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Best Small Business Loans

Economic conditions and changes in government and banking regulations mean that now is the best time to get a small business loan in the past decade. There are more lenders and the traditional lending institutions are looking to spend more on small business loans going forward. The result is that savvy small business owners will strike while the iron is hot in order to take advantage of the unique alignment of conditions and factors to get an influx of capital for their small business.

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Charting the Best Small Business Loans of 2019

While the time is right to get the best deals on small business loans, that doesn’t mean that getting a small business loan is a walk in the park. You still need to do your research to find the small business lending solution that works for your company.

The addition of online lenders and peer-to-peer lending networks has dramatically changed the small business loan industry. These new businesses have helped to fuel an increased drive at traditional lenders to give out small business loans, increased the overall number of small business loans available on the market, and enhanced the competition among small business lenders means that loans are cheaper than ever.

Top Ranked Peer-to-Peer Loans

When it comes to the new small business loan type, peer-to-peer networks, we’ve picked out the top three so that you don’t have to waste your valuable time going from site to site to find the best lending option for your business.

A peer-to-peer lending network works by assembling a group of investors for the purpose of providing small business loans. The way these companies are structured gives them greater flexibility when it comes to the loans they offer, and they are more likely to consider things other than your credit score when making determinations about whether or not to lend you money. As a result, many small businesses will find it easier to obtain a loan if their business fundamentals are good or if they have a solid and appealing business plan.

Our Top Ranked Peer-to-Peer lenders are:

Top Ranked Direct Lenders

Direct lenders are closer to the traditional loans you would expect from a bank. The difference between banks and most modern direct lenders is that the modern lenders operate entirely online. Therefore, they are able to provide loans at lower interest rates and APRs than traditional banks because they don’t have nearly as much overhead as banks do. They lack a brick and mortar building to maintain, and have fewer employees.

In addition to these qualities, modern online-only direct lenders also use automated processes to make the decision speed for your application much quicker, and they can disburse funds faster than banks can, making them more appealing to businesses that need a fast capital infusion.

Our Top Ranked Direct lenders are:

Peer-to-Peer Small Business Loan Rundown

As stated before, peer-to-peer networks connect a business with a series of investors who treat the loan as part of an investment portfolio. This makes them more flexible than traditional lenders, and means that they will consider more factors when deciding on your creditworthiness.

Funding Circle


Funding Circle got its start in the UK and opened its doors to the US in 2013. They offer loans from $25k-$500k, and offer rates from 5.49% to 27.79%. The terms on their loans are pretty flexible and they span from 1-5 years.

Loans from Funding Circle incur only two fees, a flat origination fee that runs from 1.49% to 4.99%, and a flat late payment fee. The late payment fee equals 10% of the missed or late payment. In order to qualify for a loan from Funding Circle you must do at least $150k in business every year, and have been operating for at least two years. You will also have to provide personal and business tax returns, as well as business bank records when you apply. If your loan is more than $300k, be prepared to provide even more paperwork.

Businesses in operation for more than two years that need a bigger loan than Lending Club offers make good candidates for a Funding Circle borrower. They operate in every US state with the exception of Nevada, and are also a good choice for businesses that prefer a simple fee structure.

Newer businesses and those that make less than $150k per year should look elsewhere for their small business loan. Additionally, you should come prepared with the paperwork you need or the application process will take much longer than you expect it to.

Lending Club


Lending Club has been offering small business loans since 2014. The company started out offering unsecured personal loans, so their small business offerings represent an expansion for this increasingly successful network.

In order to qualify for a small business loan from Lending Club you must have been in business for at least two years and do at least $75,000 in annual revenue. You can get a loan ranging from $15k- $30k with flexible terms ranging from 1-5 years. The interest rates you’ll get run the gambit from 5.99%-35.89%. A better credit score will help you get the most favorable APR.

Lending Club does have some fees that small business owners should pay attention to. There is an origination fee that ranges from ~1%-6%, returned checks incur a $15 fee, and a late payment costs $15 or 5% of the outstanding balance, whatever is greater.

Lending club is an excellent choice for established small businesses that can take advantage of flexible repayment terms and are interested in working with one of the longest running peer-to-peer lenders.
Businesses that haven’t been open for two years or more, or those that do less than $75k in annual revenue should probably look elsewhere when it comes to small business loan funding. Moreover, Lending Club doesn’t do business in West Virginia or Iowa.

Prosper


Prosper is a peer-to-peer lending network that is closer to Lending Club than it is to Funding Circle. While Prosper doesn’t have a specific small business loan product, they do offer unsecured personal loans that can be used for your small business.

Prosper offers loans up to $35k, and because they are unsecured personal loans they don’t have limitations on how long you need to have been operating. The APR on a Prosper loan runs from 5.99% to 32.99%. Loans receiving funding in up to two weeks, and the only term options are three or five years.

Prosper is the best choice for new businesses and those that don’t have the revenue or history needed to qualify for a small business loan with one of our other top-ranked peer-to-peer network lenders. They are also one of the largest and best established online lenders, so they can be a good option for those who are concerned about the security of online lending.

Small business owners who don’t want to use their personal credit won’t find Prosper very appealing. Moreover, the longer wait and restrictive term limits will turnoff other businesses, so their range of appeal is somewhat limited.

Direct Lender Small Business Loans Rundown

Direct lenders fund your business directly from the company, rather than assembling a list of investors like peer-to-peer networks. As a result, they operate much closer to traditional banks, and can fund loans more quickly than peer-to-peer networks. Direct lenders will also work with a wider range of businesses in terms of how long they need to have been in business. One drawback to these types of lenders when compared to peer-to-peer networks is that they tend to have a higher APR.

OnDeck


OnDeck has the capacity to lend as much as $500k in as little as 24 hours. They don’t require nearly as much paperwork as many of the peer-to-peer lenders, but the APR will be higher and the term will be shorter, with a max length of two years. You will need to have been operating for at least one year, and do $100k in revenue.

OnDeck has two different small business financial products. The first is a line of credit, which are mostly offered to businesses that have been operating a bit longer. The APR on these runs from 13.99% to 39.99%. OnDeck doesn’t list the terms for its term loans. Instead they frame the terms as a fixed amount per dollar borrowed. The APR this can translate to can be rather high, so make sure you understand what you’re agreeing to.

Businesses that need capital in a hurry are the best candidates for a loan from OnDeck. However, they had better be prepared to pay the loan back quickly as well. Businesses that have been open for less than two years are also potential candidates, but they should be prepared to pay more for the loan.

Businesses that can get offers from less expensive lenders will probably want to pass when it comes to OnDeck. Their loans are large and fast, but you’ll pay a premium for them.

Kabbage


Kabbage is one of the best lenders if you need an infusion of capital in a hurry. Businesses can get up to $150k almost instantly. All that is required is a simple application, a business checking account or a PayPal account. Kabbage might request information from other business channels you use like Quickbooks, Amazon, or eBay.

Something to keep in mind is that the repayment term for these loans is only six months, so you should be prepared to pay the loan back quickly. You’ll also pay rates that work out to as high as 90% APR.

Kabbage can be a good option for small online businesses that have problems getting funding from other lenders, and those that need cash in a hurry and are confident they can rapidly repay the loan.

Bigger businesses and those that don’t need immediate cash should look elsewhere before using Kabbage because the cost you’ll pay for the loan will be so high.

Fundation


Fundation has two different options for business loan products. They offer an operating capital loan of up to $150k, and business expansion loans up to $500k. The interest rates on their products range from 7.99% to 25%. Working capital loans have terms from one to two years, and expansion loans range from two to four year terms.

Funding can be disbursed in as little as three days, but you should be prepared to pay an origination fee of 3%. They require a more comprehensive application than other lenders, and your business will need to be at least two years old in order to qualify for funding. You will also need two full time employees other than yourself.

Fundation offers loans in all 50 states, and so many businesses can benefit from them. They’re best if you need cash in a hurry, and are looking for lower additional costs.

Fundation isn’t the best choice for new businesses or any sole proprietorships, as these businesses do not meet the qualifications. If you don’t want to spend a lot of time on an application, then you also might consider looking somewhere else for your small business loan.

Places to Find Small Business Loans

In addition to the lenders above, there are other places that you can check for small business loans. These institutions have their own set of advantages and drawbacks when it comes to securing funding for your small business.

Banks

When you need to borrow even larger sums of money for your business, banks are the best place to go to. Brick and mortar banks can offer substantial amounts of funding reasonably quickly, and have longer repayment terms. Moreover, because the process isn’t as automated, you’re more likely to be able to get a more flexible schedule on your loan terms.

The problem with bank loans is that they usually require large amounts of collateral, which isn’t as desirable as the unsecured loans that direct online lenders and peer-to-peer lenders offer. Moreover, banks don’t make as much money on small business loans as they do on other kinds of financial products, so they don’t give out as many loans. The application and approval process can also be intimidating for many small business owners, as you’ll be required to have far more paperwork, and will have to have a large down payment – as much as 30% or even more in some cases.

Credit Unions

Credit Unions are becoming an increasingly popular alternative to banks for small business loans and other financial products and services. They approve a higher percentage of small business loans than banks do, and they have competitive rates compared to banks. Sometimes, the rates are even lower because credit unions are non-profit institutions and thus don’t have as much overhead or the need to generate money for shareholders.

One of the drawbacks to credit unions is that you’ll have to be a member of the credit union in order to secure a loan. Usually membership isn’t that hard to come by, but credit unions are even more likely to prefer working with established businesses than other lenders.

SBA Loans

The Small Business Administration is a government agency that doesn’t offer loans directly, but it does secure loans by banks to small businesses if they meet certain qualifications. Because these loans are secured by the government businesses can be confident they’ll get a great deal on them relative to other loans. The government backing means the loan isn’t as risky, so you can get much lower SBA loan rates.

There are some limits and drawbacks with SBA loans, however. They can take a while to get approved, sometimes as long as two years. The application process is tedious and there might be caps on and limitations regarding how the money is used.

Online Small Business Lenders

Online lenders are a growing option for small businesses that can’t get loans through other channels. These lenders offer speedy service and flexibility on terms and requirements. They can come in the form of direct lenders where the money comes directly from the institution, or from a peer-to-peer network where the loan is funded by a collection of investors. Additionally, many of these lenders require that the owner personally guarantee the loan, which puts individuals at risk as well as businesses.

Best Advice for Getting a Small Business Loan

When it comes to getting a small business loan, there’s no such thing as a sure bet. You can increase your chances for success by following these steps.

Personal Credit


Make sure your personal credit history is as clean as possible. This will help demonstrate that you know how to manage money and make your business a more appealing option for lenders and investors. Newer businesses might also consider taking out a personal loan to start their business, in which case the decision will be made solely on your personal credit.

Business Plan


Make sure you’re clear about how you plan to operate and get the loan paid back. This will help lenders and investors have the confidence they need to decide your business is a good bet. Make sure you have all of your documentation and explain how you’re going to beat the competition.

Do Your Research


Savvy business owners know that you should always evaluate your options, and small business loans are no different. Check out several different sources for funding so you can compare the rates and terms and make the decision that’s best for your particular business situation. Head to our business loan calculator page to see more information.

Pick the Right Lender


Make sure you know what kind of lender you want to work with. If you’ve been doing business for a while then you may consider a bank for your first choice, whereas a new business will want to look for different business funding channels.

Best Small Business Loan Ranking Methodology

You should know how we decided on the businesses we did for our Top-Ranked Small Business Lenders, so we’ll explain our criteria and methodology here.

Loan Amounts

We checked how much money different lenders were willing to offer, and favored those that had higher limits so that businesses can be confident they’ll have access to all the capital they’ll need for their loan.

Transparent Requisites

We heavily penalized companies that don’t clearly state what the requirements are for the loan, as this can result in wasted time and energy for small business owners.

Solid APR

APR determines how much you’ll be paying for the loan overall, so the lower the APR, the better the deal on the loan. We looked into which institutions offered the best APRs to ensure the most value for your money.

Flexibility

Having different options for payment scheduling and term length can mean the difference between a loan being an aid or a hindrance. This is especially true for businesses with seasonal fluctuations and retail stores, so flexibility was favored.

Clear Terms on Website

Clear, transparent terms on the website means that a lender is upfront and allows you to understand what you’re getting into so you can plan accordingly. This planning and predictability is key for any business, and that’s doubly true for business loans and debt.

Fast Response

We also favored lenders that had a faster turnaround time from application to funding. More often than not, the faster a business gets access to the capital it needs, the faster it will be able to pay back the loan. Getting your money quickly puts you in a better position to take advantage of a favorable situation.

History

We also looked at the reputation of the various lenders and made sure they had an established track record when deciding who the top-ranked small business lenders of 2017 are.

Finding the Best Small Business Loans

Finding the right small business loan can be intimidating, but the infusion of capital for your business can help take you to the next level. Don’t let fear stop you from making the moves you need to set your business up for success. A well-thought-out and strategically used small business loan can mean all the difference in the world for any small business, so don’t let yours miss out on potential opportunities.

FAQ

Applying for Small Business Loans

Do you need to apply for a small business loan? In this section, you will find a list of commonly asked questions that will guide you through the application process, or increase your chances of getting approved.

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What is the best way to approach a credit union for a business loan?

You must first determine the amount you need for your business. Once you find a credit union to apply for, pinpoint exactly why you need the money and what you intend to use it for. Be specific and detailed. Then, choose the right type of loan to match the purpose for your loan.

What is the best way to present a business plan to a bank for a loan?

Your business plan should include the following to boost your chances of being approved for a business loan: executive summary, business profile, management experience, loan request, loan repayment, collateral, personal and business financial statements.

What is best reason for getting a business loan approved?

There is no such thing as best reason to increase your chances of small business loan approval. It is important to be honest about your intent for the loan and what you want to use the money for.

What is the best business loan rate?

Most business loans range in interest rate at 9.77% to as much as 35.71%. If you can get a business loan for an interest rate of below 10%, that is considered a good rate.

How to get the best business loan?

To qualify for a business loan with best interest rates, you must have a good personal credit score, must be operating as a business for over a year, with $50,000+ in annual revenue, and have no recent bankruptcies.

Why business loans are best for startups?

Business loans are ideal for startups to provide access to funding capital even when you do not have access to cash. You can use startup small business loans to purchase equipment, initial inventory, and other miscellaneous items for starting your own business.

How to get the best interest rate for a business loan?

To get the best interest rate on a business loan, it is important to have good credit history. A detailed business plan stating your type of business and purpose for the loan can also be leveraged to achieve favorable interest rates.

When is the best time to apply for a small business loan?

The right time to apply for a small business loan is just ahead of when you plan to use that money towards your business. This will give you enough time to submit and process your application and for the amount to be released in time for the intended use of it.

How to get the best rate on a business loan?

To find the best rate on a business loan, you need to do your research. Look for banks and lenders that can offer the lowest rates and then compare them if you can qualify. A good credit score and favorable financial history is also a bonus if you want to get the best rates.

What to ask when looking for the best rate on a business loan for a building expansion?

Before you apply for a business loan for a building expansion, it is a good practice to keep your credit score at its best shape. Make sure that your financial history is in good standing to get the best rate on your loan.

What is the best way to shop for a loan for my ongoing business?

If you have an existing business, you need to find loans that can boost your working capital. To shop around, you need to know exactly how much you need and what you need it for. Most loan providers will require businesses to provide a detailed explanation of what they are going to use the money for. Make sure that you provide this detailed growth plan for your business. Look for special programs you might qualify for too such as business loans for minority women.

How to get the best small business loan with bad credit and no collateral?

Qualifying for business loans for bad credit and no collateral is difficult. But you can devise a comprehensive business plan as part of your application to showcase a positive cash flow. It might be a good idea to improve your personal credit score first before you send in your application to increase your chances of approval.

What are the best questions to ask when applying for business loan?

When applying for a loan, it is best to ask what you can use the loan for. There are specific types of loans for different purposes so matching your need to the loan you are applying for will increase your chances of getting approved for the loan.

Where to Apply for Small Business Loans

So, you have decided to apply for a small business loan. The next step is to find a bank or lender to obtain your small business loan from. This section will provide the information you need to know.

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Which bank is the best for small business loans?

When looking for a bank to obtain small business loan from, choose ones with the lowest interest rates and or those that can offer a wide range of loan types to suit your unique business needs or size.

Where is the best place to get a business loan?

There are several options when you are in search of a business loan. Banks are the first and best option for those seeking small business financing. You can also apply for one from a credit union or other financing institutions.

Which lender is best for a business loan?

When comparing lenders for a business loan, opt for banks or lenders that can provide different types of loan and at reasonable interest rates. Some banks or lenders are keen to work with bigger businesses while others also specialize on small businesses. Make sure you find the right match.

Who has the best rates for business loans?

There are many banks and financial institutions that offer business loans for small businesses. Make sure you obtain many quotes and compare them thoroughly to find the best rates.

What is the best loan company for bad credit according to the better business bureau?

The Better Business Bureau has listed the following as one of the best-rated companies for small business loans: Premier Financial Group, Bank Reale, Pilgrim Bank, and True North Federal Credit Union, among others.

Which credit unions give the best deals on small business loans?

There are plenty of online and local credit unions that can offer small business loans. If you want the best deals, ask for a quote from each of these credit unions. It is also important to get pre-qualified so you can determine if you qualify and for what rate.

Where to get the best business loans for a new business?

When choosing where to get your business loan from, there are a few things you need to consider such as the qualification requirements, the amount of cash you need, and the interest rate. It is also a good idea to do comparison shopping so you can determine what the best fit for your business needs is.

Where is the best place to apply for business loan?

If you are looking for a business loan, these are the best banks where you can apply: Wells Fargo, JP Morgan Chase, US Bank, Capital One, and Bank of America.

Which bank is best for small business accounts?

If you want to start building credit for your small business, you can set up an account at Wells Fargo, Bank of America, Capital One, or Chase.

What bank has the best small business checking account?

If you want to open a business checking account, you can consider opening one from Chase, Citizens Bank, Wells Fargo, and Capital One.

How to choose the best bank for your business?

When choosing a bank to open your business account in, you must first determine your business needs. Once you determine your needs, you can match that with what your business can offer. Always consider large and small banks to do a thorough comparison. Check out the fee structures, too.

What is best small business online bank?

Chase is considered as one of the best online banks for small businesses looking for a traditional bank experience. It is the ideal choice for small business owners, especially since they have a formidable online and mobile banking system.

Types of Small Business Loans

There are several types of small business loans and each one is designed for a specific purpose or need. To help determine the right type of small business loan for your needs, find a list of questions and their corresponding answers in this section.

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What is the best loan for a small business?

The best type of loan for a small business will depend on the type of business you wish to operate. Each type of business will have different financing needs.

What is the best loan to start a business?

Microloans are great for small businesses, but if you want financing to facilitate your working capital then a business line of credit is a good option.

What is the best loan for making repairs and improvements to business property?

A business renovation loan is one of the most common types of loans provided for businesses. The funding is used for doing renovations and repairs to improve and enhance your business space.

What are the best startup business loans?

There are numerous types of business loans intended for startups. Among your options are venture capital, crowdfunding, equipment financing, SBA loans, and government grants, among others.

What is the best type of small business loan?

SBA loans are one of the best options for small businesses, especially startups. There are also four different types of small business loans to choose from to match your needs.

What are the best lowest interest small business loans?

SBA loans are your best option when it comes to lowest possible rates on business loans. The SBA can also guarantee up to 85% of financing with interest rates no more than 9%.

Which business loans are best for which type of needs and asset types?

There are several types of business loans to choose from. Term loans are for those who want cash upfront or if you want access to higher borrowing amounts. SBA loans are for businesses looking to expand. And a business line of credit is a short-term financing suited for businesses that need help managing cash flow.

What best business to start using micro loans?

Small business micro loans are the best option for businesses that are unable to secure a loan using traditional loan methods by the bank. Due to the limited funding, this loan type is best for small businesses that require small capital. 

What is the best and fastest small business loan?

Fast business loans are suited for businesses that need to fill short-term working capital needs. You can inquire in your bank and local credit unions if they offer this type of loan.

What are the best loans to build business credit?

When it comes to helping your business build its credit, the following are the best loans to pursue: Chase Business Term Loans, Citi Business Loans, and SBA Micro Loans.

Consolidation, business, or personal loan: which has the best rate?

The interest rate on your loan (regardless if it is consolidation, business or personal) will vary according to your personal or business credit. Thus, there is no way to determine which the best rate is for each of these loan types as it can differ significantly.

Which inventory loans are best for small business?

When comparing inventory loans for small businesses, consider whether you are looking for fast cash or want to improve your business cash flow. It is also important to look at the average APR and the amount of cash that can be provided for in the loan.

When paying a business loan is it best to pay toward the principal or the interest?

If you can pay more than your minimum payments on the loan, this will help to reduce the life of your loan. If you can shorten the life of the loan, you can lower the amount of interest that you pay. In most cases, any extra amount that you pay is added to the principal amount but you can also use it to pay off interest that has accrued on your account.

What is the best financing option for a business?

The choice of financing for your business will vary according to the type of business and your business needs. Some of the best types of financing available are SBA loans, commercial bank loans, and micro loans from credit unions.

How to choose the best financing option for a business?

Before you shop around for financing for your business, it is wise to consider your financing needs and. This will enable you to pinpoint what type of lender to choose and compare your needs to the amount offered, type of loan, and the requirements needed.