Best Small Business Loans in May 2024

Compare top lenders to find the right funding for your business

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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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Written by Jill A. Chafin | Edited by Dawn Daniels | May 1, 2024

Best small business loans in 2024

Small business lenders at a glance

Small Business Administration: Best for SBA 7(a) loans

Loan amountsUp to $5,000,000
Maximum interest rate for variable loans*
  • 15% for loans $50,000 or less
  • 14.5% for loans $50,001 to $250,000
  • 13% for loans $250,001 to $350,000
  • 11.5% for loans above $350,000
Maximum interest rate for fixed loans*
  • 16.5% for loans $25,000 or less
  • 15.5% for loans $25,001 to $50,000
  • 14.5% for loans $50,001 to $250,000
  • 13.5% for loans above $250,000
Term lengthUp to 300 months
Minimum credit score680 (recommended)
Minimum time in business24 months (recommended)
Minimum annual revenueVaries by lender

* Some lenders may charge lower rates. Based on the current Prime rate of 8.50% + a rate maximum set by the SBA.

OnDeck: Best for short-term loans

Loan amounts$5,000 to $250,000
Starting interest rate27.30% (for at least 5% of customers)*
Term length18 to 24 months
Minimum credit score625
Minimum time in business12 months
Minimum annual revenue$100,000

*Minimum APR offered to at least 5% of customers (not the lowest rate offered).

Funding Circle: Best for long-term loans

Loan amounts$25,000 to $500,000
Starting interest rate15.22%
Term length6 to 84 months
Minimum credit score660
Minimum time in business24 months
Minimum annual revenue$50,000

American Express Business Line of Credit: Best for lines of credit

amex business line of credit logo

Loan amounts$2,000 to $250,000
Starting interest rate
  • 3% to 9% for 6-month loans
  • 6% to 18% for 12-month loans
  • 9% to 27% for 18-month loans
  • 12% to 18% for 24-month loans
Term length6 to 24 months
Minimum credit score660
Minimum time in business12 months
Minimum annual revenue$36,000

Credibly: Best for working capital

Loan amounts$5,000 to $600,000
Starting interest rate1.11 factor rate
Term length3 to 24 months
Minimum credit score500
Minimum time in businessSix months
Minimum annual revenue$180,000

Taycor Financial: Best for equipment financing

Taycor Financial lender logo

Loan amounts$500 to $2,000,000
Starting interest rate4.99%
Term length12 to 84 months
Minimum credit score550
Minimum time in businessNot required
Minimum annual revenueNo specific minimum

Wells Fargo: Best for traditional bank loan

Wells Fargo logo #1

Loan amounts$10,000 to $15,000,000
Starting interest rateVaries by product
Term lengthUp to 300 months
Minimum credit score680 for unsecured line of credit (not disclosed for other products)
Minimum time in business24 months for unsecured line of credit (not disclosed for other products)
Minimum annual revenue$2 million for Prime Line secured line of credit (not disclosed for other products)

Fundbox: Best for startups

Fundbox logo

Loan amountsUp to $150,000
Starting interest rate
  • 4.66% for 3-month terms
  • 8.99% for 12-month terms
Term length3 or 12 months
Minimum credit score600
Minimum time in businessSix months
Minimum annual revenue$100,000

Fora Financial: Best for bad credit

Fora Financial

Loan amounts$5,000 to $1,500,000
Starting interest rate1.10 factor rate
Term lengthUp to 18 months
Minimum credit score570
Minimum time in businessSix months
Minimum annual revenue$180,000

National Funding: Best for fast financing

Loan amounts$5,000 to $500,000
Starting interest rate1.11 factor rate
Term length4 to 60 months
Minimum credit score600
Minimum time in businessSix months
Minimum annual revenue$250,000

Headway Capital: Best for unsecured loans

Loan amountsUp to $50,000
Starting interest rateNot disclosed
Term length12 to 24 months
Minimum credit scoreNot disclosed
Minimum time in business12 months
Minimum annual revenue$50,000

eCapital: Best small business loans for invoice factoring

Loan amountsUp to $30,000,000
Invoice factoring rates0.90% to 2.50% factor rate every 30 days (discount rate)
Minimum credit scoreNot needed
Minimum time in business12 months
Minimum annual revenue$120,000

Accion Opportunity Fund: Best for minority entrepreneurs

Loan amounts$5,000 to $250,000
Starting interest rate8.49%
Term length12 to 60 months
Minimum credit scoreNot disclosed
Minimum time in business12 months
Minimum annual revenue$50,000

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What is a small business loan?

Small business loans help new and established companies access capital for various business needs. With business financing, you can purchase inventory, invest in new equipment, build an expansion or cover emergency expenses.

Traditional banks, credit unions, online lenders and government agencies all offer small business loans.

The best business loan for your company depends on how much you need, your business’s qualifications and how quickly you need the funds.

Types of small business loans

Business loans for small businesses come in a variety of flavors, with terms as short as a few months or as long as 25 years. Here are some common types of business loans to consider:


Term loans

  • Minimum credit score: 500
  • Time to funding: Same day to three months

Business term loans provide a lump sum of cash upfront, paid with interest in fixed weekly or monthly installments.

Short-term business loans have repayment terms around 3 to 24 months and are commonly available from online lenders.

Long-term business loans, usually offered by traditional banks, can last 10 years or more.


Line of credit

  • Minimum credit score: 600
  • Time to funding: 1 to 14 business days

Similar to a credit card, a small business line of credit allows you to borrow up to your credit limit as often as needed.

You typically only pay interest on the amounts you borrow, although some lenders charge additional maintenance or withdrawal fees.

Lines of credit are best for recurring expenses like rent, inventory purchases or seasonal fluctuations in income..


Equipment financing

  • Minimum credit score: 500
  • Time to funding: Same day to two months

equipment financing can help you purchase or repair heavy machinery, computers, vehicles or other equipment needed to operate the business.

The equipment usually acts as collateral to secure the loan, meaning the lender can seize it if you fail to make payments. Because of this, equipment loans typically have more lenient eligibility requirements.


Commercial loans

  • Minimum credit score: 500
  • Time to funding: Same day to two months

Commercial loans provide funds specifically for equipment or property for business uses.

Commercial real estate loans are similar to a home mortgage, but often require a higher upfront down payment.

Like equipment loans, the property you’re purchasing can serve as collateral to secure the debt.


SBA loans

  • Credit score: 680 (recommended)
  • Time to funding: 2 weeks to 3 months

SBA loans are guaranteed by the U.S. Small Business Administration (SBA), offering long repayment terms with capped interest rates.

The SBA 7(a) loan provides up to $5 million for various business purposes, while the SBA 504/CDC loan is more commonly used for purchasing equipment or real estate.

You’ll apply with a bank or online lender, not directly through the SBA.


Microloans

  • Credit score: 300
  • Time to funding: 2 weeks to 3 months

Microloans are loans for $50,000 or less. The SBA offers microloans, along with several nonprofit or community organizations.

Microloans are often geared toward startups or underrepresented business owners, such as women or people of color.


Working capital loans

  • Credit score: 500
  • Time to funding: Same-day to 3 months

Working capital loan is an umbrella term for financing that covers short-term operating expenses, like payroll or cash flow gaps.

Working capital loans come in various forms, like working capital lines of credit, term loans and cash advances.


Government loans

  • Credit score: Varies by program
  • Time to funding: Varies by program

There are additional government-backed small business loans worth considering besides SBA loans.

If you operate a business in a rural area (50,000 or fewer residents), you might be eligible for a loan guaranteed by the U.S. Department of Agriculture (USDA), such as the popular Business & Industry (B&I) Loan Program.

The Farm Service Agency (FSA) also offers low-cost financing to help farmers start and expand their farm businesses.

American Indian and Alaska Native business owners can consider federally backed financing from the Indian Loan Guarantee and Insurance Program (ILGP).

Additional business funding options

In addition to traditional business financing, here are some other ways to fund your company.


Merchant cash advance

A merchant cash advance (MCA) gives you a lump sum of cash upfront against your future sales. You repay the merchant cash advance through a percentage of daily or weekly credit card sales.

While this type of funding can deliver cash fast, it tends to be a more costly way to borrow money for your company.


Invoice factoring

Invoice factoring allows businesses to sell unpaid invoices to a factoring company in exchange for a cash advance.

This can be a good option for cash-strapped businesses or those with poor or limited credit, but you can typically get only 70% to 90% of your invoice face value.

Invoice factoring can also get expensive, with factoring rates going as high as 8.25%.


Business credit cards

Business credit cards can help track business expenses and unlock cash back or travel rewards while monitoring employee spending.

To avoid paying a high annual percentage rate, pay off your credit card statement balance in full by the due date.


Small business grants

Federal government agencies, state governments, private corporations and foundations offer grants for small businesses.

You can narrow your search based on business type, location and demographics, such as minority business grants and business grants for women

Because grants provide free money that typically doesn’t need to be repaid, competition can be stiff.


Crowdfunding

Business crowdfunding is when you ask family, friends and the general public for donations to kickstart your business.

This method can help you test out a business idea and generally appeals to startups or businesses struggling to get funding.

Just be aware that some crowdfunding platforms deduct a fee before your total donations.


Peer-to-peer lending

Peer-to-peer lending, or P2P lending, is a type of financing where individual and commercial investors provide the loan funds rather than a financial institution.

A P2P online platform acts as the coordinator between you and the investors, helping process and finalize your loan details.

While P2P loans typically have more lenient qualifying requirements, they can take longer to fund than other types of financing. Additionally, P2P lending might not be available in your state.


Personal loans

Personal loans for business may be easier to get if you struggle to meet the strict eligibility criteria for a business loan.

However, this type of financing relies on your personal credit and income, putting your personal credit and assets at risk.

And personal loans won’t help you build business credit, nor can you claim the loan interest as a qualified business tax deduction.


Bootstrapping

Bootstrap financing is when you use your own financial resources to fund your business.

Startup businesses may use bootstrapping to get off the ground, but you risk not recouping your investment if your business fails to thrive.

Business loan requirements

When you apply for a business loan, lenders want to know that your business and credit history are stable. Here are some common business loan requirements you may need to meet to get approved for small business financing:

  • TIME IN BUSINESS

    In general, your business will be in a stronger position to borrow if you can prove you have a track record of solid revenue over the past one to two years. This is more attractive to a lender than a company with spotty revenue over the past six months.

  • CREDIT SCORE

    Lenders use your credit score to determine your riskiness as a borrower. In most cases, you’ll need a good to excellent credit score in the mid-600s or higher to get a business loan, although certain lenders allow scores as low as 500. Your business credit score should be at least 80, although some lenders may rely on just your personal score when reviewing your loan application.

  • CASH FLOW

    A business cash-flow projection shows when money is collected, when cash goes out and what’s left. Lenders typically like to see that you understand where your business’s money is going each month.

  • COLLATERAL

    Collateral is an asset that lenders can legally seize if you can’t make payments. Common forms of collateral include real estate, equipment, money owed to your company (accounts receivable) and even cash. Some business owners use their personal assets — including their homes — as collateral on a business loan.

  • FIXED CHARGE COVERAGE RATIO

    Your business’s fixed-charge coverage ratio measures how well your company can pay its fixed expenses, including any debts and interest you have. Lenders use this metric to help determine whether or not to approve a business loan application.

  • WORKING CAPITAL

    Your working capital refers to the available money you have to fund your company’s day-to-day operations. You can calculate your working capital by subtracting the business’s debt liabilities due within a year from current assets that you can convert to cash.

View Your Small Business Loan Options

What to consider before getting a business loan

The process to get a business loan depends on the lender and the type of funding you need. Answering the following questions can help narrow down the best small business lending option for your short- and long-term needs:

Why do you need the funds?

Are you looking to buy a vehicle for your new food truck business? Are you looking for commercial real estate so you can expand to a second location across town? Or maybe you need some quick cash to fill in the gaps during the off-season.

What you can afford?

Look at your business budget to decide what you can afford. Some business loans are repaid monthly over long periods, while others require weekly or even daily repayment. Business loans are debts you must repay, so make sure your business can handle the extra payment.

How can you get the best rates?

Before you decide to apply, take the extra time to shop around. Compare offers to get the best rates. This extra bit of legwork may reduce your interest or fees in the long run. Read small business lender reviews to ensure you are working with a reputable lender.

Applying for a business loan through your bank

When looking for funding for your small business, it’s worth seeing what your current bank has to offer. Having an established relationship with a bank or credit union can often increase the likelihood of getting your business loan approved, especially if you have maintained good standing with another type of financing with them.

One benefit to sticking with your current bank is that you can access all of your accounts, like your bank account and loans, with one login, making it easier to stay on top of payments and track your finances.

Start by getting a quote with estimated interest rates, terms and fees. Some banks might run a hard credit check. But don’t worry, you generally have around 14 to 45 days to get quotes from additional lenders without any further impact to your credit score — multiple credit checks for the same type of financing are generally counted as one inquiry so you can rate shop. This means you can get a quote from your bank and from a variety of online lenders to compare interest rates and see if sticking with your bank is the best option.

Banks that offer small business loans

Banks that offer business loans include:

  • Chase
  • Wells Fargo
  • U.S. Bank
  • Capital One
  • Bank of America
  • American Express

Bank of America offers additional perks for business customers, such as business loan rate discounts, free business credit score monitoring and tips on cash flow strategies. And if you have an active American Express credit card, you can log into your account to see if you’re eligible for an American Express Business Line of Credit pre-approval offer.

Small business loan application checklist

Applying for a small business loan involves rounding up necessary documents for your loan application. The exact paperwork differs across business funding partners, but here are some documents you might need to provide:

How to compare small business loans

In order to pick the best business loan, you can compare the following loan details:

  • Interest rate: Is the business loan interest rate variable or fixed? If the lender charges a factor rate, it’s worth converting it to better compare against other offers. Also calculate how much interest charges you’ll pay over the life of the loan.
  • Repayment term: When do payments start? Do you prefer daily, weekly or monthly payments? Is there any option to delay or pause payments during times of financial hardship?
  • Time to fund: How long does the application process take? Traditional bank and SBA loans can take two weeks to three months to approve and fund, while online lenders can typically deliver funds within one to three business days. Keep in mind that the quickest business loans aren’t always the most affordable.
  • Additional fees: Make sure to check the fine print for extra fees, such as origination fees, late charges and business loan prepayment penalties.

Before closing your loan

After approval, the closing process involves reviewing documentation that will determine the terms of your selected loan. A business loan agreement is a legally binding contract that dictates your interest rate and repayment schedule.

Ensure you thoroughly understand what the lender is asking of you and what the terms mean for your business’s financial future. After you sign, you’ve agreed to everything in the contract — including what happens when you make late payments or can’t repay the debt.

How we chose the best small business loans

We reviewed 20 leading small business lenders to determine the overall best 13 small business loans. To make our list, lenders must meet the following criteria:

  • Loan amounts: Funding options ranging from $500 to $15.5 million.
  • Minimum time in business: No more than two years in business required.
  • Minimum credit score: Personal credit score requirements below 680.
  • Rates and terms: We prioritize lenders with more competitive fixed rates, fewer fees and more flexible repayment terms.
  • Time to funding: Options for same-day loans or SBA lenders with quicker turnaround times.
  • Repayment experience: We consider each lender’s reputation and business practices, favoring lenders that report to all major credit bureaus, offer reliable customer service and provide free perks to customers, like rewards progress or business coaching.

Frequently asked questions

Business owners can take out small business loans — anywhere between $500 and $15.5 million — to finance expenses like payroll financing, inventory, equipment and other costs. Repayment terms could be as short as three months or as long as 25 years. Both traditional financial institutions and alternative online lenders offer small business loans.

Yes, bad credit business loans are available for business owners with personal credit scores as low as 500. However, these loans tend to come with higher interest rates and less flexible repayment terms.

A personal guarantee requires you as the business owner to be personally responsible for the company’s debt in case of default. A personal guarantee is fairly common on small business loans because it lowers the risk for a lender. But as the business owner, it may limit any protections your business structure offers.

Online lenders may be the best option to get a startup business loan with no money. Unlike brick-and-mortar banks that often have stricter eligibility requirements, some alternative lenders will work with you after about six months in business. If you can’t find a suitable lender providing business loans for new businesses, you can consider alternative options like crowdsourcing, self-funding or grant funding.

Each lender will have its own criteria based on the loan type. In general, you need a personal FICO Score of at least 500 and a business credit score of 80 to get a small business loan. But the lowest business loan interest rates are typically reserved for borrowers with higher credit scores. You can check and monitor your credit score for free with LendingTree Spring.

Most lenders look for minimum monthly or annual revenue when you apply for a loan. It’s common to expect a minimum annual revenue requirement of $50,000 or more for unsecured loans. However, you may be eligible for a business loan with a lower annual revenue if you can provide collateral.

If you were rejected for a business loan, revisit the reason why. Focus on improving your personal credit and business credit scores. If you haven’t operated in business long enough, wait a bit. In the meantime, consider a small business credit card or a personal loan to access capital for any immediate business needs.