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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
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Small-business loans can be critical to your success as a business owner, whether you're stocking your shelves, buying equipment or expanding your footprint. Traditional banks are no longer the only sources of business financing. With online lending, you now have access – often quickly – to various funding options, from SBA loans and business lines of credit to term loans and invoice-based financing.

In response to the economic fallout from the coronavirus pandemic, small-business owners and self-employed workers have access to new relief loans provided under a new stimulus package. The application for Paycheck Protection Program reopened in January 2021.

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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%650
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BlueVine - Invoice factoring

Best for Invoice factoring15.00 - 68.00%530
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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%

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.
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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%

Min. Credit Score

660

Funding Circle is an option for established businesses that are financing an expansion or refinancing debt. NOTE: Funding Circle has temporarily paused term loan origination to prioritize PPP lending.

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%

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.
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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%

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.
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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%

Min. Credit Score

650

BlueVine's line of credit provides fast working capital for short-term borrowing needs. NOTE: BlueVine has temporarily paused applications for this product to prioritize PPP funding.

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: 650.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: $360,000.
  • 12-month line of credit
  • Minimum credit score: 650.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: $360,000.

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%

Min. Credit Score

530

BlueVine has temporarily paused applications for this product to prioritize PPP funding.

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.
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Qualifications:

  • Minimum credit score: 530.
  • Minimum time in business: 3 months.
  • Minimum annual revenue: $120,000.

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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

Small-business loans are typically issued only for businesses with a year or more of history and revenue. Among the financing options for entrepreneurs who qualify are U.S. Small Business Administration loans, term loans, business lines of credit and invoice factoring. Startups operating for less than a year can consider other financing options.

Types of small-business loans

PAYCHECK PROTECTION PROGRAM LOANS

PPP, which was designed to keep employees on the payroll, reopened in January. Small-business owners impacted by the COVID-19 pandemic can apply for first or second PPP 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.

business term loan

Online lenders offer term loans of up to $500,000. For a short-term loan, the repayment period typically ranges from six to 12 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: $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: $2,000 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 online lenders?

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 3, 2021

To recap our selections...

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

Frequently Asked Questions

Two laws passed by the federal government in early 2020 offered relief for small businesses and self-employed workers affected by the coronavirus pandemic. There are five primary relief valves included in these laws. Under a new stimulus package signed by President Trump at the end of 2020, small-business owners are eligible for new and additional relief loans.

The Paycheck Protection Program is a federal loan program to help small businesses keep employees on the payroll amid the economic fallout of the coronavirus pandemic. Implemented by the U.S. Small Business Administration, PPP reopened in January 2021 under a stimulus package signed into law by President Trump at the end of last year.

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.

Startups less than a year old typically won't qualify for traditional small-business loans. Instead, consider alternative financing like business credit cards, personal loans or grants. See our list of funding options for startups.