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Small-Business Loans 2021: Compare Financing and Apply

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

NerdWalletFebruary 10, 2021
Many or all of the products featured here are from our partners who compensate us. This may influence which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money.

A small-business loan can help you stock your shelves, buy new equipment or expand your footprint. Business owners can access funding through traditional banks, online lenders and community lending institutions.

Explore and compare your options for small-business financing, including SBA loans, business lines of credit, term loans and invoice-based financing.

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Our pick for

SBA loans

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

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Top SBA Lenders

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Max Loan

$5k - $5M

Terms

5 - 25 years

Est. APR

Starting at 5.5%

Speed

As fast as 2 weeks

SBA loans work best for established businesses that prioritize low lending costs over funding speed.

Pros

  • Lowest down payments.
  • Longest payment terms.
  • Reasonable interest rates.

Cons

  • More paperwork than online term loans.
  • Longer approval time.
  • May require collateral.
Learn more

Qualifications:

  • Be a U.S. business.
  • Must first use alternative financial resources, including personal assets.
  • Approved SBA lenders will almost always have credit score minimums between 620-640.
  • Average successful applicant has an annual revenue of over $180,000.

Our pick for

Online term loans

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

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Credibility Capital - Online term loan

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Est. APR

6.99 - 24.99%

Depending on your creditworthiness and your business's financials

Min. Credit Score

650

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

  • 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: 650.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: $200,000.
  • No bankruptcies in the past 5 years.
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Funding Circle - Online term loan

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Est. APR

12.18 - 36.00%

Depending on your creditworthiness and your business's financials

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 business lien and personal guarantee.
  • Not available in Nevada.
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Qualifications:

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

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Est. APR

9.00 - 99.00%

Depending on your creditworthiness and your business's financials

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.

Our picks for

Lines of credit

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

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OnDeck - Line of credit

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Est. APR

11.00 - 61.90%

Depending on your creditworthiness and your business's financials

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: 1 year.
  • Minimum annual revenue: $100,000.
  • No bankruptcies in the past 2 years.
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BlueVine - Line of credit

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Est. APR

15.00 - 78.00%

Depending on your creditworthiness and your business's financials

Min. Credit Score

600

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

Pros

  • Cash can be available within 12 to 24 hours.
  • Multiple term lengths for different financing needs.

Cons

  • Short repayment term results in higher payment amounts.
  • Requires personal guarantee.
  • Not available in North Dakota, South Dakota or Vermont.
Read full review

Qualifications:

  • 6-month line of credit:
  • Minimum credit score: 600.
  • Minimum time in business: 6 months.
  • Minimum annual revenue: $120,000.
  • 12-month line of credit:
  • Minimum credit score: 600.
  • Minimum time in business: 6 months.
  • Minimum annual revenue: $120,000.

Our pick for

Invoice factoring

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

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BlueVine - Invoice factoring

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Est. APR

15.00 - 68.00%

Depending on your creditworthiness and your business's financials

Min. Credit Score

530

BlueVine's invoice factoring can turn unpaid customer invoices into fast cash.

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: $120,000.

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Summary of Small-Business Loans 2021: Compare Financing and Apply

LenderBest ForEst. APRMin. Credit ScoreNext Steps

Top SBA Lenders

Best for SBA loansStarting at 6%620
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Credibility Capital - Online term loan

Best for Online term loans6.99 - 24.99%650
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Funding Circle - Online term loan

Best for Online term loans12.18 - 36.00%660
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OnDeck - Online term loan

Best for Online term loans9.00 - 99.00%600
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OnDeck - Line of credit

Best for Business lines of credit up to $100,00011.00 - 61.90%600
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BlueVine - Line of credit

Best for Business lines of credit up to $250,00015.00 - 78.00%600
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BlueVine - Invoice factoring

Best for Invoice factoring15.00 - 68.00%530
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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

Funding options for qualified business owners include SBA loans, term loans, business lines of credit and invoice factoring. You typically need a year or more of history and revenue to qualify for financing. Startups operating for less than a year can consider other financing options.

Types of small-business loans

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.

The SBA also administered the Paycheck Protection Program, which was designed to help small-business owners keep employees on the payroll. The general fund for PPP loans ran out of money on May 4, 2021. New applications from Community Financial Institutions, which service underserved communities, will still be processed. But new PPP loan applications from other lenders will not be processed. The PPP loan program officially expires on May 31, 2021.

Business term loan

Online lenders offer term loans of up to $500,000. For a short-term loan, the repayment period typically ranges from three to 18 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. Similar to a credit card, 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: $6,000 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. Time to funding can be relatively short with invoice factoring or financing.

  • 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.

Banks that offer small-business loans typically require a strong personal credit score (starting in the 700s), several years in business and a solid track record of business finances such as strong cash flow. In some cases, banks will require collateral.

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 consider an online lender?

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 19, 2021

To recap our selections...

NerdWallet's Small-Business Loans 2021: Compare Financing and Apply

Frequently Asked Questions

Like any type of credit, qualifying for a business loans depends a lot on your personal credit score, which can signal to lenders how likely you are to repay the loan. Small-business lenders also consider factors like how old your business is and how much revenue it earns. Learn how to qualify for a small-business loan in five steps.

Credit score requirements vary by loan and lender. Banks often require a credit score in the 700s for a small-business loan. But some online lenders will fund loans for borrowers with credit scores in the low- to mid-600s.

To qualify for an SBA loan, you typically need a good personal credit score (690 or higher), though some SBA loan programs are available to business owners with bad credit.

Startups less than a year old typically won't qualify for traditional small-business loans. The SBA does have two loan programs that cater to startups: SBA microloans and SBA Community Advantage loans.

Consider alternative financing like business credit cards, personal loans or grants if you can’t secure a small-business loan for your startup. See our list offunding options for startups.

The primary COVID-19 relief program for small-business owners — the Paycheck Protection Program — is closed to most new applicants. But there are additionalcoronavirus relief options, including grants for restaurants and live-music venues, loan deferments and tax credits. Additional relief measures signed into law include loan deferments and tax credits.

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