11 Top-Rated Loans for Businesses in 2022
[Compare & Apply]
Check out our compilation of the best business loans in 2022. We crafted our analysis based on key loan terms, minimum requirements, repayment model and fees, additional benefits and restrictions.
Fact-checked
Last Updated: April 14, 2022
1. Biz2Credit
Biz2Credit can secure short or long term loans of almost any amount for a broad scope of business activities, from cash to real estate. Get cash within 48 hours with minimal paperwork and relaxed business requirements. Biz2Credit works with a wide network of partners to ensure that whatever your financial needs are, they will be able to help. Full Review
- Flexible repayment terms
- Loans of up to $5 million in working capital
- Additional products available via lender network
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Biz2Credit can secure short or long term loans of almost any amount for a broad scope of business activities, from cash to real estate. Get cash within 48 hours with minimal paperwork and relaxed business requirements. Biz2Credit works with a wide network of partners to ensure that whatever your financial needs are, they will be able to help. Full Review
★★★★★ 5/5
★★★★☆ 4/5
★★★★★ 5/5
★★★★☆ 4/5
2. National Funding
National Funding is a top-rated provider of loans for small businesses in the US. Get approved within 24 hours for a small loan of up to $500,000 or receive $150,000 for equipment financing. The free, no-obligation application is quick and easy and won’t affect your credit score. Full Review
- 24-hour turnaround
- Equipment financing available
- Loans and lines of credit up to $500,000
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National Funding is a top-rated provider of loans for small businesses in the US. Get approved within 24 hours for a small loan of up to $500,000 or receive $150,000 for equipment financing. The free, no-obligation application is quick and easy and won’t affect your credit score. Full Review
★★★★☆ 4/5
★★★★★ 5/5
★★★★★ 5/5
★★★★☆ 4/5
3. LoanBuilder
PayPal’s LoanBuilder is a highly-rated provider of loans for businesses that makes borrowing money quick and easy. Get a short-term loan approved within 1 day to get your business up and running. Requirements are minimal and the convenient fixed-fee structure keeps things simple. With no additional hidden fees, you have no surprises to worry about. LoanBuilder is available to businesses in all 50 states. Full Review
- 1-day turnaround
- Minimal requirements
- Good for small, short-term loans
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PayPal’s LoanBuilder is a highly-rated provider of loans for businesses that makes borrowing money quick and easy. Get a short-term loan approved within 1 day to get your business up and running. Requirements are minimal and the convenient fixed-fee structure keeps things simple. With no additional hidden fees, you have no surprises to worry about. LoanBuilder is available to businesses in all 50 states. Full Review
★★★★★ 5/5
★★★★☆ 4/5
★★★★☆ 4/5
★★★★★ 5/5
4. One Park Financial
One Park Financial will help your business secure a loan up to $750,000 even if you have bad credit. The no-obligation online loan comparison service is free to use and only charges a fee once you’ve selected a provider. One Park Financial considers businesses as young as 3 months old with no collateral required, and businesses with bankruptcies or tax liens are accepted. Full Review
- 24-hour turnaround after approval
- Startup loans require no collateral
- Loans available to businesses with low credit
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One Park Financial will help your business secure a loan up to $750,000 even if you have bad credit. The no-obligation online loan comparison service is free to use and only charges a fee once you’ve selected a provider. One Park Financial considers businesses as young as 3 months old with no collateral required, and businesses with bankruptcies or tax liens are accepted. Full Review
★★★★★ 5/5
★★★★☆ 4/5
★★★☆☆ 3/5
★★★★★ 5/5
5. OnDeck
OnDeck is a popular online provider of direct loans and lines of credit to small or medium-sized companies. Get a short-term loan up to $500,000 at as little as 11% APR and repay it over 36 months. If your loan application has been denied by the bank, OnDeck can help with its low FICO score and business revenue eligibility requirements. Full Review
- Lines of credit also available
- Get a loan up to $500,000 within 24 hours
- Government-backed SBA PPP loans for businesses affected by COVID-19
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OnDeck is a popular online provider of direct loans and lines of credit to small or medium-sized companies. Get a short-term loan up to $500,000 at as little as 11% APR and repay it over 36 months. If your loan application has been denied by the bank, OnDeck can help with its low FICO score and business revenue eligibility requirements. Full Review
★★★★★ 5/5
★★★★☆ 4/5
★★★★★ 5/5
★★★★☆ 4/5
6. BlueVine
BlueVine is more than just your typical lender. With invoice factoring up to $5 million and SBA PPP loans with as little as 1% interest, BlueVine can be a lifeline for your business. Get a short or long-term loan up to $250,000 delivered directly to your bank account within 10 minutes of approval. BlueVine has low eligibility requirements for businesses that need hassle-free quick cash. Full Review
- Low-rate SBA PPP loans
- Instant loans in less than 12 hours
- Invoice factoring loans up to $5 million
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BlueVine is more than just your typical lender. With invoice factoring up to $5 million and SBA PPP loans with as little as 1% interest, BlueVine can be a lifeline for your business. Get a short or long-term loan up to $250,000 delivered directly to your bank account within 10 minutes of approval. BlueVine has low eligibility requirements for businesses that need hassle-free quick cash. Full Review
★★★★☆ 4/5
★★★★★ 5/5
★★★★☆ 4/5
★★★★★ 5/5
7. Reliant Funding
Reliant Funding offers a range of secured and unsecured loans to businesses of all sizes. Receive a quick cash loan with minimum requirements or a longer-term loan, both available as lines of credit. Loyal customers receive better rates on second and third loans and there are no fees for paying off a loan early. Full Review
- No minimum credit score
- Large loans available with low requirements
- Quick, unsecured loans without the need for special documentation
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Reliant Funding offers a range of secured and unsecured loans to businesses of all sizes. Receive a quick cash loan with minimum requirements or a longer-term loan, both available as lines of credit. Loyal customers receive better rates on second and third loans and there are no fees for paying off a loan early. Full Review
★★★★☆ 4/5
★★★★★ 5/5
★★★★☆ 4/5
★★★★★ 5/5
8. Fundbox
Fundbox is an advanced credit provision company for small businesses looking for easy, automated loans. The system integrates with your banking and accounting software to make an assessment of your business needs and provide the best possible loan based on your financial decisions. Get up to $100,000 credit within 24 hours of implementing the Fundbox system. Full Review
- 100% invoice funding
- Lines of credit for B2C businesses
- Fast provision of credit (once implemented)
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Fundbox is an advanced credit provision company for small businesses looking for easy, automated loans. The system integrates with your banking and accounting software to make an assessment of your business needs and provide the best possible loan based on your financial decisions. Get up to $100,000 credit within 24 hours of implementing the Fundbox system. Full Review
★★★★☆ 4/5
★★★★★ 5/5
★★★★☆ 4/5
★★★★★ 5/5
9. LoanMe
You can easily get your business a small, short-term loan from LoanMe with its flexible pricing structure. You can compare loans for businesses with all information presented clearly on their website with no hidden fees. No income threshold or minimum credit score is required, only 2 months proof of earnings and 90 days in business. Full Review
- Excellent sales support
- Working capital and fixed-term loans
- Tiered pricing structure based on prequalification
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You can easily get your business a small, short-term loan from LoanMe with its flexible pricing structure. You can compare loans for businesses with all information presented clearly on their website with no hidden fees. No income threshold or minimum credit score is required, only 2 months proof of earnings and 90 days in business. Full Review
★★★★★ 5/5
★★★★☆ 4/5
★★★★☆ 4/5
★★★★★ 5/5
10. Fundera
Fundera is a relatively fresh loan comparison site aimed at securing loans tailored to your company’s needs. Businesses can choose whatever kind of loan they require, from short-term cash advances to long-term lines of credit. No matter what’s your situation, Fundera will find the right loan provider for you. Full Review
- Provides strong privacy and an eligibility tracker
- Wide variety of different types of loans for businesses
- Fundera can sync with popular accounting software like QuickBooks
Show More
Fundera is a relatively fresh loan comparison site aimed at securing loans tailored to your company’s needs. Businesses can choose whatever kind of loan they require, from short-term cash advances to long-term lines of credit. No matter what’s your situation, Fundera will find the right loan provider for you. Full Review
★★★★☆ 4/5
★★★★★ 5/5
★★★★☆ 4/5
★★★★★ 5/5
11. Lendio
Lendio is an online service for accessing a wide range of loan types across a broad spectrum of different businesses. Get instant quotes on short and long-term loans, MCAs, credit lines, equipment hire, and real estate loans. Lendio has partnered with hundreds of lenders, many with low entry requirements designed to help new businesses with low monthly revenue. Whether you’re a large corporation or a small startup, Lendio can find the right loan for you. Full Review
- Free to use with access to all the best lenders
- Includes equipment rental and real estate loans
- Highly flexible terms with small or large loans available
Show More
Lendio is an online service for accessing a wide range of loan types across a broad spectrum of different businesses. Get instant quotes on short and long-term loans, MCAs, credit lines, equipment hire, and real estate loans. Lendio has partnered with hundreds of lenders, many with low entry requirements designed to help new businesses with low monthly revenue. Whether you’re a large corporation or a small startup, Lendio can find the right loan for you. Full Review
★★★★☆ 4/5
★★★★★ 5/5
★★★★☆ 4/5
★★★★★ 5/5
Our Methodology
In this article, we share our pick of the top loans for businesses that are currently available today. To create this review we investigated all the various types of business financing options online and read hundreds of reviews.
The factors we have considered include:
- Company Reputation – what ratings do online reviewers give for their loans?
- Types of loans on offer – short-term, revolving, installment, etc.
- Variables – annual percentage rate (APR), term lengths, loan amount.
- Requirements – credit scores, annual revenue, etc.
- Funding time-frame – how soon can you receive the money?
- Restrictions – business types or locations that can’t apply.
With this data, we have compiled a comprehensive comparison article that will provide you with all the information you need to choose an ideal loan for your company.
Detailed Reviews
- Flexible repayment terms
- Easy application process
- Ideal for small businesses
- Loans of up to $5 million in working capital
- Additional products available via lender network
- Low credit scores accepted and requirements aren’t too strict
- High fees and restrictive terms
- Some additional fees
Biz2Credit is a company that provides direct financial products in the form of working capital loans, merchant cash advances, Small Business Administration loans, and commercial real estate loans. In addition to this, Biz2Credit can secure term loans and lines of credit via its network of partner loan providers. It has a particularly high rating due to its excellent customer service but has been criticized for charging above-average interest on its loans.
Services
- APR Range: Varies according to lender
- Loan Amount: $5,000 – $5 million
- Term Length: 3-36 months
- Funding Time: 24-48 hours
Requirements
- Min. credit score: Variable, usually above 600
- Minimum time in business: 6 months
- Minimum annual revenue: Varies by lender ($100,000+)
Benefits
In addition to its direct services, Biz2Credit offers lines of credit and term loans via its network of partners. It has been praised as one of the best lenders for the high quality of its customer service.
Commercial real estate loans can be converted to SBA loans after an initial term which saves time and effort for your business.
Fees and Restrictions
There are no fees for the submission of applications, but third-party providers may charge origination fees.
Customer Support
Not only does Biz2Credit offer plenty of ways to contact their customer support team – phone, email, and web form – the customer service itself is very helpful and professional.
- 24-hour turnaround
- Early repayment discounts
- No collateral required
- Quick and easy application
- Equipment financing available
- Loans and lines of credit up to $500,000
- Fixed daily or weekly payments
- Rates are expensive
National Funding loans are aimed at businesses looking for short-term options, merchant cash advances up to $500,000, or equipment financing between $5,000 and $150,000. Loans are payable over 15 months and equipment financing over up to 5 years. Collateral is not required but a personal guarantee is, along with a credit score of at least 600. Payments are fixed and must be made daily or weekly.
Services
- APR Range: 15% to 30%
- Loan Amount: $5,000 to $500,000
- Term Length: 6 to 15 months
- Funding Time: 24 hours
Requirements
- Min. credit score: 600
- Minimum time in business: 1 year
- Minimum annual revenue: $100,000
- Other: Three months of business bank statements
- Most recent tax return
Benefits
National Funding loans for small businesses are available to a broad range of different small businesses, including beauty salons, contractors, restaurants, construction, retail, and agriculture companies.
National Funding is still accepting PPP loan applications.
Fees and Restrictions
National Funding charges an origination fee of 2% on their short-term loans and offers a 7% discount for prepayment.
No UCC lien for loans under $250,000.
Customer Support
Applying for or getting help with National Funding is a piece of cake. Simply call or email the professional, helpful customer support.
- 1-day turnaround
- Minimal requirements
- Good for small, short-term loans
- Fast and easy application process
- Lower requirements than most banks
- No origination fees or prepayment penalties
- No early repayment discount
- Long-term financing not available
- Lien requirement
LoanBuilder is a Paypal-driven loan service for small businesses and is also known as PayPal Business Loan. Its subsidiary company, Swift Financial, which PayPal bought out in 2017, has a good online reputation and a history of quality customer care which according to statistics translates into a nice profit. Paypal’s Loanbuilder has an A+ rating on Better Business Bureau (BBB) and 9/10 on Trustpilot, with LoanBuilder reviews on most other rating sites being overwhelmingly positive as well.
Services
LoanBuilder offers short-term fixed-fee loans with no variable interest. While they are not the cheapest loans available, they have low entry requirements.
- APR Range: 6% – 19% fixed
- Loan Amount: $5,000 – $500,000
- Term Length: 3 – 12 months
- Funding Time: Within 24 hours of approval (business day)
Requirements
- Min. credit score: 550
- Minimum time in business: 9 months
- Minimum annual revenue: $42,000
- Other: Lien: UCC 1 Filing
Benefits
- LoanBuilder is great for loans for businesses but doesn’t offer SBA-approved loans.
Fees and Restrictions
$20 return payment fee.
Reviews of Paypal business loan talk about some restricted businesses. These include agencies, political, religious, nonprofit, human rights, gambling, conservation, education, civic, and social organizations, amongst others.
Customer Support
LoanBuilder’s customer support is outstanding. The friendly, supportive agents are available via phone and email, Monday through Saturday.
- Startup loans require no collateral
- 24-hour turnaround after approval
- Open to businesses with bad credit
- Loans available to businesses with low credit
- Service fees included
One Park Financial is a loan comparison site that can find multiple loan offers from the top-rated lenders who offer loans for businesses of all types, even those with bad credit. The site aggregates loan offers from multiple sources, finding the best loan to suit the borrower’s needs. Get up to $750,000 with variable rates and terms for businesses as young as 3 months old.
Services
- APR Range: Varies (comparison site)
- Loan Amount: $5,000 – $750,000
- Term Length: Variable
- Funding Time: ~ 72 Hours
Requirements
- Min. credit score: 450
- Minimum time in business: 3 months
- Minimum annual revenue: $30,000
- Other: Poor credit, bankruptcies, tax liens accepted
Benefits
- BBB accredited with A+ rating
- Accepts new customers
Fees
The service is free to use with no obligations but One Park Financial does charge a professional service fee when you choose a provider.
Customer Support
One Park Financial’s customer service is praised far and wide. Whether you call or email them, you can be sure they’ll answer your questions quickly and professionally.
- Government-backed SBA PPP loans for businesses affected by COVID-19
- Offers SBA PPP loans at 1% fixed interest (currently on hold)
- Get a loan for business up to $500,000 within 24 hours
- More flexible than banks
- Lines of credit also available
- Comparatively high annual revenue requirements
- Fees could add up to higher than average
OnDeck is an efficient loan provider for businesses struggling to get a loan from their banks and credit unions. However, it only offers a fixed-fee structure that could work out more expensive than a traditional loan and requires frequent repayments. The company provides SBA PPP loans, revolving credit lines, and term loans up to $500,000 with variable rates.
Services
- APR Range: 11% – 99%
- Loan Amount: $5,000 to $500,000
- Term Length: 3 to 36 months
- Funding Time: Same business day
Requirements
- Min. credit score: 600
- Minimum time in business: 1 years
- Minimum annual revenue: $100,000
- Other: Business lien and personal guarantee
- Daily or weekly repayments
Benefits
OnDeck allows you to receive funding quickly and has low entry requirements. They offer different types of loans and fixed-rate fees to keep things simple and transparent. It is also an SBA-authorized lender.
Fees and Restrictions
OnDeck is one of the loan options for businesses that charges a one-time origination fee between 2.5% and 4% that drops to 1.25% – 3% for regular customers. There is a $20 monthly maintenance fee for the lines of credit.
Customers can’t make early repayments and must not have filed for personal bankruptcy, but even if you are on the verge of filing, here’s how to avoid it. Restricted businesses: adult entertainment, drug dispensaries, firearms vendors, nonprofits, boarding houses, car dealers, government, horoscope, gambling, religious, and civic organizations.
Customer Support
Comments of loans for small businesses describe OnDeck’s customer support as incredibly helpful and professional. You can reach them via phone or email, both of which differ depending on whether you’re a new or existing customer.
- Low-rate SBA PPP loans
- Instant loans in less than 12 hours
- Invoice factoring loans up to $5 million
- PPP loans up to $2 million with only 1% APR
- Personal guarantee required
- Short repayment terms result in high APRs
BlueVine is one of the fastest providers of loans for businesses available with some customers receiving cash within 10 minutes after approval. BlueVine also offers credit lines and SBA PPP loans. Get a 6 to 12-month loan or credit line of up to $250,000, or as much as $2 million on a PPP loan over 2 years with only 1% APR. Businesses with outstanding invoices can benefit from invoice factoring loans up to $5 million.
Services
- APR Range: 15% – 88% (1% for PPP)
- Loan Amount: $5,000 to $250,000 ($2 million for PPP)
- Term Length: 6 – 12 months (24 months for PPP)
- Funding Time: 10 mins (term loan) 12 to 24 hours (credit lines)
Requirements
- Min. credit score: 600
- Minimum time in business: 6 months
- Minimum annual revenue: $100,000
Benefits
BlueVine is the company providing loans for small businesses that offers invoice factoring loans up to $5 million over 13 weeks to cover losses from clients who are slow to pay.
Lines of credit, SBA PPP, and short-term loans are all available, with cash delivered in as little as 10 minutes on term loans and 12 hours on credit lines.
Fees and Restrictions
Not available in North Dakota, South Dakota, or Vermont.
Customer Support
There are two ways to contact BlueVine – via phone call or a web form. And while reaching the customer support team may take a while, it’s worth it. Whether you’re looking for help with the app, startup loans for veterans, or anything in between, you’ll be greeted with friendly and patient service.
- Quick approval time
- No minimum credit score
- Range of various loans available
- Large loans available with low requirements
- Quick, unsecured loans without the need for special documentation
- Lack of fee transparency
- Frequent payments required
Reliant Funding provides various loans for businesses including short-term, merchant cash advances, and equipment financing. Your company only needs to have been in business for one year or more and low credit scores are not a problem, although they will affect the loan’s APR. Reliant Funding charges unspecified fees as a percentage or multiplier depending on your business situation.
Services
- APR Range: Variable
- Loan Amount: $5,000-$500,000
- Term Length: 6-18 months
- Funding Time: 24 hours
Requirements
- Min. credit score: N/A
- Minimum time in business: 1 year
- Minimum annual revenue: $120,000
Benefits
Reliant Funding provides secure loans for businesses with comparatively high maximum borrowing amounts and no minimum credit score requirements.
Fees and Restrictions
Reliant Funding charges an unspecified amount of origination and additional fees. There is a lack of information and transparency on its website when it comes to fees charged by the company.
Customer Support
Reliant Funding’s extremely timely and helpful customer support is available via phone, email, and web form.
- 100% invoice funding
- Quick application process
- Lines of credit for B2C businesses
- Fast provision of credit (once implemented)
Fundbox provides loans based on certain evaluation criteria that involve creating an account and linking your third-party accounting software to its platform. It also requires companies to use one of its 12,000 compatible business bank accounts. Through this system, it provides loans based on its evaluation of the health of your business’ finances. The complex system is able to provide businesses with one of two products, a line of credit or a B2B trade credit loan.
Services
- APR Range: 10.10% – 79.80%
- Loan Amount: $1,000 – $100,000
- Term Length: 12 or 24 weeks
- Funding Time: ~ 24 hours
Requirements
- Min. credit score: 500
- Minimum time in business: No minimum
- Minimum annual revenue: $50,000
- Other: Connect your accounting software and bank
account
Benefits
Businesses don’t need to provide collateral for loans. Customer service is rated as excellent and is available via multiple channels, including email, phone, and a support center.
Fees and Restrictions
A minimum advance fee of 4.66%, with weekly payments. No prepayment penalty.
Customer Support
You can reach Fundbox’ customer service Monday to Friday via phone, and through email. The help you’ll get is bound to be quick and professional.
- Live chat sales support
- Excellent sales support
- No prepayment penalty
- Working capital and fixed-term loans
- Accredited by the Better Business Bureau
- Tiered pricing structure based on prequalification
- Small loans only
- Very high APR for low-tier loans
LoanMe provides loans to low-credit companies with no collateral or high turnover requirements. The loans usually have high APRs unless you have a good FICO score. However, for working capital loans, LoanMe provides longer terms than most lenders and you can pay them off anytime with no penalty. Fixed-rate terms are for smaller amounts with terms up to 12 months.
Services
- APR Range: 25%-149% (working capital)
- Loan Amount: $3,500 to $250,000
- Term Length: 6-12 months (fixed term) ~ 10 years (working capital)
- Funding Time: 2-4 hours
Requirements
- Min. credit score: Not specified but LoanMe will do a hard pull
- Minimum time in business: 90 days
- Minimum annual revenue: Proof of 2 months of income
- Other: 25% of the business owned by the applicant
Benefits
No collateral is required. LoanMe also provides personal “homeowner” loans with an average interest rate and a 15-year term for people with a FICO score over 760.
Fees and Restrictions
An origination fee of 5% to 10% for working capital and 14%-35% for fixed-term, depending on your business’s qualifications.
Available only in 23 states.
Customer Support
If you have any issue you need solving, LoanMe’s customer service is easy to reach every day of the week, both over phone and via email.
- Fundera can sync with popular accounting software like QuickBooks
- Provides strong privacy and an eligibility tracker
- Wide variety of different types of loans for businesses
- Best business financing variety
- Strong privacy
- Good customer support
- Lack of clarity on specific fees, some of which can be high
- Exposure to a limited selection of niche lenders
Fundera is a popular financial services comparison site that finds a wide variety of the best online loans for businesses of all kinds. Customers can get quotes on Small Business Administration loans, cash advances, short and medium-term loans, credit lines, equipment loans, and invoice financing. The selection of lenders is restricted so the choice can be limited but there is something to fit everyone’s needs.
Services
- APR Range: Variable
- Loan Amount: $2,500 (cash advance) or $10,000-$1 million (credit line)
- Term Length: 6 months to 5 years
- Funding Time: 2 days to 2 weeks
Requirements
- Min. credit score: 550
- Minimum time in business: Depends on the lender
- Minimum annual revenue: Varies
- Other: Bank statements and tax returns
- Profit and loss statements
- Verification of rental space
Benefits
Fundera is a free-to-use service that supplies SBA-approved loans and first-time loans to new businesses with relatively low credit.
Fees and Restrictions
Fundera does not charge fees for the service but each loan provider has its own fee structure. Restrictions regarding business activities may vary from lender to lender.
Customer Support
While the only way to contact Fundera’s customer service team is via email, their professionalism and ability to help will knock you off your feet.
Lendio
Best for Companies That Know Specifically What Type of Loans They Are Looking For
Visit Website- Highly rated in online reviews as one of the top lenders
- Highly flexible terms with small or large loans available
- Get instant quotes on all types of loans for businesses
- Includes equipment rental and real estate loans
- Free to use with access to all the best lenders
- Comparatively low requirements
Lendio is a digital lender marketplace that provides quotes on a wide variety of loan types, including credit cards, large cash flow loans, term loans, merchant cash advances (MCA), Small Business Administration loans, equipment leasing, and real estate. It gets quotes from a range of big lenders from among its 300+ list of vendors, ensuring you get an offer that suits your needs.
Services
- APR Range: Starts at 6%
- Loan Amount: $1,000 – $2 million
- Term Length: 1 month – 5 years (25 years for real estate)
- Funding Time: 24 hours ~
Requirements
- Min. credit score: 560
- Minimum time in business: 12 months
- Minimum annual revenue: $10,000 / month
- Other: 6 months business bank account statements
- Mortgage or landlord verification
Benefits
Lendio uses the same 256-bit encryption used by banking apps. An approved loan is not guaranteed but the service is free to use until you have chosen a lender. Offers some of the best long term loans for businesses in real estate.
Fees and Restrictions
- Origination, prepayment, and admin fees may or may not be added. Interest fees vary between lenders and can be fixed or variable, quoted weekly, monthly, or yearly.
- Restrictions include commercial real estate, hunting, fishing, gambling, legal, nonprofit, mining, and insurance businesses.
Customer Support
While you may experience some unnecessary back and forth when it comes to Lendio’s customer service team, they are easily reachable via website form.
Loans for (Small) Business – The Ultimate Guide of 2022
How Do Loans for Businesses Work?
These loans are offered by lenders to companies in exchange for an agreement to repay with interest. There are many different types of loans designed to support the various aspects of a business such as cash flow, real estate, equipment, and debt financing.
New companies can generally benefit from loans for startup businesses until such a time as they are making enough profit to sustain themselves independently. Larger businesses may need a loan to expand into bigger premises or fund the development of a new project.
Loans for businesses differ from personal loans as the business takes liability over the loan, making it less risky for the individual. Having a higher personal FICO score can help to secure a loan. However, if you are looking for a loan for your business and you have bad credit, you still have multiple options.
What Is the Best Loan for a Small Business?
This will largely depend on your business’ particular needs and circumstances.
Here are a few tips on how to choose a loan:
Evaluate Requirements
Reviews of loans for startup businesses suggest evaluating your business situation to choose the right type of loan. Some businesses find it better to get loans from banks and credit unions if they can, others prefer non-banking financial institutions, such as lenders.
Two important factors to consider are:
- Your credit score
- Debt to equity ratio
These two factors will determine which types of loans you qualify for and the terms you will receive. You can then decide how much you need and whether you need a lump sum (term loan, cash advance) or small amounts over a long period of time (line of credit). It’s important to go into the search with a clear idea of what you are looking for.
Get Quotes
Reviews of loans for businesses suggest once you know what type of loan you need and how much, you can start collecting quotes from loan institutions. These are the details that you should evaluate in each quote:
- Repayment term (how long you will pay it off)
- Repayment schedule (daily, weekly, or monthly payments)
- Interest rates (annual percentage rate (APR))
- Additional fees (origination fees, penalties)
- Requirements (collateral, personal guarantee, minimum revenue)
Fees and terms can be confusing and some lenders purposely make them unclear, so take some time calculating exactly how much you will be paying off in the long run. If you don’t do this, you may get tricked into paying off more than you expected, and it’ll be too late to change once you’ve taken out the loan.
Evaluate the Company
Before signing, make sure to do a decent background check on the company. Check its accreditations and read lots of online reviews to get a good idea of the lender’s reputation. If you come across any trouble, later on, you want to be sure that the lender has a good customer support service and will be on hand to help you out.
COVID-19 and Business Loans
Due to the COVID-19 crisis, some lenders have been forced to temporarily suspend offering certain products. In some cases, existing lines of credit have even been recalled in light of a worsening situation.
In April, the government-funded Small Business Act (SBA) Paycheck Protection Program (PPP) fund ran dry, leaving many lenders unable to continue offering this product. However, a second-round has now become available and some SBA-approved lenders like Lendio and BlueVine have begun offering PPP loans for a limited period.
We will keep this page updated as the situation progresses and lenders begin to accept applications again. Unfortunately, unexpected changes to interest rates and borrower requirements may affect our rankings but we’ll do our best to update these promptly
Types of Business Loans
There are several different loans, all with different terms of repayment and types of interests. You can find unsecured or secured, loans with weekly or monthly installments, loans for large purchases, line of credits, and specialized loans from niche lenders.
Basic Term Loans (Short and Long Term)
Useful for a real estate or business purchase loan, expansion, or renovation. Involves a set amount of money (up to $600,000) and sets monthly payments typically over a one to a five-year term (including 7%-30% interest). This can be arranged by banks or online lenders, although the latter attract higher interest rates, and the process is quicker and simpler.
Benefits:
- A structured system
- Covers a wide range of uses
- Lower monthly payments
- Long repayment terms
Specialized Lending
Specialized lending applies specifically to the corporate asset class. The borrower is an SPE (special purpose entity) and requires project, object, or real estate financing, and has no other assets. The lender has considerable control over the project and any generated income.
Other specialized loans could include cannabis loans, which are particularly difficult to secure.
Small Business Administration (SBA) Loans
These loans, provided by the private sector and backed by the government, are specifically aimed at assisting small business startups which have a high failure rate. They also help to provide funding options and loans for veterans. Terms and conditions vary depending on the size of the loan and the plans and needs of the organization.
An SBA loan will not be issued:
- without collateral (pledging the company or personal assets)
- if the business is a nonprofit organization
- if the business is not based in the US
Benefits:
The 7(a) Loan Program ($350,000-$5 million) is versatile and the funds can be used as loans to buy a business or real estate, finance equipment and supplies, or acquire an existing business.
The Microloan program ($10,000-$50,000) requires limited collateral and provides working capital to finance small purchases like inventory, supplies, furniture, and fittings.
The CDC/504 Loan Program (up to $5 million) for the purpose of expansion offers:
- 90% financing
- Longer repayment terms
- Fixed interest rate
- Overall savings
Merchant Cash Advances (MCA)
This is one of the most expensive forms of credit and should only be considered if the owner has had trouble applying for loans elsewhere. Typically, if the business needs a small amount of cash in an emergency or for short-term needs, the lender offers a cash advance against future credit card sales. Daily payments are made to the lender from the business bank account with the repayment amount being dependent upon sales.
Benefits:
- If the business is slow, you pay less
- Does not require a high credit score
- Can be approved within 24 hours
Invoice Factoring and Invoice Financing
A useful tool for business owners who need an advance to cover expenses and overheads while waiting for customers to pay their invoices. Companies offering invoice financing will usually cover up to 85% or 90% of your invoice value, retaining the extra 10% or 15% as collateral. Once the outstanding invoices are settled, this 10% is returned, minus the weekly processing fee of around 3%.
Benefits:
- Takes as little as one day to organize the financing
- The invoices act as the required collateral
- Solves your short term cash-flow problems
- Relatively risk-free
Peer-To-Peer Lending
Peer-to-peer lending involves borrowing money from other individuals or groups, with a third party overseeing the transactions. Essential factors include presenting an agreement in writing, including a specific interest rate and repayment schedule.
Benefits:
- A lower interest rate and a flexible repayment plan
- An interest in your progress and success
Business Lines of Credit
Most suitable for small business owners, this one-year loan is paid directly into your business account to assist with cash flow. It’s specifically aimed at operating costs and daily needs rather than the purchase of equipment or buildings and can be renewed on payment of an annual fee.
Benefits:
- Allows for emergency cash problems
- Is considered low-risk, therefore, has a low monthly interest rate
- Allows the principal amount to be paid at your convenience
How Can You Get a Loan for Small Business?
Getting a loan for your business boils down to two main actions: knowing your options, and preparing the required documentation.
As we mentioned, different loan providers have different requirements and offer different loan amounts and rates. But let’s dive into it some more and see what exactly that means. Depending on how your business is doing, you can choose one of these three:
- Banks.
If you don’t need cash right away, your best option may be a bank. However, a bank does require you to put in a collateral and have a certain amount of “business hours” behind you. Additionally, you’ll need to have a good credit score. So if you tick all of those boxes, you can expect great loan rates out there. - Online lenders.
If your business hasn’t been around for long, you lack collateral, and need funding sooner rather than later, your best option may be online lenders. Just be aware that you’ll likely end up with somewhat higher rates than those you could get with a collateral, and a better credit score. However, if you need a quick loan, online lenders are the way to go. - Microloans.
Finally, if none of the above is a viable option, you can always reach out to microlenders. It’s not likely you’ll get a loan higher than $50,000, but you should be able to get one. The most common reasons people opt for microlending is either that their company is still too small, or they are forced to look for loans for bad credit, meaning banks and most online lenders aren’t an option.
Once you’re clear on what kind of institution you’re after, you’ll be required to submit some of these documents:
- Business tax returns
- Personal tax returns
- Business bank statements
- Personal bank statements
- Business financial statements
- Business legal documents (such as franchise agreement, articles of incorporation, etc.)
- Business plan.
While you may not need all of these for every lender, getting the best loans for small businesses is generally a lot quicker and easier if you prepare them anyway.
The State of Small-Business Financing
Loans for businesses have gained a lot of popularity in the last couple of years. In fact, as much as 32% of small businesses choose to apply for one. The reasons vary, but 56% of all those asking for a loan for their business fall under three groups: they either do it to help a business gain traction, to expand, or in search of business acquisition loans.
And while that may not surprise you, this might: did you know that 36% of all small businesses asking for a loan were denied it because of their credit score? While you may think that it doesn’t play as big a role when applying for a loan, data clearly shows it does. After all, these loans tend to be pretty huge – an average SBA loan being $107,000 – so it’s only natural lenders would want to protect themselves. In order to do so, they tend to opt for trustworthy borrowers.
However, if you’re in the business for business mortgage loans, we have good news: their approval rate is pretty high at 69%. Expanding your office space or getting a brand new building to call your commercial home could be easier than you think, especially with a good credit score.
But those who don’t have a lot of experience under their belt shouldn’t give up, either. While they may initially be denied, with such a wide variety of lenders out there, it’s more than likely everyone will get one sooner or later.
Additional Funding Options
If for any reason you can’t use any of the loans for startups, there are other options to get your hands on the much-needed capital:
- Personal loans for bad credit
In general, borrowers don’t get too much into how you decide to spend your personal loan. With the right company, whether you decide to buy a new car or turn that money into a replacement for hemp loans is completely up to you. - Crowdfunding
Quality crowdfunding sites can help you fund anything. By creating an enticing crowdfunding campaign and explaining why your business matters to you, you could reach your campaign goal more quickly than you think. - Business credit cards
If the previous two didn’t really catch your attention, you may like the final alternative. Business credit cards may not be loans per se, but they do allow you to spend money upfront and use it as capital. If you opt for this one, look for the best small business rates in 2021, and cards offering certain benefits such as cash-back rewards.
Best Business Loans in 2022 at a Glance
- Biz2Credit – Best commercial loan supplier
- National Funding – Best low-interest loans for businesses
- LoanBuilder – Best provider of loans for small businesses
- One Park Financial – Good loan options for bad credit
- OnDeck – Best loan rates for small businesses
- BlueVine – Best quick loans
- Reliant Funding – Best unsecured loans with no minimum credit score
- Fundbox – Best short-term loans
- LoanMe – Best small business funding for startups
- Fundera – Best personalized loan for small-business
- Lendio – Best for companies that need a specific type of loans
FAQ
Are loans for small businesses hard to get? Not necessarily. Several companies exist specifically to help out young businesses. The easiest lenders to get a loan are Kabbage, BlueVine, Fundbox, and National Funding. These companies offer loans to companies that have been in business for less than a year and with minimal credit requirements.
It is more difficult but not impossible to get a loan with bad credit. Certain companies specifically cater to businesses that need help with credit repair. The downside is that you will probably get bad terms and a high APR. You may consider repairing your credit score before applying for a loan.
For small businesses that are just starting out, it can be difficult to get any type of loan. Many lenders require you to have been in business for several years with a minimum annual revenue and credit score. However, the majority of lenders provide a quick and easy application form to let you know if you prequalify.
Secured loans require you to back the loan with collateral, like real estate or assets. If you default on the loan, the lender can repossess these assets. Unsecured loans don’t require backing but offer less favorable terms. To find the best business loans, always ensure you check the terms and rates carefully.
