Best Small Business Loans

Compare the best small business loans side-by-side

What is a business loan?

A business loan is a source of capital secured from banks, credit unions, or online lenders to launch, grow, or expand your business. Compared to personal loans, business loans are granted in higher amounts with longer repayment terms. Business loans also typically require more detailed paperwork, including financial statements and business plans.

Different small business loan lenders have different terms, fee structures, and interest rates. It’s crucial to carefully review your loan agreement and understand all the costs associated with a loan, including interest rates, origination fees, and any other additional charges, before accepting the loan. Some loans may have lower interest rates but higher fees, and vice versa.

Your business has access to two business loan options. The first is a traditional bank loan. But if your business struggles to qualify for a regular loan, you might consider a government-guaranteed loan offered by the Small Business Administration (SBA), called an SBA loan. In the fiscal year 2022, the SBA provided $43 billion in funding to small businesses, approving over 62,000 traditional loans to entrepreneurs and business owners like you.

Because of their guaranty, SBA loans help lenders mitigate certain reasons they would typically not be willing or able to make a loan, explained Lynette Lambert, Assistant Vice President, SBA Department at Security Bank. By backing the loan, the government guarantees a portion of the loan, lowering the lender’s risk.

How do small business loans work?

Small business financing provides flexible options to support your business and come in varying sizes, from $5,000 to $6 million. The application process for these loans is typically very straightforward, with an expedited approval time frame. The online lenders we’ve identified regularly expedite the approval process to one to three days.

While most reputable business loans offer flexibility, allowing you to allocate funds according to your business needs, some loan types indicate usage criteria like commercial real estate or equipment loans. For instance, equipment loans are designed explicitly to buy and maintain business equipment, serving as a specialized financial tool to enhance your business operations.

Small business loan types

• Equipment Financing: A loan for acquiring essential business equipment, with the equipment serving as collateral. The loan amount is based on its value.
• Invoice Factoring & Financing: Selling outstanding invoices at a discount to a third party for quick cash and relief from collecting outstanding payments.
• Line of Credit: Revolving funding accessible over a designated time frame.
• Merchant Cash Advance: This is not a traditional loan, but operates similarly. You receive a lump sum and repay it as a percentage of your daily or weekly credit card transactions.
• SBA Loan: Small Business Administration-backed term loan for small businesses, offering lower interest rates and extended repayment terms.
• Term Loan: a lump sum with a fixed period for repayment. Also known as a traditional loan or traditional financing.
• Working Capital Loan: like a merchant cash advance but an actual loan, with more flexible payment options that aren’t dependent on your credit card sales.

The following chart will help you understand the types of small business loans our vetted lenders offer.

Loan Type	SMB Compass	Biz2Credit	BlueVine	Fundbox	Funding Circle	OnDeck	QuickBridge	SBG Funding	SmartBiz
Equipment financing	✅	❌	❌	❌	❌	❌	❌	✅	❌
Invoice financing	✅	❌	❌	❌	❌	❌	❌	✅	❌
Line of credit	✅	❌	✅	✅	✅	✅	❌	✅	✅
Merchant cash advance	❌	❌	❌	❌	❌	❌	❌	❌	❌
SBA loan	✅	❌	❌	❌	✅	❌	❌	✅	✅
Term loan	✅	✅	❌	❌	✅	✅	✅	✅	✅
Working capital loan	❌	✅	❌	❌	❌	❌	✅	❌	❌

Requirements for small business loans

Eligibility requirements for a small business loan typically include the following items.

Annual Revenue

Lenders expect your business to generate a certain income level. Startup business loans without revenue are harder to secure. Here are some examples from the lenders on our list:

• BlueVine – $480,000 annually
• Fundbox – $100,000 annually
• OnDeck – $100,000 annually

Credit Score

Your credit score is a critical factor in the evaluation process, reflecting your reliability in repaying the loan. On average, most business loans require a credit score of around 600. However, here are some lenders from our list with lower credit score thresholds:

• SBG Funding – 500 minimum
• Biz2Credit – 525 minimum
• QuickBridge – no requirement, considers all credit scores 

Time in Business

Lenders assess your business’s longevity and requirements usually range between six months to a year. Here is a sampling of this requirement from our selected lenders:

• SBG Funding – six months
• Biz2Credit – six months
• Fundbox – six months
• Funding Circle – two years

How to get a small business loan

Deciding on the right lender for your business loan is the first step. To begin, you must identify the types of financing that suit your needs and then research which lenders offer that type. It’s also essential to consider factors like the urgency of your financing requirements and your overall financial health. The following steps will walk you through the application process:

Application: Many online lenders, such as Biz2Credit, have streamlined application processes, some boasting applications that can be completed in as little as four minutes.

Documentation: When applying for a small business loan, it speeds up the application process when you have all the necessary information and documentation ready.

When asked about the application process, an Assistant Vice President of the SBA department at a privately owned community bank told us, “The process can be quick – or it can drag out if the borrower doesn’t pull the information together. As a lender, when a borrower can’t provide the information needed in a timely manner, the focus will shift to another borrower that is responsive to what is needed to process their loan.”

Most applications will ask for some or all of the following:

• Business name, address, and tax ID
• Name, address, social security number for each partner/owner
• Time in business
• Your accessible credit score
• Three months of recent business bank statements
• Three months of recent personal bank statements
• Tax returns
• Profit and loss statements
• Collateral information

The lender we spoke with advised it’s better to be over-prepared than underprepared. She said it’s a good idea to create a short business plan for the lender, informing them about you, the owner, how your company plans to compete, who runs day-to-day operations, how much money is needed, and how much of your own money you’re putting into the project.

Approval Process: The speed of approval can vary, but online lenders, like Biz2Credit, often provide quick turnaround times, sometimes approving loans within as little as 24 hours. Try not to worry – small businesses have promising approval rates, with 63% successfully securing the capital they need, according to a survey from UpCity.

Loan Closing: Once approved and all terms and conditions are agreed upon, you and your chosen lender will sign the necessary documents to formalize the loan agreement. The rate at which you receive the funds varies. Check out the following sampling of time to funding from our researched lenders:

• SBA loans – within one week
• OnDeck – same day
• BlueVine – same day

“When a borrower can’t provide the information needed in a timely manner, the focus will shift to another borrower that is responsive to what is needed to process their loan.” 

Small Business Loans Frequently Asked Questions (FAQs)

Can you get a small business loan with bad credit?

Getting a small business loan with a poor credit history is completely possible. Check with vendors such as QuickBridge, which considers all applications regardless of credit score, or SBG Funding and Biz2Credit, who have a lower credit score requirement in the industry.

How do I qualify for a small business loan?

Ultimately, the lender decides if you qualify for a business loan. You can help swing this decision in your favor by applying with lenders whose lending criteria match your financial situation, diligently completing their application, and ensuring you submit all requested documentation promptly.

Which loan is best for small businesses?

The key to identifying the best small business loan is considering your specific requirements, including how quickly you need funds and what you need the funds for.

Methodology: How we choose the best business loans

​​To curate our list of preferred business loan lenders, we started with a list of 33 well-known online lenders. These lenders had to offer at least $150,000 in loans, provide quick funding within a week of loan approval, don’t require businesses to be older than two years, and accept credit scores 660 and lower.

We further evaluated these lenders on:

• Lender Requirements: how easy it is to qualify for a loan.
• Lender Offerings: types of loans available, loan amounts, and how fast the funds are disbursed.
• Lender Transparency: how they present their rates and fees.
• Brand Reputation: reviews and ratings from experts and customer reviews.

We use a comprehensive scoring system, graded on a scale from 1 (unsatisfactory) to 3 (outstanding) across the following four categories, each contributing 25% towards the overall assessment. Our goal throughout this process is to provide business owners and entrepreneurs with the information they need to make informed decisions when seeking small business loans from these online lenders.

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Disclaimers

All loan offers and qualifications require credit approval and are subject to change with or without notice.

Loans are made by FC Marketplace, LLC dba Funding Circle and arranged pursuant to Nevada Installment Loan Company License No. IL11154 and IL11155, California Financing License No. 6054785, North Dakota Money Broker License MB 102840, South Dakota Money Lending License MYL.3054, Vermont Commercial Lender License No. 1287979 CLL, and Florida Consumer Company License CF9901099. Partner Loans are made or arranged pursuant to their applicable lending license(s).

1 Rates, terms and maximum loan amount may vary according to the overall creditworthiness of the applicant and financing product selected. To see what your business may qualify for, apply today at no obligation.

2 The minimum FICO score requirement for a term loan with Funding Circle is a 620 personal FICO score of the business owner. If there is more than one business owner, then at least 50% of the business ownership must have a FICO score of 620 or greater.

3 Approval and funding times may vary by lending partner and financing product selected.