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Online Business Loans 2020: Compare Your Options

Andrew L. WangMay 4, 2020

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Online lenders often provide faster and easier access to small-business loans than banks, though at higher rates.

Online business loans have become a popular financing option over the past decade as banks have scaled back on loans to small businesses.

With the help of algorithms and technology, online lenders analyze traditional credit standards, such as personal credit score and cash flow, and may also use nontraditional metrics, including social media interactions and online customer reviews. As a result, they can offer quicker and easier access to capital than traditional lenders like banks and credit unions. Borrowing costs, though, are typically higher for online business loans.

Borrowing from online lenders isn’t for everyone, however. If your business is just getting started, you probably won’t qualify. You’ll have to consider other startup-financing options. But if you’ve been in business at least a year and need quick access to cash or can’t qualify for a bank loan, online small-business loans are worth exploring.

You can compare online financing options by product below: term loans, lines of credit and invoice factoring.

Apply for the SBA Paycheck Protection Program.

Does your small business need COVID-19 relief? Learn about the program and apply on Lendio.

Get Started

on Lendio's website

Our picks for

Online business term loans

Credibility Capital - Online term loan

Credibility Capital - Online term loan

Est. APR

19.99 - 24.99%

Min. Credit Score

680

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

  • Short repayment term results in higher payment amounts.
  • 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: 680.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: $250,000.
  • No bankruptcies in the past 5 years.
Currency - Equipment financing

Currency - Equipment financing

Est. APR

6.00 - 24.00%

Min. Credit Score

585

Currency is an option for business owners looking to finance the purchase of new equipment.

Pros

  • Competitive rates among online lenders.

Cons

  • Prepayment penalty in some cases.
  • Requires business lien and personal guarantee.
Read full review

Qualifications

  • Minimum credit score: 585.
  • Minimum time in business: 6 months.
  • Minimum annual revenue: $75,000.
  • Must have a net loss no greater than 10% over the past 12 months.
Funding Circle - Online term loan

Funding Circle - Online term loan

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.

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.
Read full review

Qualifications

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

OnDeck - Online term loan

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.
Read full review

Qualifications

  • Minimum credit score: 600.
  • Minimum time in business: 3 years.
  • Minimum annual revenue: $250,000.
  • No bankruptcies in the past 2 years.
SmartBiz - SBA loan

SmartBiz - SBA loan

Est. APR

6.73 - 10.29%

Min. Credit Score

650

SmartBiz’s low-cost SBA loans work best for established businesses that want to finance an expansion or refinance debt.

Pros

  • Competitive rates among online lenders.
  • Faster than getting an SBA loan from a bank.

Cons

  • Must have strong financials, supported by personal and business tax returns for the past 3 years.
  • Stringent rules on use of proceeds.
  • Requires business lien and personal guarantee.
Read full review

Qualifications

  • Minimum credit score: 650.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: $50,000.
  • No bankruptcies or foreclosures in the past 3 years.

Our picks for

Business lines of credit

BlueVine - Line of credit

BlueVine - Line of credit

Est. APR

15.00 - 78.00%

Min. Credit Score

600

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

Pros

  • Offers options for businesses less than a year old.
  • Cash can be available within 12 to 24 hours.

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: $100,000.
  • 12-month line of credit
  • Minimum credit score: 620.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: $450,000.
Fundbox - Line of credit

Fundbox - Line of credit

Est. APR

10.10 - 79.80%

Min. Credit Score

500

Fundbox offers a business line of credit to fill a cash-flow gap, and qualifying is easier than with other lenders.

Pros

  • Cash can be available by the next day.
  • Low minimum credit score requirement.

Cons

  • Rates are high compared to traditional banks.
Read full review

Qualifications

  • Minimum credit score: 500.
  • Minimum time in business: 3 months.
  • Minimum annual revenue: $50,000.
Kabbage - Line of credit

Kabbage - Line of credit

Est. APR

24.00 - 99.00%

Min. Credit Score

560

Kabbage provides fast loans for business owners with bad personal credit, but rates can be high.

Pros

  • Financing up to $250,000 available within a few days.
  • Accepts low credit scores.

Cons

  • Rates are high compared to other online lenders.
  • Must have online checking or PayPal account to verify cash flow.
  • Fixed-fee structure means early repayment does not save interest.
Read full review

Qualifications

  • Minimum credit score: 560.
  • Minimum time in business: 1 year.
  • Minimum annual revenue: $50,000.
OnDeck - Line of credit

OnDeck - Line of credit

Est. APR

13.99 - 63.00%

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: 3 years.
  • Minimum annual revenue: $250,000.
  • No bankruptcies in the past 2 years.

Our pick for

Invoice factoring

BlueVine - Invoice factoring

BlueVine - Invoice factoring

Est. APR

15.00 - 68.00%

Min. Credit Score

530

BlueVine’s invoice factoring works best for financing larger invoices, but only if your customers reliably pay on time.

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: $100,000.

Apply for the SBA Paycheck Protection Program.

Does your small business need COVID-19 relief? Learn about the program and apply on Lendio.

Get Started

on Lendio's website

Summary of Online Business Loans 2020: Compare Your Options

LenderBest ForEst. APRMin. Credit Score
Credibility Capital - Online term loan

Credibility Capital - Online term loan

Best for: Online business term loans

19.99 - 24.99%

680

Currency - Equipment financing

Currency - Equipment financing

Best for: Online business term loans

6.00 - 24.00%

585

Funding Circle - Online term loan

Funding Circle - Online term loan

Best for: Online business term loans

12.18 - 36.00%

660

OnDeck - Online term loan

OnDeck - Online term loan

Best for: Online business term loans

9.00 - 99.00%

600

SmartBiz - SBA loan

SmartBiz - SBA loan

Best for: Online business term loans

6.73 - 10.29%

650

BlueVine - Line of credit

BlueVine - Line of credit

Best for: Business lines of credit

15.00 - 78.00%

600

Fundbox - Line of credit

Fundbox - Line of credit

Best for: Business lines of credit

10.10 - 79.80%

500

Kabbage - Line of credit

Kabbage - Line of credit

Best for: Business lines of credit

24.00 - 99.00%

560

OnDeck - Line of credit

OnDeck - Line of credit

Best for: Business lines of credit

13.99 - 63.00%

600

BlueVine - Invoice factoring

BlueVine - Invoice factoring

Best for: Invoice factoring

15.00 - 68.00%

530

Online term loans for small businesses

Term loans transfer to your bank account a lump sum of cash that you repay over a fixed period. Because you can pay them off over a longer period, term loans are usually the better choice for larger investments and long-term growth.

Lines of credit for small businesses

If you’re looking for financing flexibility, a business line of credit is a better option. You draw on the line — up to a specified amount — as needed and pay interest only on the money you’ve borrowed. Lines of credit are a better choice for short-term expenses. Although the APR may be slightly higher than for term loans, lines of credit provide the flexibility to take out money only when, and as often as, you need it.

Invoice factoring for businesses

Invoice factoring is a way to get immediate cash by borrowing against your unpaid customer invoices, which can help you fill cash-flow gaps while you wait for customers to pay. This type of financing is only for companies that sell goods and services to other businesses and, therefore, have invoices. Typically, invoice factoring costs are higher than with term loans and lines of credit.

Compare online business loans

To help you compare loan options, NerdWallet has a list of small-business loans that are best for business owners. All of our recommendations are based on the lender’s market scope and track record and on the needs of business owners, as well as rates and other factors, so you can make the right financing decision.

Last updated on May 4, 2020

To recap our selections...

NerdWallet's Online Business Loans 2020: Compare Your Options