Best Private Business Loans From Our Partners
Best Private Business Loans From Our Partners
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Max loan amount
$250,000
Min. credit score
625
Est. APR
14.00-48.00%
Pros
- Cash can be available within 12 to 24 hours.
- Can be used to build business credit.
- Low minimum credit score requirement.
Cons
- Requires weekly payments.
- Not available in North Dakota, South Dakota or Nevada.
- Rates can be high compared with traditional lenders.
Bluevine - Line of credit
Best for business lines of credit
Max loan amount
$250,000
Min. credit score
625
Est. APR
14.00-48.00%
Pros
- Cash can be available within 12 to 24 hours.
- Can be used to build business credit.
- Low minimum credit score requirement.
Cons
- Requires weekly payments.
- Not available in North Dakota, South Dakota or Nevada.
- Rates can be high compared with traditional lenders.
Max loan amount
$1,500,000
Min. credit score
570
Pros
- Cash can be available quickly.
- Get a discount for prepaying.
- No collateral required.
- Low minimum credit score requirement.
Cons
- Charges a factor rate that makes it more difficult to compare costs with other lenders.
- Can’t build business credit.
- Longest loan term is 18 months.
- Charges an origination fee.
Fora Financial - Online term loan
Best for short-term loans
Max loan amount
$1,500,000
Min. credit score
570
Pros
- Cash can be available quickly.
- Get a discount for prepaying.
- No collateral required.
- Low minimum credit score requirement.
Cons
- Charges a factor rate that makes it more difficult to compare costs with other lenders.
- Can’t build business credit.
- Longest loan term is 18 months.
- Charges an origination fee.
Max loan amount
$150,000
Min. credit score
600
Pros
- Funding in as little as 24 hours.
- Prepayment discounts available.
- Offers loans to startups and borrowers with bad credit.
- No collateral or down payment required.
Cons
- Charges a factor rate that makes it more difficult to compare costs with other lenders.
- Requires higher annual revenue than other online lenders.
- Misleading website marketing: National Funding offers only short-term loans and equipment financing/leasing.
- Charges an origination fee.
National Funding - Equipment financing
Best for equipment financing
Max loan amount
$150,000
Min. credit score
600
Pros
- Funding in as little as 24 hours.
- Prepayment discounts available.
- Offers loans to startups and borrowers with bad credit.
- No collateral or down payment required.
Cons
- Charges a factor rate that makes it more difficult to compare costs with other lenders.
- Requires higher annual revenue than other online lenders.
- Misleading website marketing: National Funding offers only short-term loans and equipment financing/leasing.
- Charges an origination fee.
Expansion Capital Group - Merchant cash advance
Best for merchant cash advances
Max loan amount
$300,000
Min. credit score
500
Pros
- Simple application with minimal documentation required.
- Low minimum credit score requirement.
- Daily or weekly repayment available.
- Offers prepayment discounts.
Cons
- Business assets required as collateral in some cases.
- Factor rate and fee information not available on website.
- Charges an origination fee and a monthly servicing fee.
Expansion Capital Group - Merchant cash advance
Best for merchant cash advances
Max loan amount
$300,000
Min. credit score
500
Pros
- Simple application with minimal documentation required.
- Low minimum credit score requirement.
- Daily or weekly repayment available.
- Offers prepayment discounts.
Cons
- Business assets required as collateral in some cases.
- Factor rate and fee information not available on website.
- Charges an origination fee and a monthly servicing fee.
What is a private business loan?
A private business loan is a loan issued by alternative lenders — as opposed to traditional financial institutions, like banks or credit unions. Private business lenders include online lenders, factoring companies and merchant cash advance companies.
Compared with business bank loans, private loans tend to have more flexible eligibility requirements; startups and borrowers with bad credit may qualify. These loans also offer streamlined application processes and fast funding times. As a result of this speed and flexibility, however, private business loans typically have higher interest rates and shorter repayment terms.
How to compare private business loans
The best loan for your business is typically the most affordable one you can qualify for that meets your needs. As you compare the small-business loan options, consider the following factors:
- Use of proceeds. Think about how you plan to use the loan. If you’re looking for ongoing access to funds, a working capital line of credit may be the best fit. On the other hand, if you need to purchase equipment, you might want to get an equipment loan. Some lenders restrict how you can use a loan, so make sure your needs fit into any eligibility guidelines.
- Loan terms. Terms can vary widely on private business loans. Short-term loans may be easier to qualify for, but you’ll be making larger payments over an abbreviated period of time. Long-term loans can help lower your payment amount, but you may pay more in interest over the total loan period.
- Repayment schedule. Some private business loans may require daily or weekly payments, which can restrict your cash flow. Make sure that you can afford and manage the payment frequency before taking on new debt.
- Interest rates. Business loan rates on private business loans can range anywhere from 14% to 99% annual percentage rate. And private lenders may charge interest differently, so calculating costs into an APR allows you to make a straightforward comparison between options. In general, the stronger your qualifications, the lower interest rates you’ll receive. Offering collateral, providing a down payment or getting a cosigner can also help you get the best rates.
- Funding time. Private business lenders typically rely on online applications and automated underwriting to provide quick funding. Speed and convenience can come with a price, however; these lenders often charge higher interest rates and provide shorter repayment terms. If you can afford to wait, slower funding options (like microloans, for example) may offer better rates.
- Lender reputation. Reading online reviews can help you get a sense of what it’s like to work with a particular small-business lender. Keep an eye out for predatory lenders who make “too good to be true” claims, such as guaranteed approval or no credit check.
Pros and cons of private business loans
Pros
Wide range of loan types to choose from.
Easier to qualify for than traditional bank loans.
Streamlined application processes and fast funding times.
Cons
May have higher interest rates and shorter repayment terms.
Limited person-to-person customer support.
Can have a greater risk of predatory lending and loan scams.
How to get a private business loan
1. Evaluate your funding needs
You’ll want to determine how much capital you need, how much debt you can afford and what type of loan is best for your business. Use a business loan calculator to help estimate potential loan costs.
2. Review your qualifications
Most private lenders consider similar business loan requirements — such as personal credit score, annual revenue and time in business — to underwrite your application. They may also look at your cash flow, financial accounts, outstanding invoices and available collateral.
3. Compare private business lenders
Research and compare several lenders to determine which one is right for your needs. Consider factors such as loan type, interest rates, fees, repayment terms, funding speed and lender reputation when making your decision.
4. Gather your documents and apply
Private business lenders typically use technology to streamline the application process. You may be able to connect your financial accounts to their system instead of having to individually upload documents.
In general, lenders may ask for:
- Basic information about you and your business.
- Personal and business bank statements.
- Personal and business tax returns.
- Financial statements (e.g., profit and loss statement, balance sheet).
After you submit your application, you may be able to receive approval and funding in as little as 24 hours. Funding times vary based on lender and loan type.
Types of private business loans
Private business loans can be used for a variety of reasons. Lenders offer different types of loans, including:
Business term loans
With a business term loan, a lender provides you with a lump sum of money that you repay, with interest, over a specific period of time. These loans can be used for various purposes, such as buying inventory or equipment, making payroll, performing renovations and funding general expansion initiatives.
Business lines of credit
A business line of credit offers more flexibility than a term loan. This type of financing gives you access to a set amount of money that you can draw from as needed. You only pay interest on the money you draw — and once you’ve repaid what you’ve borrowed, you can continue to draw on the line.
Business lines of credit are a good option for managing cash flow and covering working capital needs. While term loans can be useful for large investments and projects, lines of credit are better used for short-term or unexpected expenses.
Invoice factoring
With invoice factoring, you sell your outstanding invoices to a factoring company in exchange for an advance of cash. The company advances you a percentage of the invoice amount, then assumes responsibility for collecting repayment from your customers. Once it receives that payment, the factoring company sends you the difference, minus agreed-upon fees.
Invoice factoring is a good option for business-to-business companies that have a cash flow gap as a result of slow-paying customers.
Equipment financing
Equipment financing is a loan used specifically to buy machines and other equipment for your business. These loans are typically structured as term loans and secured by the equipment you buy. Because the equipment serves as collateral, private lenders may not be as reliant on traditional eligibility criteria (credit score, annual revenue, time in business) when reviewing your application.
Merchant cash advances
With a merchant cash advance (MCA), a financing company provides you with a lump sum of money that you repay with a percentage of your debit and credit card sales, plus a fee. MCAs can be used to manage cash flow shortages and cover short-term expenses.
Although merchant cash advances are often fast to fund and easy to qualify for, they’re also one of the most expensive types of business financing. In general, you’ll want to consider all of your other options before turning to an MCA.
Alternatives to private business loans
If you’re not sure that a private business loan is right for your needs, consider these alternative options.
- Bank and credit unions loans. These traditional lenders typically provide the lowest interest rates and most competitive repayment terms. You’ll likely need strong credit and at least two years in business to qualify. Compared with private business loans, credit union and bank business loans are also slower to fund.
- SBA loans. SBA loans are partially guaranteed by the U.S. Small Business Administration and issued by participating lenders, such as banks and credit unions. Like bank loans, SBA loans offer competitive interest rates and long repayment terms. Although SBA loans may be slightly easier to qualify for than bank loans, you’ll still need to have good credit and a solid business track record to get funding.
- Microloans. These small-dollar loans are available in amounts up to $50,000. Microloans are issued by nonprofit and community organizations. These lenders tend to have more flexible qualification requirements than banks or credit unions, but still offer competitive rates and terms. Microlenders may also provide business training and other educational resources.
- Friends and family loans. Business loans from friends and family may be an option if you can’t qualify for other types of financing. There’s not usually a formal application process with these loans — and your friends and family may be willing to offer low interest rates or no interest at all. To prevent tension in your relationships, you’ll want to make sure you create a formal loan agreement.
Last updated on December 5, 2024
Methodology
NerdWallet’s review process evaluates and rates small-business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.
Our star ratings award points to lenders that offer small-business friendly features, including:
- Transparency of rates and terms.
- Flexible payment options.
- Fast funding times.
- Accessible customer service.
- Reporting of payments to business credit bureaus.
- Responsible lending practices.
We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.
NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodology for small-business loans and our editorial guidelines.
Wondering if you qualify?
It’s possible to get a business loan even if you have bad credit. Bad-credit business loans are available from alternative sources, like online or nonprofit lenders.
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