Best Private Business Loans in April 2024

A private business loan is provided by an alternative funding source instead of a traditional brick-and-mortar bank. Funds can be used for working capital, equipment financing, commercial real estate and more.

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LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
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Best private business loans in April 2024

Written by Jill A. Chafin and Marianne Hayes | Edited by Abigail Bassett and Janet Schaaf | March 28, 2024

How Does LendingTree Get Paid?
LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.

How Does LendingTree Get Paid?

LendingTree is compensated by companies on this site and this compensation may impact how and where offers appear on this site (such as the order). LendingTree does not include all lenders, savings products, or loan options available in the marketplace.
LenderUser ratingsBest for…Max. loan amountTerm lengthMin. credit scoreTime in business
User ratings coming soonLines of credit$250,0006 or 12 months62524 monthsGet business loan offers
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User Ratings & Reviews rating-reviews-tooltip-icon

Ratings and reviews are from real consumers who have used the lending partner’s services.

Bad credit$1,500,0004 to 15 months5006 monthsGet business loan offers
Fundbox logo
(30)
User Ratings & Reviews rating-reviews-tooltip-icon

Ratings and reviews are from real consumers who have used the lending partner’s services.

Startups$150,0003 or 6 months6006 monthsGet business loan offers
(155)
User Ratings & Reviews rating-reviews-tooltip-icon

Ratings and reviews are from real consumers who have used the lending partner’s services.

Equipment financing$2,000,00012 to 84 months550StartupGet business loan offers
(1)
User Ratings & Reviews rating-reviews-tooltip-icon

Ratings and reviews are from real consumers who have used the lending partner’s services.

SBA loans$500,000120 months65024 monthsGet business loan offers

Learn more about how we chose our picks.

Private business lenders at a glance

Bluevine: Best private business loan for lines of credit

Loan amounts$6,000 to $250,000
Starting interest rateNot disclosed
Term length6 or 12 months
Minimum credit score625
Minimum time in business24 months

See Your Business Loan Offers

Fora Financial: Best private business loan for bad credit

Loan amounts$5,000 to $1,500,000
Starting interest rate1.10 factor rate
Term length4 to 15 months
Minimum credit score500
Minimum time in business6 months

See Your Business Loan Offers

Fundbox logo

Fundbox: Best private business loan for startups

Loan amountsUp to $150,000
Starting interest rate4.66% for 12-week term
8.99% for 24-week term
Term length3 or 6 months
Minimum credit score600
Minimum time in business6 months

See Your Business Loan Offers

Taycor Financial: Best private business loan for equipment financing

Loan amounts$500 to $2,000,000
Starting interest rate4.99%
Term length12 to 84 months
Minimum credit score550
Minimum time in businessStartup

See Your Business Loan Offers

SmartBiz: Best private business loan for SBA loans

Loan amounts$30,000 to $500,000
Starting interest rate11.25% to 13.25%
Term length120 months
Minimum credit score650
Minimum time in business24 months

See Your Business Loan Offers

What is a private business loan?

A private business loan is small business financing provided by alternative lenders instead of traditional banks or financial institutions. While eligibility requirements vary by lender and loan type, private loans are typically less restrictive than traditional business loans.Alternative lenders also utilize a streamlined application process to review documents quickly, with funds usually disbursed within one to three business days after approval.

However, private business loans tend to charge higher interest rates with shorter repayment terms

Types of private business financing

Private lenders offer many types of small business loans to help you start, grow or expand your business.

Term loans

With a term loan, the lender provides a lump sum that the borrower repays over time with interest. Additional fees, like loan origination fees and prepayment penalties, may apply. Funds can be used to cover any business-related expense.

A short-term business loan is ideal for immediate, low-cost expenses, while a long-term business loan can help cover more significant projects.

Equipment loan

Equipment financing allows you to purchase equipment that’s essential to running your business. It can include everything from computers to refrigerators to commercial-grade appliances. Interest rates are typically on the lower side because the equipment is used as collateral to secure the loan.

Lines of credit

Unlike a lump-sum loan, a business line of credit is a revolving credit line that the borrower draws on to borrow on an as-needed basis — similar to a credit card. A business credit line is replenished as you make payments. With this type of business financing, you only pay interest on your outstanding balance, although some lenders charge monthly or annual maintenance fees.

Invoice factoring

Invoice factoring involves selling unpaid invoices to a factoring company in exchange for a cash advance. The factoring company then collects your customers’ outstanding payments on your behalf, taking a cut of each invoice before paying you the remaining amount. This setup is typically used by business-to-business (B2B) companies.

Merchant cash advance

With a merchant cash advance, the business owner trades a portion of future earnings for lump-sum funding today. The lender is usually repaid by taking a daily or weekly percentage of the business’s credit card sales.

Private business loan uses

A private business loan can be used for a range of business expenses, such as the following:

  Inventory: Purchase essential supplies your business needs to fulfill customer orders. A restaurant, pizza shop or coffee shop, for example, will likely need cups, napkins, tablecloths and more.

  Equipment and machinery: Anything from a dishwasher for a restaurant to medical equipment for a doctor’s office can be covered by private business loans.

  Cash-flow gaps: Maybe your business is running low on cash waiting on outstanding invoices to be paid. Others may go through a seasonal slump where revenue is down. Private funding can help cover these kinds of cash-flow gaps.

  Working capital and operational expenses: Some businesses may need help with operational expenses like paying rent or covering payroll. A private business loan can provide working capital that can be put toward regular operating costs.

  Marketing: This is an essential part of building brand awareness and attracting and retaining customers. Business owners who haven’t carved out a marketing budget can use private funding to get the job done.

  Business expansion and growth: Aside from day-to-day operating expenses, many business owners have long-term goals for growth and expansion. That may include opening a new location or investing in a new business direction. A private business loan can provide the necessary funding.

How to get a private business loan

Here are five steps to help you get a small business loan with a private lender.

1. Calculate how much you need

Creating a business budget can help you define your most crucial business expenses. While private loans for business can help with seasonal dips in income or allow you to invest in essential equipment, you want to avoid taking on too much debt. If in doubt, start off small to ensure you can keep up with the repayment schedule.

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2. Review eligibility requirements

While criteria will vary by lender and loan type, here are some common business loan requirements you will likely need to meet when applying with a private lender:

  • Your credit score: Minimum FICO Score requirements can range from 500 to 650 or higher. Lenders may also review your business credit history when determining your level of creditworthiness. The higher your credit score, the more likely you’ll secure a low interest rate with flexible terms.
  • Time in business: SBA loan requirements are typically more complex than other types of financing, often requiring at least two years in business to qualify. Some alternative lenders have more lenient requirements, making it easier for younger companies to secure private business financing. However, interest rates tend to be higher when compared to traditional lenders.
  • Business revenue: Most private lenders require a certain cash flow to qualify for small business financing. Annual revenue requirements can range from $50,000 to $480,000 or higher. Some lenders, like Taycor Financial, don’t have any annual revenue requirements, making it an ideal choice for startups.
  • Collateral and/or personal guarantee: Depending on the lender and loan type, you may also be required to provide a personal guarantee or pledge collateral like fixed or financial assets. Alternatively, you can get an unsecured business loan without any collateral required.

3. Compare private business lenders

It’s worth spending time researching private lending companies to find the best option for your business. Pay attention to extra service fees since these can significantly increase your loan’s overall costs. Also, make sure the lender reports payments to the major credit bureaus to help build your business credit.

Check out our guide to small-business lender reviews before applying to fully understand what each lender offers.

4. Gather required documents

Private lenders should have a list of required documents on their website. If not, contact them for more guidance. Here’s a general list of what you may need to provide when applying for loans from private lenders:

5. Submit and review offers

While some traditional banks and credit unions require in-person appointments to finalize loan details, private business loan applications can be completed entirely online. Sometimes, a funding specialist will reach out to discuss loan options or to request additional information.

Since private lenders often utilize advanced underwriting software, it’s common to get a funding decision within minutes. Make sure to review your business loan agreement before signing the dotted line to ensure you understand the rates, repayment term and additional fees.

How to compare private business loans

Picking the best private business loan can be tough, especially if you qualify for multiple offers. Compare the following data points to narrow down the most ideal option for your unique situation.

  Interest rate: Business loan interest rates vary by lender and loan type. While a variable rate might seem enticing in the moment, a fixed rate is typically better for long-term budgeting. And don’t worry, you can always refinance your business loan if you spot a better rate down the road.

  Repayment term: Private business loans could require daily, weekly, monthly or seasonal payments. Opting for a longer repayment term could provide lower payments but will likely incur more interest charges over the loan’s duration.

  Time to fund: Thanks to advanced technology, most private lenders are able to provide quick business loans with funds being available within one to three business days after approval. However, speedy financing comes at a price — typically meaning higher interest rates and shorter repayment terms.

  Additional fees: Private lenders and platforms like SmartBiz often charge additional fees, including origination fees, service fees, late charges and prepayment penalties. Be sure to scour your loan’s contract before signing since these fees are often listed in fine print.

  Loan purpose: Some private business lenders have restrictions on what industries and business expenses they’ll fund. For example, you can’t use Bluevine funds to start an auto dealership or for political campaigns, and SmartBiz loan proceeds can’t be used for unpaid taxes. Check with potential lenders to ensure their loan is an ideal match for your industry and expected expenses.

Pros and cons of private business loans

ProsCons

 Generally easier to obtain than traditional lending options

 Funding within one to three business days after approval

 Low-credit borrowers and startups can typically qualify

 Interest rates and additional fees tend to be higher

 You may be required to put up collateral or provide a personal guarantee

 Revenue requirements could create a barrier for some borrowers

Alternatives to private business loans

Private business loans can cater to a diverse range of business owners, helping you get funding for your most important needs. However, private lenders aren’t a perfect fit for everyone. Here are some alternative small business funding options to consider.

Traditional bank loans

Working with a traditional bank has many advantages, such as accessing a variety of products and services like business bank accounts and commercial real estate loans. Depending on where you live, you might be able to visit a physical branch for in-person support and business coaching.

However, traditional financing usually comes with stricter eligibility requirements, such as a minimum of two years in business and credit scores of 670 or higher.

Credit union loans

If you’re a member of a credit union, it’s worth inquiring about credit union business loans. The advantages of credit unions include large business loans with reduced fees and lower rates.

Similar to traditional bank loans, these loans typically have strict financial requirements. You will also need to meet the credit union’s specific criteria, such as joining a business membership program or living within a certain area.

Small business grants

Small business grants are another option to help fund your company. You can find grants through local and nationwide government and nonprofit organizations, as well as private corporations. While researching and applying for grants takes time and effort, it can be worth it to receive free money for your business.

Business credit cards

Business credit cards are usually easier to qualify for than traditional business financing and can be used for day-to-day or low-cost expenses. You can even earn generous sign-up bonuses and business travel rewards along the way.

If comparing business credit cards versus business lines of credit, note that credit cards typically charge significantly higher interest rates. This doesn’t have to be a dealbreaker but you should make an effort to pay your balance in full to avoid exorbitant fees.

Crowdfunding

GoFundMe for business can help you raise money for specific business projects or goals. Getting started is easy:

  • 1. Create a business profile.
  • 2. Broadcast a fundraising goal.
  • 3. Share the link via social media.

While GoFundMe will take a small fee from your donations, you don’t have to pay anything upfront for this service. Crowdfunding works best for companies with a robust online presence or following, especially if you’re able to offer a free or discounted product or service as an incentive.

How we chose the best private business loans

We reviewed a diverse range of leading private lenders for business loans to determine the overall best five private business loans. To make our list, private business lenders must meet the following criteria:

  • Minimum time in business: Options available to startups and companies who have been operating for up to 24 months.
  • Minimum credit score: Personal credit score requirements of 650 or lower.
  • Maximum loan amounts: A range of funding amounts, with maximum limits as high as $150,000 to $2 million.
  • Rates and terms: We prioritize lenders with competitive rates, limited fees, flexible repayment terms, a range of loan amounts and APR discounts.
  • Repayment experience: We consider each lender’s reputation and overall business practices. We also favor lenders that report to all major credit bureaus, offer reliable customer service and provide customer perks, like free business classes, bonus rewards and early payoff discounts.

Frequently asked questions

Almost all private business lenders accept online loan applications. Once you’ve gathered the necessary information, you can submit everything and expect a lending decision from there. Sometimes a lending specialist will call you to verify information.

Depending on the loan type and lender, you could receive funding in as little as one to seven days after approval.

Yes, you can research private lenders for business startup loans to see which options best fit your needs. Some lenders provide lines of credit to businesses that have been operating for less than two years. There are even banks willing to provide a loan to entrepreneurs with outstanding credit, appropriate collateral and an adequate cash flow.

Getting a startup loan with no moneycan be tricky since most lenders want to see at least six to 12 months in operation before taking a risk on you. However, some potential funding options include: