Having access to funds for your small business can be crucial. In lean times and in growth periods, the right financing can not only keep your company afloat but also supercharge your business. It can be difficult, however, to find the right loan for your business. That’s why we’ve compiled our research, examining over 30 different lenders and highlighting our top choices for small business loans.
To determine the best small business lenders, AdvisorSmith considered a number of factors, including financial strength ratings, customer satisfaction data, complaint ratings from the Better Business Bureau, available terms and loan amounts, and availability of information and ease of use of the lender websites.
The Best Small Business Loans
- National Business Capital: Best overall
- Rapid Finance: Best short-term loan
- Lendio: Best for startups
- Fundbox: Best for lower credit scores
- Accion Opportunity Fund: Best microloan
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National Business Capital is a financing marketplace that specializes in connecting small businesses with a variety of loan products and over 75 lenders.
We chose National Business Capital as our best overall because of its diverse product portfolio, ability to service a wide range of businesses from startups to established companies, and stellar customer reviews and ratings. National can serve as a one-stop shop for your financing needs, offering loan amounts from $10,000 to $5,000,000, term lengths from 6 months to 25 years, and funding to your bank in under 24 hours.
Rapid Finance: Best short-term loan
Rapid Finance is an alternative lender known for offering a variety of short-term loans targeted at small and midsize businesses.
We chose Rapid Finance as our best short-term loan lender because of its fast funding and approval process, wide range of short-term loan products, and positive customer reviews and ratings. While short-term loans are more expensive than other types of loans, for businesses with an urgent need for funding, this type of financing may be ideal. Rapid Finance can offer loan amounts from $5,000 to $1,000,000, term lengths from 3 to 60 months, funding to your bank within hours.
Lendio: Best for startups
Lendio is a financing marketplace that works with a variety of lenders, many of whom offer loans specifically for startups.
We chose Lendio as our best startup lender because of its ease of application, variety of financing products, and convenience in finding and comparing offers from multiple lenders. Startups are always pressed for resources and time, so it makes sense to rely on a third party to help do the legwork in finding loan offers for your business. Lendio can offer loan amounts from $500 to $5,000,000, term lengths from 1 to 25 years, and funding to your bank within 24 hours.
Fundbox: Best for lower credit scores
Fundbox is an alternative lender that is best known for offering lines of credit and invoice financing for small businesses.
We chose Fundbox as our best lender for lower credit scores because of its less stringent borrower requirements, streamlined application process, and high customer satisfaction ratings. One potential downside to Fundbox is that it only offers a maximum of $150,000 in financing, meaning businesses looking for larger loans will have to go elsewhere. However, for those looking for smaller amounts and businesses that may have lower credit scores, Fundbox can be a good alternative to get funded fast.
Accion Opportunity Fund: Best microloan
The Accion Opportunity Fund is a non-profit lender focused on providing funding to small businesses, particularly business owners who are underrepresented minorities and women who may not qualify with other traditional lenders.
We chose Accion Opportunity Fund as our best lender for microloans because of its dedication to providing loans for underserved communities, resources and support for business owners, and less stringent borrower requirements. Accion can offer loan amounts from $5,000 to $100,000 with term lengths up to 60 months.
Types of Small Business Loans
There are a variety of loan types, and the best loan for your business will depend on your goals for the loan, the type of business you run, your financial situation, and more. It’s best to make sure you understand what type of loan products are available and how a lender can fulfill your financing needs.
Below, we’ve listed some of the most common types of small business loans:
|Qualified businesses looking for short or long-term financing needs and predictable repayment schedules
|Business line of credit
|Businesses that need flexible access to working capital
|Small businesses that have trouble getting approved for more traditional loans but are otherwise qualified
|Businesses looking to finance the purchase of new equipment
|Startups and newer businesses looking for small amounts of capital (less than $50,000)
|Businesses that regularly invoice clients and have capital locked up in large outstanding invoices
|Merchant cash advance
|Seasonal businesses that take card transactions and need quick access to cash
|Commercial real estate loan
|Businesses looking to expand, renovate, or purchase commercial property
|Personal business loan
|New business owners with good personal credit looking for small amounts of funding
|Business acquisition loan
|Business owners looking to purchase an existing business, buy a franchise, or buy out a business partner
Depending on the type of loan you’re applying for and the lender you’re applying with, there are different requirements you must fulfill in order to be approved. Traditional loans from banks or credit unions and loans guaranteed by the SBA generally have stricter requirements, while online lenders may offer greater flexibility. However, all lenders typically consider a number of factors, including credit scores, business history, financial status, debt, and more.
Below, we’ve listed some common business loan types along with their major requirements.
|Business plan, financial history, personal credit score, business credit score
|Traditional term loan
|Personal credit score, business credit score, in business for at least two years, collateral
|Online term loan
|Revenue, in business for at least one year, credit score
|Business line of credit
|Business credit score, personal credit score, revenue
|Business plan, personal credit score
|Equipment as collateral, personal credit score, in business for at least one year
|Financial strength and payment history of customers, credit score, in business for at least one year
|Merchant cash advance
|Annual sales of at least $50,000, two years of credit card sales history
|Personal business loan
|Personal credit score and personal financial history
|Business plan, personal credit score, business credit score
|Commercial real estate loan
|Net operating income, personal credit score, business credit score, in business for at least one to two years, financial history
When evaluating business loans, interest rates will play a big part in your decision process. Ultimately, the interest rate on a loan will be the bulk of the cost to the loan, in addition to various fees that lenders charge. Interest rates can vary by type of loan and by lender, and depending on the financial standing of your business and your personal credit score, you may be offered varying rates.
|Type of Lender
|Average Interest Rates
|Banks or Credit Unions
|1.7% to 5.4%
|Alternative or Online Lenders
|4.8% to 30.1%
It’s important to understand how interest rates work, and how you can make an apples-to-apples comparison between lenders as you are shopping for a business loan. Take a look at our guide on business loan interest rates, and learn about the types of interest rates you’ll see, common fees that lenders charge, and the different factors that affect interest rates.
There can be a lot involved in securing a small business loan, and you’ll want to make sure you’re doing your due diligence to get a loan that fits your business’s needs. A little bit of upfront work can help you avoid potential headaches in the future, not to mention save you money in interest rates and fees. Follow our basic seven-step guide to learn how you can get the right loan for your business.
- Determine your goals for the loan.
- Explore the different types of business loans available.
- Compare small business lenders.
- Understand the requirements to qualify for a business loan.
- Calculate the cost of a loan and determine affordability.
- Gather documentation.
In order to determine the best small business loans, AdvisorSmith considered a number of factors that reflect a lender’s financial strength, customer satisfaction, and ease of use. Using our own proprietary scoring algorithm, we weighted the various factors based upon what we believe to be important for small and midsize business owners. These factors included ratings, reviews, and complaint data from the Better Business Bureau, Trustpilot, and other online review platforms; an evaluation of each lender’s financial solvency; a deep dive into lender products, options, application processes, and website features; and more. While we considered a number of lenders, we only included in this article the top choice in each category.
The AdvisorSmith rankings are based upon our editorial team’s quantitative and qualitative analysis, and they are intended to serve only as a guide for our readers. We encourage our readers to conduct their own research when selecting a lender, shop and compare quotes, and make a decision based on their own unique business needs.
AdvisorSmith is in no way compensated for any of our reviews.
Funding for your business is crucial, whether you’re trying to make it through a slow period or going through an expansion. And finding the right loan for your business, along with the right lender, can be a critical part of your business’s success. Luckily, there are a variety of lenders and financing products out in the market that can help your specific business achieve its goals. Take the time to understand your business’s financing needs, research and compare lenders, and select the best loan for your business’s needs.