexible. Lenders may consider factors other than your personal credit score, time in business and annual revenue when evaluating your application. Some lenders will also work with new businesses or those with bad credit.
Cons
- Can be expensive. Because online business loans are faster to fund and easier to qualify for — and therefore pose greater risk for lenders — they will generally be more expensive than bank and SBA loans. While the average annual percentage rate for bank loans ranges from 3% to 7%, APRs for online loans can vary anywhere from 7% to 97%. And APRs for merchant cash advances can reach even higher — up to 350%.
- Limited person-to-person interaction. Although some online lenders offer phone-based customer support, you’ll typically complete the entire loan process online — meaning you may not interact with anyone from the lending company. If you’re looking to build a relationship with a lender or have someone address your questions one-on-one, an online business loan might not be the best option for you.
- Security risks. There are a multitude of reliable online lenders on the market, but there are also bad actors that are looking to take advantage of small-business owners. These predatory lenders are often trying to trap businesses with offers that seem too good to be true, especially if those businesses are having trouble finding financing elsewhere. You can avoid these business loan scams by thoroughly researching and vetting an online lender to make sure they are reliable and trustworthy.
Although loan applications vary from lender to lender, you’ll typically be able to apply for an online business loan within minutes. Here are the steps you can follow:
1. Understand your financing needs
You’ll want to determine how much capital you need, how much debt you can afford and what type of loan is right for your business.
2. Evaluate your qualifications
Most lenders will look at your personal credit score, time in business and annual revenue when underwriting your loan application. Online lenders may also look at your cash flow, financial accounts or outstanding invoices. You’ll want to review your business qualifications ahead of time so you know where your company stands.
3. Compare lenders
You should explore and compare multiple lenders to find the best fit for your needs. You’ll also want to research the lender and read reviews to make sure they’re reputable.
4. Submit your application
With most online lenders, you should be able to complete and submit your business loan application in minutes. Some lenders have you fill out a simple form and connect your financial data to their system so that they can evaluate your business information more quickly and provide a faster application decision.
You may also, however, need to provide financial documentation, such as:
- Business and personal tax returns.
- Business and personal bank statements.
- Business financial statements (e.g., profit and loss statement, balance sheet).
Additionally, your lender may secure the loan by taking out a blanket lien on your business assets — and you’ll likely be required to sign a personal guarantee.
5. Receive your funds
Online lenders typically fund business loan applications within a matter of days. Some lenders offer funding in as little as 24 hours. Before signing a business loan agreement, make sure you review the terms and conditions and talk to your lender if you have any questions.
» MORE: How to get a business loan
The best business loan is generally the one with the lowest rates and most ideal terms. But other factors — like time to fund and your business’s qualifications — can help determine which option you should choose. NerdWallet recommends comparing small-business loans to find the right fit for your business.
Last updated on July 19, 2022
To recap our selections...
Online Business Loans: Compare Your Best Options
- Kabbage - Line of credit: Best for Online business lines of credit
- OnDeck - Line of credit: Best for Online business lines of credit
- OnDeck - Online term loan: Best for Short-term online business loans
- Credibility Capital - Online term loan: Best for Online business loans for established companies
- Funding Circle - Online term loan: Best for Online business loans for established companies
- Bluevine - Line of credit: Best for Online business loans for startups
- Fundbox - Line of credit: Best for Online business loans for bad credit
- Triton Capital - Equipment financing: Best for Online equipment loans
Frequently Asked Questions
Online business loans are a safe and legitimate way to fund your business. These loans can be good options if you need fast financing or if you can’t qualify for other types of business loans.
Predatory lenders do exist online, however, looking to take advantage of small businesses. Watch for these red flags: Lenders that guarantee approval, make you pay a fee upfront or don’t have a physical address.
Some online business lenders can approve applications within minutes and offer funding within 24 hours. Ultimately, funding speed varies based on the individual lender, but many online lenders issue loans within a matter of days.
Many online business lenders don’t require you to provide physical collateral to secure your loan. Your lender may take out a blanket lien on your business assets, however. You’ll also likely be required to sign a personal guarantee.
Although physical collateral may not be required for an online business loan, you may be able to offer it to access better interest rates and repayment terms.