Are you a small business owner looking to find a loan to help you hire new talent, purchase equipment or inventory, or expand your business? Are you struggling to figure out which loan provider will meet your specific needs? Or, are you just totally overwhelmed with the number of choices and different options available?
No matter where you’re at in your small business loan search, read on, and see if you can find a small business loan that best fits your needs.
Overview of the Best Small Business Loans
Small business loan providers Best for Types of loans offered Max loan amount
BlueVine Line of credit Line of credit $250,000
OnDeck Access to fast funding Term loans, line of credit $350,000
Live Oak Personalized loan packages SBA, USDA, commercial loans, and more $5.5 million
Lendio Comparing different loans SBA, term loans, start-up loans, line of credit, and more $5.5 million
SmartBiz SBA loans SBA loans, bank term loans $5.5 million
Kiva Micro loans Micro loans $15,000
BlueVine is an online fintech company that provides banking services and financing to small and medium-sized businesses. BlueVine was founded in 2013 and has since helped over 200,000 small business owners.
A BlueVine line of credit grants your small business the flexibility of a revolving line of credit. This means you can use what you need and only pay for the amount you use.
To qualify for BlueVine’s line of credit, you will need to meet the following requirements:
- Minimum 650 FICO score.
- At least two years in business.
- $40,000 in monthly revenue.
Some key features of BlueVine’s line of credit service include:
- Fast approval process – as little as five minutes.
- Credit lines up to $250,000.
- Rates as low as 4.7%.
In addition to its financing options, BlueVine also offers additional services to small businesses, like the BlueVine checking account.
OnDeck is another online lender that helps small businesses get the funding they need to grow and succeed. OnDeck was founded in 2006 and since this time it has extended $13 billion to small businesses. They offer two different types of small business loans: term loans and line of credit loans.
OnDeck short term loans are a perfect option for small businesses that need money for a specific investment or purchase. OnDeck offers short term loans in the form of one-time lump sum payments. You then get to use the money as you see fit for your small business. You can work with OnDeck to find a repayment schedule that best fits your timeline.
To qualify for an OnDeck term loan, you will need to meet the following requirements:
- Personal FICO score of 600.
- Business bank account.
- Minimum of one year in business.
- Annual revenue of $100K.
Some key features of OnDeck term loans include:
- Access to loan amounts from $5,000 to $250,000.
- Repayment terms up to 18 months.
- Automatic daily or weekly payments.
- Same day payments.
- Transparent pricing.
- SBA approved lender.
- Term loans rates as low as 11.98% APR.
OnDeck’s business lines of credit offer revolving loans that allow small business owners to access a fixed amount of capital that can be used exactly when it is needed.
To qualify for OnDeck’s line of credit, you will need to meet the same requirements as those for a term loan.
Some key features of OnDeck line of credit include:
- Access to revolving credit.
- Access to the line of credit from $6,000 to $10,000.
- 12-month repayment terms that reset after each withdrawal.
- Lines of Credit rates as low as 10.99% APR.
- Access to instant funding.
- No prepayment penalties.
Live Oak claims to be on a mission to be America’s small business bank, so it’s no wonder they made the list for the best small business loans.
Live Oak Bank was founded in 2005 and is headquartered in North Carolina. As of writing this article, Live Oak Bank is the most active lender with the Small Business Administration 7(A) (SBA). This means that they have the greatest loan approval amount with the SBA.
Live Oak offers SBA backed loans, US Department of Agriculture (USDA) loans, as well as commercial loans. Live Oak will also do a combination of the SBA loan with a conventional loan or line of credit. They will work with small business owners to create a personalized loan package that best fits the needs of your small business.
To qualify for a Live Oak SBA loan will need to meet the following requirements:
- Personal credit score of 650+.
- Meet standard SBA loan requirements.
Some key features of Live Oak SBA loans include:
- One of the most active lenders with SBA 7(A).
- Will work with you to create a personalized loan package.
- Assigned to an SBA business analyst who is there to provide business guidance.
- Interest rates are Prime plus lender spread.
Lendio is an online marketplace for small business loans. It was founded in 2011 and is based in Utah.
Lendio offers a huge array of different loan products including SBA loans, short-term loans, and business lines of credit. Lendio offers a super-fast application process that can be completed within 15 minutes online. Once your loan has been approved, you can access your capital in as little as 24 hours.
Lendio also offers small business owners access to over 75 lenders on their online marketplace so you can truly find the loan that is right for you. And, if you feel like you will be overwhelmed by the sheer number of lender options, you can always reach out to a Lendio fund manager.
Because Lendio is a marketplace for small business loans, the loan criteria will vary based on the type and amount of loan you are looking for.
Some key features of Lendios SBA loans include:
- Access to up to $500,000.
- Loan term of 10-30 years.
- Can get access to funds in one-two months.
- Interest rates are Prime plus lender spread.
Some key features of Lendio Business Line of Credit Loans include:
- Access to a loan amount between $1,000 – $500,000.
- One-two year loan terms.
- Can get access to funds in as little as one-two weeks.
- Interest rates as low as 8%-24%.
SmartBiz is an online marketplace that specializes in low-cost financing for small businesses. SmartBiz is there to help guide small businesses through the financing process. Using their online platform, they help match small business owners with the SBA and bank term lenders.
SmartBiz was founded in 2009 and has since served more than 20,000 small businesses. They are also the leading online network for SBA loans and their network has been used to process more than 10% of the entire country’s volume of SBA 7(a) loans for under $350,000.
Most businesses that qualify for an SBA loan in the SmartBiz network meet the following criteria:
- More than $100,000 in annual revenue.
- Profitable and cash flow positive.
- Cash flow to support loan payments.
To qualify for a SmallBiz bank term loan you must meet the following criteria:
- More than two years in business.
- Must be a U.S. citizen or legal permanent resident.
- Personal credit score above 660.
- Cash flow to support loan payments.
- NO bankruptcies or foreclosures in the last three years.
- NO outstanding tax liens.
Some key features of SmartBiz SBA loans include:
- Loan amounts between $30,000 to $5 million.
- Repayment terms between 10-25 years.
- Interest rates between 4.75% – 7.00%.
Some key features of SmartBiz bank term loans include:
- Loan amounts of $30,000 to $500,000.
- Two-five year repayment terms.
- Fixed interest rates from 7.99% to 24.99%.
- Monthly repayments.
- No prepayment penalties.
Kiva is an international not-for-profit organization that helps to fund low-income entrepreneurs and students through microloans. Kiva was founded in 2005 in San Francisco with the goal to expand financing to underserved communities. They do this through crowdsourcing. People from around the world can go onto their site and lend money to help small businesses thrive.
Since their inception, Kiva, with its 1.9 million lenders, has helped 3.7 million borrowers in 76 countries get access to $1.5 billion in loans with a repayment rate of 98.5%. Very impressive! Another amazing fact: over 81% of Kivas borrowers are women.
To qualify for a Kiva loan you must meet the following criteria:
- Must be based in the U.S. – both you and your business.
- 18+ years old.
- Loan must be used for business purposes.
- Must demonstrate social capital by having a few friends or family members make a loan to you.
- Businesses can not currently be engaged in multi-level marketing (MLM) or direct sales, illegal activities, or pure financial investing.
- Can not currently be in foreclosure, bankruptcy, or under liens.
Some key features of Kiva loans include:
- Up to $15,000 in loans.
- 0% interest – yes, you read that right!
- Up to 36 months to repay your loan.
How I Came up with This List
In coming up with this list, I looked at a wide number of small business lenders including banks, online marketplaces, the Small Business Administration (SBA), and even not-for-profit lenders. I focused on the following:
- The type of loan options that were provided.
- The company’s history.
- How focused they were on supporting small business owners specifically.
- The number of small businesses they’ve supported.
- The company’s overall mission.
I also tried to find a variety of different lenders that offered different loan products to suit the different needs of small business owners who are at different points on their business journey.
When it comes to taking out a small business loan, it is up to you to decide what type of loan and which lender is right for you. Be sure to do your homework. You are the one taking on the responsibility of a loan so make sure that you know exactly what you are getting into. If you feel unsure about your decision, you can consider reaching out to a financial professional to help you through the process.
Why You Should Use a Small Business Loan
A small business loan is a good tool for many small businesses that may need additional financing for a variety of reasons including:
- Working capital.
- Purchasing equipment or inventory.
- Consolidating debt.
- Credit building.
- Hiring new employees.
Most Important Features of a Small Business Loan
It’s important that you do your homework and find a loan provider that is a good fit for you and your business. You can decide if you want to work with a big bank, an online provider, or maybe a not-for-profit lender is the right choice for your needs.
How much money do you need? This will help you to determine the type of loan and the lender that you want to go with. A small, one-person startup looking for a micro-loan of $750 has very different needs than a more established small business that is hoping to get financing for $4.5 million.
How quickly do you need access to the funds? There can be a large amount of variation between lenders when it comes to the speed of the application process as well as how quickly you can access the loan once you have been approved. If you need access to money immediately, there are lenders that can fill that need, but, you may have to compromise on higher borrowing rates.
While the interest rate should not be the only factor you consider when choosing a loan for your small business, it is an important one. Loans offered by banks backed by the SBA typically come with lower interest rates than conventional business loans. This is because banks that are part of the SBA loan guarantee program are guaranteed to get a portion of their loan back should a borrower go bankrupt or default on their loan payments.
You should also be aware of any additional fees attached to the loan. Make sure you inquire about the following:
- Origination fees – upfront costs charged by the lender to cover the cost of servicing the loan.
- Application fees – this is a fee covered by some lenders for just applying for a loan.
- Other fees – there could be other fees like monthly fees, late fees, and early repayment fees. Be sure to ask for a complete breakdown of all of the fees included with the loan.
Make sure you compare repayment terms between lenders. How quickly do you need to repay your loan? What does the repayment schedule look like? Can you pay off the loan early, or are there early repayment penalties?
What are the Different Types of Business Loans?
There are a number of different types of loans available to small business owners including:
- Small business loans (SBA) offer a variety of different loans to small businesses.
- Lines of credit offer revolving credit that allows you to use the money as it is required.
- Short term loans are a good option if you need access to funding fast.
- Term loans usually come with a fixed interest rate or flat repayment fee.
- Business credit cards can be easy to qualify for providing you have a good credit score.
- Accounts receivable financing, also known as factoring, allows you to borrow against your unpaid invoices.
- Equipment loan financing is very useful if you need to purchase equipment.
- Start-up loans can provide the capital you need to get your business off of the ground.
- Merchant cash advances borrow against your future earnings to secure financing.
Business Loans Funding Alternatives
In addition to the variety of types of business loans that are available there are also a number of alternatives you can investigate including:
- Bootstrapping – this is a scrappy approach to funding a small business. Ask your friends, family, and dip into your savings. You do what you need to do to fund your business.
- Crowdfunding– put your business idea out there to the public and see if they think it’s worth funding.
- Peer-to-peer lending – also known as social lending, allows individuals to borrow and lend money to each other.
- Angel investments – investments from individuals or firms who see potential in your start-up and want in.
How Do Small Business Loans Work?
A small business loan works by having a lender give money to a business owner and then the business owner pays back the loan with interest over a specified period of time.
To take out a business loan, you will need to meet the qualification criteria of the specific lender you are borrowing from. This typically involves questions around how long you have been in business, annual revenue, cash flow, and credit score.
Each lender and type of loan comes with its own details in terms of how much money you can borrow, the borrowing rate, and the repayment terms.
How to Apply for a Small Business Loan
Each lender will have specific criteria for the minimum requirements that must be met by lenders in order to be eligible for a loan. The documentation that is required during the application will also vary. When looking for a small business loan, it’s a good idea to research the different lenders’ criteria before you apply to give yourself a better chance of success.
The first thing you will want to do when applying for a small business loan is to research the lending options. What type of loan do you want? How much money do you need to borrow? How quickly do you need access to funds? All of these questions will help to narrow down the type of learner you should be looking for.
Once you have an idea of what you need in terms of a loan, you can begin to research the application criteria required by lenders. Each lender’s specific criteria will vary but some of the main things they look at are:
- How long you have been in business.
- Annual revenue.
- Cash flow.
- Credit score.
Next, you will want to have all of the necessary documentation required to apply. Again, what is required will vary based on the lender and type of loan but may include:
- Business plan.
- Credit score.
- Bank statements.
- Drivers license.
- Tax returns.
- Balance sheets.
At this point, you are ready to apply! If you are meeting with someone at a traditional bank, you can call and make an appointment. Alternatively, if you are applying online, many lenders have a quick application process that can be completed from the comfort of home.
A small business loan can be a great option for those needing access to working capital to hire new talent, purchase inventory, or expand your business. There are a ton of lending options available to suit the needs of your small business.
From micro-loans to help the solopreneur turn their awesome idea into an actual business, to multi-million dollar lending options to help established businesses expand to the next level. However, not all loans are created equally. It’s important that you do your research, compare lenders on a variety of criteria, and choose the lending option that will truly benefit the needs of your small businesses so you can continue to grow and succeed.