Best Of
Compare online loan options for funding and growing your small business.
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 loansand business lines of creditto term loansand 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 loansprovided under a new stimulus package. The application for Paycheck Protection Program reopened in January 2021.
Our pick for
SBA loans
A loan funded by participating lending institutions and backed by the Small Business Administration.
8.00 - 25.00%
650
Pros
Cons
Qualifications:
Our pick for
Online term loans
A loan repaid with interest over a set period of time.
18.00 - 78.00%
600
Pros
Cons
Qualifications:
19.99 - 24.99%
680
Pros
Cons
Qualifications:
12.18 - 36.00%
660
Pros
Cons
Qualifications:
9.00 - 99.00%
600
Pros
Cons
Qualifications:
Our pick for
Lines of credit
Financing you can draw from up to a set limit. Pay interest only on borrowed amount.
10.10 - 79.80%
600
Pros
Cons
Qualifications:
11.00 - 61.90%
600
Pros
Cons
Qualifications:
15.00 - 78.00%
650
Pros
Cons
Qualifications:
Our pick for
Invoice factoring
Upfront cash at a reduced value for your unpaid invoices or receivables.
15.00 - 68.00%
530
Pros
Cons
Qualifications:
Lender | Best For | Est. APR | Min. Credit Score |
---|---|---|---|
Live Oak Bank - SBA loan | Best for SBA loans | 8.00 - 25.00% | 650 |
BlueVine - Term loan | Best for Online term loans | 18.00 - 78.00% | 600 |
Credibility Capital - Online term loan | Best for Online term loans | 19.99 - 24.99% | 680 |
Funding Circle - Online term loan | Best for Online term loans | 12.18 - 36.00% | 660 |
OnDeck - Online term loan | Best for Online term loans | 9.00 - 99.00% | 600 |
Fundbox - Line of credit | Best for Business lines of credit up to $100,000 | 10.10 - 79.80% | 600 |
OnDeck - Line of credit | Best for Business lines of credit up to $100,000 | 11.00 - 61.90% | 600 |
BlueVine - Line of credit | Best for Business lines of credit up to $250,000 | 15.00 - 78.00% | 650 |
BlueVine - Invoice factoring | Best for Invoice factoring | 15.00 - 68.00% | 530 |
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
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.
The government-guaranteed SBA loan program works with banks to offer low interest ratessand 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.
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 loanrepayment 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 equipmentor inventory.
A business line of creditprovides 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.
Invoice factoringturns 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.
Business financing options other than traditional loans or lines of credit include personal loans for business or business credit cards. Apersonal loan for businessis 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 cardoffers 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.
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 loanstypically 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
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.
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 lendersalso offer competitive rates and faster funding than some banks.
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.
To recap our selections...
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 valvesincluded 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 Programis 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 optionsfor startups.