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A small business loan is a financing tool for a current or aspiring business owner to borrow funds to purchase, operate, or improve a small business. They give small business owners the funds needed to invest in and grow their business and could mean the difference between closing down or staying in business. They can also help relieve some financial stress on the business owner by freeing up cash and helping to meet the needs of their business or even expand into a larger space or multiple locations. Rates, terms, and requirements vary by the type of loan and the lender offering it.
We reviewed more than a dozen small business loans and compared them based on the type of loans offered, the application process, loan requirements, terms, loan amounts, and more. Keep reading to find out more about which small business loan is right for your growing business.
Best Overall : Kabbage
Why We Chose It: Kabbage offers financial solutions especially built for small businesses and is technologically driven with flexible funding.
Easy application process
An app makes accessing your loan account easy
Minimum time in business requirements
Kabbage was founded in 2008 as an online platform that connects small businesses with cash flow solutions using technology. It was recently acquired by American Express and now has a new servicing platform called K Servicing to manage and make payments on your loans entirely online.
The company offers lines of credit for small businesses and also has checking accounts and payment processing services. It has a simple application process with less paperwork and more lenient requirements than a typical bank. Its goal is to get small businesses the funds they need in an uncomplicated and timely manner.
You can apply for a loan online and receive approval quickly. You must be in business for at least one year and have a business checking account to qualify. Loan terms are typically between six and 18 months and there are no prepayment penalties or hidden loan fees. The limit of your credit line will depend on your revenue, creditworthiness, and other factors. Credit lines can be between $1,000 and $150,000.
The company has mixed reviews that lean positive. Customers like the website, credit line product, and the helpful small business resources, but some customers complain about the lack of responsiveness from customer service agents. In addition to small business lines of credit and its checking and payment products, Kabbage offers resources for small business owners with customer stories, helpful tips, and cash flow insights.
Best for SBA Loans : Fundera
Why We Chose It: Fundera offers multiple SBA loans with an informational section on how to apply and cost breakdowns.
Lots of different types of small business loans to choose from
Accounting, legal, human resources, and other services offered on the site
Apply for SBA loan directly on the site with multiple SBA lenders
Minimum credit score of 680 is required for SBA loans
Some loans require collateral such as real estate or equipment and in some cases your inventory
Not a direct lender so you’re dealing with different lenders
Fundera is an online loan marketplace for small business owners. It specializes in Small Business Association (SBA) loans, as well as term loans, equipment financing, lines of credit, business credit cards, and more. It was founded in 2013 and instead of lending money itself, it connects small businesses with the best loan options on the market. It works with top SBA lenders to offer the SBA 7(a) loan, 504 loans, and microloans.
You fill out one simple loan application and compare dozens of loan options at once. The company then pairs you with a lending specialist to learn more about your business and which loans would be the best fit. You get to compare the loans and then choose the one you want to go with. Your loan specialist stays with you for the duration of your loan and even helps you find better loan products as your business grows.
Loan rates, requirements, and terms vary but expect to have a repayment term from 10 to 25 years for a 504 loan. The maximum loan amount is $5.5 million and the interest rate is the rate of the 5- to 10-year Treasury plus 2.23% to 2.39%. Fees are typically 3% of the loan amount and these loans are usually best for purchasing major fixed assets.
Best for Bad Credit : BlueVine
Why We Chose It: BlueVine offers lines of credit with low credit score requirements and fast funding time.
Low credit score requirements
Financing available for newer companies
Fast loan approval and funding times
Max repayment term is 12 months
Founded in 2013 as a financial technology startup company, BlueVine provides cash flow solutions to small businesses that may not qualify at other banks and financial institutions. The founder was inspired by his dad and the small business he owned, so he started the company to help other small business owners avoid some of the struggles his dad faced in terms of business financing and small business loans.
BlueVine offers business lines of credit to small businesses. It also offers business checking accounts, bill pay, service, and a business blog with advice and tips. The company’s goal is to help businesses that have inconsistent cash flow get the funds they need quickly without strict requirements.
Best for Microloans : Kiva
Why We Chose It: Kiva provides small loans with no interest, and you can market your product or service to Kiva members around the world.
Small loans with no interest
Repayment terms up to 36 months
Company focuses on funding for underserved communities
Long funding time and process
Loan amounts only go up to $15,000
Kiva was founded in 2005 in San Francisco, California, and is a global nonprofit company that offers crowdfunded loans for the underserved. The company also has offices in Portland, Bangkok, Nairobi, and staff around the globe. It’s a peer-to-peer lending platform and investors can help fund loans for people who wouldn’t otherwise have access to capital. It believes that too many people don’t have access to the funds they need and that there should be more financial inclusivity for everyone.
Kiva's loans have 0% interest and the maximum loan amount is $15,000. Loan repayment terms are up to 36 months. First you solicit family and friends through the platform before moving on to the wider Kiva community.
As a lender, you can also choose to give a gift or a donation to Kiva in addition to your loan. Lenders get to choose where their funds go and it encourages a sense of community and connection between its members. You can lend as little as $25 on Kiva and 100% of the loan amount goes toward funding loans on the platform.
Kiva has connected millions of borrowers and lenders to fund more than $1.71 billion in loans in 76 different countries. The company also has an app to make it more accessible.
Best for Same-Day Funding : Rapid Finance
Why We Chose It: Rapid Finance is known for funding within hours of approval and easy loan application process.
No hidden fees
Positive customer service reviews
Fast application process
Frequent repayments as often as daily
Rapid Finance was founded in 2005 in Bethesda, Maryland, as a technology-powered financial services company. It provides working capital to small and mid-sized businesses across the country. It has a range of financing options that serves a variety of industries and sectors. It specializes in fast funding times and offers loans with uniquely short terms as low as three months.
The company offers small business loans, business lines of credit, SBA loans, merchant cash advances, invoice factoring, bridge loans, asset-based loans, and commercial real estate loans. In addition, the site has business resources including small business guides and a blog with tips and industry news. Rates and terms vary by loan type, but small business loans have terms from three months to 60 months and require a business bank account for funding.
You can apply online or with a representative over the phone and get a quote within a few minutes. Funding for some loans can be as soon as a few hours after the application is approved, and the money can be used for business expansion, marketing solutions, equipment leasing, debt consolidation, technology upgrades, working capital, and more.
The company has funded over $2 billion in loans across a variety of industries.
Best for New Businesses : OnDeck
Why We Chose It: Same-day funding is offered for some of OnDeck’s loans and there is a simple application process.
Low minimum loan amounts
Discounts on future loans
Fast funding times
Some loans have prepayment penalties
Daily or weekly repayment schedules
Founded in 2006 in New York City, OnDeck uses proprietary software and an algorithm to compile a company’s financial data and determine their loan eligibility. The company offers term loans and business lines of credit. It has funded more than $13 billion in loans.
Most loans can be applied for on the site or over the phone with a loan advisor and it takes normally only 10 minutes to apply. Loans are typically approved the same day and some even fund as quickly as the same day. If a new business needs cash, these fast turnaround times are quite helpful, as are the low minimum loan amounts of $5,000.
Borrowing requires a 600 credit score, one year in business, a business checking account, and $100,000 in annual gross revenue.
Term loans are between $5,000 and $250,000 with a lump-sum of cash upfront and the option to apply for more money once the loan is halfway paid off. Terms are up to 24 months. Interest rates start at 35% and the average is 54.96%.
Business lines of credit have 12 month repayment terms and are available in amounts between $6,000 and $100,000. Interest rates for these start at 35.9% and average 47.14%.
There’s a team of U.S.-based loan advisors to answer questions and assist you throughout the loan process. Customers have left positive overall reviews praising the easy loan process and quick funding times.
We highlighted several direct lenders, loan marketplaces, and lenders that offer small business loans. Some lenders have same-day funding, others offer short-term loans, and others have more lenient credit requirements. We chose the best small business loans out there and each of them has something different to offer.
However, we recommend checking out Kabbage first. The company has a simple application process and fast loan approvals.
|Best Small Business Loans|
|Company||Why We Chose It||Maximum Loan Amount||Repayment Terms|
|Kabbage Best Overall||Lines of credit and fast approvals||$150,000||Six to 18 months|
|Fundera Best for SBA Loans||Apply for multiple SBA loans on the site||$5.5 million||Varies|
|BlueVine Best for Bad Credit||Low credit score requirements and fast funding times||$250,000||6 or 12 months|
|Kiva Best for Microloans||Offers microloans around the world and helps empower small business owners||$15,000||36 months|
|Rapid Finance Best for Same-Day Funding||Same-day funding and easy applications||Varies||Varies|
|OnDeck Best for New Businesses||Fast funding times and small loan minimums make it ideal for new businesses||$250,000||24 months|
Frequently Asked Questions
How Do Small Business Loans Work?
Small business loans vary depending on the loan type, lender, and loan amount.
For example, a restaurant loan may look different from a loan for an online business. Typically, you apply for the small business loan over the phone or online and receive a lump-sum payment once the loan is approved and funded. This will come with agreed-upon payback terms including a specified interest rate, payment schedule, and loan amount including fees.
It’s important to know all of the costs of the loan upfront including any origination or prepayment penalty fees, as these will affect your monthly repayment costs and the overall cost of the loan.
How Do I Qualify for a Small Business Loan?
To qualify for a small business loan you typically need to:
- Be in business for at least one year
- Have annual revenue of $50,000 or more
- Minimum credit score of 550
- No recent bankruptcies or foreclosures
- Have a business in an industry that the lender works with
- Have a business checking account
Keep in mind that small business loan qualifications vary greatly between loan types and lenders. Get all of your questions answered upfront so you know what the loan requirements and expectations are.
What Credit Score Do I Need to Qualify for a Small Business Loan?
Typically, the higher your credit score, the better loan rates and terms you will see, which will save you money in the long term. Each lender and type of loan has its credit score requirements, but 550 is usually the lowest credit score accepted for a small business loan. Obviously, you may find exceptions though.
What Can I Use a Small Business Loan For?
The lender and the type of loan will determine what you can use your small business loan for. Typically, you can use a small business loan to purchase inventory, buy business-related equipment, have working capital, make payroll, use it for marketing and advertising, and some loans even allow you to use funds to purchase real estate to expand your business.
We researched more than a dozen of the top small business loans before deciding on our top choices. We compared the best small business loans based on several factors including types of loans offered, the application process, loan amounts, terms, and qualifications. We also looked at additional services offered by the companies.
All of our choices are reputable companies with easy-to-use websites and offer reasonable terms with competitive rates and maximum loan amounts.