Small Business Loans: Compare Your Financing Options

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Best small business loans in 2022

Written by Melissa Wylie | Edited by Kurt Adams | Updated on January 18, 2022

Small business loans can cover real estate, equipment, payroll or nearly any need. For this guide, we selected the best small business loans that offer transparent rates and repayment terms, maximum loan amounts of at least $150,000, funding within two weeks or less and lenient requirements for personal credit scores and time in business. Learn more about our methodology behind our picks here.

LenderBest forLoan TermsAmountRatesMin. credit Score
SmartBizSBA loans120 to 300 months$30,000 to $5,000,0004.75% to 7.00%640 to 675
OnDeckShort-term loansUp to 24 months$5,000 to $250,000Starting at 35.00% APR600
Funding CircleLong-term loans6 to 60 months$25,000 to $500,0004.99% to 19.49% interest rates on loans issued directly by Funding Circle660
BluevineLine of credit6 to 12 monthsUp to $250,000Simple interest rates starting at 4.80% for 26-week repayment600
CrediblyWorking capital6 to 18 monthsUp to $400,000Factor rates starting at 1.15500
National FundingEquipment financing24 to 84 monthsUp to $150,000Beginning at 4.99% simple interest575
Elevation CapitalAccounts receivable financing6-month avg. repayment$5,000 to $10,000,000Factor rates starting at 1.12550
Reliant FundingMerchant cash advances3 to 15 months$5,000 to $400,000Factor rates starting at 1.10525
QuickBridgeBad credit4 to 24 months$5,000 to $500,000Factor rates starting at 1.10500
Mulligan FundingFast funding6 to 18 months$5,000 to $500,000Factor rates starting at 1.11600
Seeking COVID-19 relief for your small business? Find resources here.

Our pick for SBA loans: SmartBiz

APR range 4.75% to 7.00%
Loan amount $30,000 to $5,000,000
Term (months) 120 to 300 months
Min. credit score 640 to 675
Fees Up to 3.5% of guaranteed portion up to $1,000,000, plus 3.75% of guaranteed portion over $1,000,000
Time to funding As short as 7 days
Online marketplace matches borrowers with SBA lenders
Shortens SBA funding process to as quickly as one week


Down payment required
Businesses must show at least two years of operating history

These popular government-backed loans are available for most business uses, with terms up to 25 years and moderate interest rates. SBA loans are widely available through banks, though the application process can take anywhere from five days to two months or more.

Read our SmartBiz review


Our pick for short-term loans: OnDeck

APR range Starting at 35.00% APR
Loan amount $5,000 to $250,000
Term (months) 3 to 24 months
Min. credit score 600
Fees Maximum origination fee of 4.00%
Time to funding Up to 3 business days
Repayment terms between 3 to 24 months
Loan amounts between $5,000 to $250,000


$100,000 annual revenue required
Lowest APRs reserved for strongest applicants

Short-term loans have repayment terms of a few months to a year or more, good for when you expect a quick return on what you’re investing in with the loan funds. Loan approval can be as fast as a few days, even for business owners with poor credit — however, higher rates are often a trade-off for speed and accessibility.

Read our OnDeck review


Our pick for long-term loans: Funding Circle

APR range 4.99% to 19.49% interest rates on loans issued directly by Funding Circle
Loan amount $25,000 to $500,000
Term (months) 6 to 60 months
Min. credit score 660
Fees Origination fee of 3.49% to 6.99%
Time to funding 3 to 5 days
Loans available from $25,000 to $500,000
No prepayment penalties


Requires collateral
Average Funding Circle borrower makes about $1.4 million in annual sales

Traditional long-term business loans offer relatively low-rate financing for lasting investments, such as machinery or business acquisition. Repayment terms can last up to 10 years, with approval times that tend to take multiple weeks; in addition, lenders will usually require you to have strong credit.

Read our Funding Circle review


Our pick for business line of credit: BlueVine

APR range Simple interest rates starting at 4.80%
Loan amount Up to $250,000
Term (months) 6 to 12 months
Min. credit score 600
Fees N/A
Time to funding One to 3 business days
Credit lines available up to $250,000
Revolving access to funds


$120,000 in annual revenue required
Weekly interest in a short repayment time frame can make Bluevine an expensive option

Though not technically a loan, a line of credit is capital that you can draw upon as needed, and you only have to pay interest on what you borrow. You can use business lines of credit for short-term or long-term needs, and they can be secured or unsecured. Lenders can fund lines of credit as quickly as the next day or within weeks.

Read our BlueVine review


Our pick for working capital loans: Credibly

APR range Factor rates starting at 1.15
Loan amount Up to $400,000
Term (months) 6 to 18 months
Min. credit score 500
Fees 2.50% origination fee
Time to funding May be as soon within 1 business day
Loan amounts up to $400,000
Minimum credit requirement of 500


Six months in business required to qualify
Average of $15,000 in monthly bank deposits required

Working capital loans are short-term loans disbursed within 24 hours to a week of approval and designed to fund your company’s day-to-day operations during a time of reduced activity. When the lull ends and business booms again, you should have enough revenue to repay the working capital loan.

Read our Credibly review


Our pick for equipment financing: National Funding

APR range 4.99% simple interest
Loan amount Up to $150,000
Term (months) 24 to 84 months [shortcode]
Min. credit score 575
Fees 1% of equipment cost doc fee
Time to funding 24 to 72 hours
Financing available up to $150,000
Time to funding may be between 24 and 72 hours


No down payment means you may have higher monthly payments

Equipment financing allows businesses to pay for equipment, such as commercial trucks, a restaurant oven or an office copier, a little at a time for relatively low rates; in exchange, the equipment is used as collateral. Equipment financing is ideal for borrowers who need hard assets quickly, but can’t afford to purchase them outright.

Read our National Funding review


Our pick for accounts receivable financing: Elevation Capital

APR range Factor rates starting at 1.12
Loan amount $5,000 to $10,000,000
Term (months) 6-month avg. repayment [shortcode]
Min. credit score 550
Fees N/A
Time to funding Within 10 days
$5,000 to $10,000,000 available
Minimum credit requirement of 550


$150,000 in annual revenue required
10 days to receive funds

Exchange unpaid invoices for immediate cash, minus a fee. AR financing, also known as “invoice factoring,” may be right for risk-averse or poor-credit borrowers, or those without a lengthy business history.

Read our Elevation Capital review


Our pick for merchant cash advances: Reliant Funding

APR range Factor rates starting at 1.10
Loan amount $5,000 to $400,000
Term (months) 3 to 15 months
Min. credit score 525
Fees Origination fee varies by customer and loan size.
Time to funding As little as 24 hours
$5,000 to $400,000 available
Your credit history is not a primary deciding factor


Faster-than-normal repayment terms could lead to higher daily payments
Six months in business required

While it’s not a loan, a merchant cash advance may be an attractive financing option for businesses with high sales volume — it’s a lump sum of funding that businesses repay through their daily transactions. However, be prepared for your lender to take daily payments out of your sales, which could cause cash flow issues if you don’t have a good grasp of your daily revenue and operating costs.

Read our Reliant Funding review


Our pick for bad credit business loans: QuickBridge

APR range Factor rates starting at 1.10
Loan amount $5,000 to $500,000
Term (months) 4 to 24 months
Min. credit score 500
Fees Origination fee, amount not disclosed
Time to funding One to three business days

Available to borrowers with credit scores as a low as 500
$5,000 to $500,000 available


Short terms require quick repayment
$150,000 in annual revenue required

Getting a business loan with bad credit can seem nearly impossible, but there are lenders who might consider you for a business loan with personal credit scores as low as 500. Though there’s not just one type of bad credit business loan, lenders may require you to put up collateral or charge a higher interest rate in exchange for lower credit requirements.

Read our QuickBridge review


Our pick for fast funding: Mulligan Funding

APR range Factor rates starting at 1.11
Loan amount $5,000 to $500,000
Term (months) 6 to 18 months
Min. credit score 600
Fees No prepayment penalties
Time to funding As soon as the next business day after approval

No collateral required and no prepayment penalties
Time in business for working capital loans is nine months


$120,000 in annual revenue required for working capital, but $350,000 in annual revenue required for term loans
Term loans take at least two business days to receive funds

If you need fast funding for your business, there are ways you can get the money you need within 24 hours. Our pick, Mulligan Funding, will transfer the funds for a working capital loan as soon as the next business day after you’re approved.


 

Methodology:

We chose small business loans from online lenders that could cover small, medium or large expenses. Small business lenders that appear on this list meet the following criteria:

  • Maximum amounts no less than $150,000
  • Funding available within two weeks of approval
  • No more than two years in business required
  • Personal credit score requirements below 680
  • Transparent rates and repayment terms

What is a small business loan?

Small business loans help entrepreneurs build, maintain or expand their companies. Getting a business loan for your company doesn’t always require walking into a bank and securing funds — there are also a variety of online small business lenders to consider, which may have easier qualifications and faster applications.

Small businesses account for a significant chunk of American economic activity — the U.S. Small Business Administration (SBA) estimates that there are 32.5 million small businesses across the country. While the nature of each one varies, many hold one major thing in common: the need for business financing.

Funding for underserved small businesses

There are several financing options aimed at historically disadvantaged businesses, including those owned by women and veterans, as well as Black, Asian, Latino and Native American entrepreneurs.

Business funding for women

Women entrepreneurs can apply for business grants or debt financing reserved for women-owned businesses. Women-owned businesses have grown at a faster rate than U.S. businesses overall in recent years, but when women are approved for business loans, the average annual loan size is about 33% less than men.

Business funding for minorities

Capital is available for business owners of color in the form of business grants or loans. Compared to their counterparts, those in historically marginalized communities face more entrepreneurial hurdles related to funding. Organizations and lenders across the U.S. allocate funds to support minority-owned businesses.

Business funding for veterans

There are several resources and funding options for veteran business owners. After leaving the military, many veterans often have trouble transitioning their military training to civilian careers and instead choose to start their own ventures. Business loans for military veterans are among the keys to success.

How to get a small business loan

The application process for small business loans differs depending on the type of business loan you’re seeking. Short-term loans typically have less paperwork than long-term loans, while equipment financing usually doesn’t require as much documentation as a business line of credit. However, it’s still a good idea to have certain documents ready in case they’re requested, in order to improve your chances of approval:


Summarizes revenue and costs and resulting profit or loss over a specified time, such as a quarter or fiscal year. Also known as a P&L or income statement.


Tracks how much cash your business has on hand at a certain point in time. While a P&L takes into account non-cash costs like depreciation, a cash flow statement allows you to understand how much cash is available for monthly bills.


Shows what the company owns and owes at a specific point in time. There is no set format for balance sheets, as the information reported varies by industry.


Describes the nature and scope of your operation, including projected income and expenses. A business plan is a guide for making business decisions and to help potential lenders, partners and investors evaluate your potential.


The most recent two years of business and personal tax returns, which help lenders verify income, as well as document your ability to repay the loan. Your business accountant can prepare the business and tax documents needed to support your small business loan application and guide you in accounting and tax matters related to your business.

Small business loan application checklist

Once you’ve determined that your business can handle taking on a loan, you should begin the process of rounding up the necessary documentation for your loan application. The exact paperwork differs across business funding partners, but will most likely include the following documents:

  • 2 to 3 years of personal and business tax returns
  • Recent profit and loss statement
  • Past bank statements
  • Recent balance sheet
  • Legal filings related to ownership
  • Information on existing debts
  • Business license (if applicable)
  • Business plan

AVOID THESE COMMON SMALL BUSINESS LOAN MISTAKES
Failed applicants commonly make the mistake of submitting inadequate or poorly planned financial documents and business plans. It’s important to gather as much well-prepared information as you can when applying for a business loan.
Close your loan
After approval, the closing process involves reviewing documentation that will determine the terms of your selected loan. A business loan contract is a legally binding agreement that will dictate your interest rate and repayment schedule. Make sure you have a thorough understanding of what the lender is asking of you and the implications these terms have on 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 default.

What do small business lenders look for?

Small business lenders want to know that your business and credit history are relatively stable. As such, they’ll look at several different debt, asset, credit and operational factors to judge your risk as a borrower.
  • TIME IN BUSINESS

    In general, a business that’s been around for a couple of years is more stable than a startup. This is key for lenders, as a business that has a proven track record of revenue over the past two years is a more attractive borrower than a company with spotty revenue over the past six months.

  • CREDIT SCORE

    Your credit score is a data point lenders use to determine your reliability as a borrower. In most cases, you’ll need a credit score in the 600s to qualify for financing, although certain lenders and loan types may allow scores as low as 500.

  • CASH FLOW

    A cash-flow projection shows when money is collected, when cash goes out and what’s left. Lenders typically like to see that the borrower has a thorough understanding of the financial operating cycle of the business.

  • COLLATERAL

    Collateral is an asset that lenders can legally seize if you can’t make payments, including company buildings, equipment and accounts receivable. Some business owners choose to use their personal assets — including their homes — as collateral on a business loan.

  • DEBT-TO-EQUITY RATIO

    Your company’s debt-to-equity (D/E) ratio measures the proportion of your company’s debt divided by shareholders’ equity. This metric helps a lender understand how likely you are to cover new debt based on the debt you’re already paying. While high D/E’s are common in some industries, your goal should be to keep your business’s D/E ratio as low as possible.

  • 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

Estimate how much you can borrow

Check your creditworthiness

Lenders may analyze your personal and business credit history when reviewing your company’s loan application; if your business is new, your personal credit profile would carry more weight.

Borrowers should expect to have good credit to qualify for traditional business loans.

  • 680 or higher: Minimum required by most traditional bank and credit union business loans.
  • 670 or lower: Accepted by online lenders. They may even consider scores as low as 500; howeve the trade-off might be higher fees.

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Business applications up nearly 9%, but omicron variant concerns loom

 

Key findings

  • Prospective business owners remain hopeful about economic growth, but a new coronavirus variant could impact that going forward. Nationwide, the number of business applications is up 8.9% in November 2021, compared with November 2020. However, on Nov. 30, 2021, the U.S. classified omicron as a variant of concern, which could impact business application growth in December.
  • Wyoming saw the most business application growth. The number of business applications rose 47.1% in the November-to-November period, from 2,190 to 3,222.
  • Four other Western states are also in the top 10. New Mexico, Montana, Alaska and Washington saw year-over-year business application growth of 18.6% or greater.
  • Business application growth is occurring in every state but five. The five that saw business applications drop are Maryland, Ohio, Pennsylvania, Georgia and Michigan.
  • The new businesses are likely to lead to long-term job growth. Researchers earlier in the pandemic saw an uptick in business applications, but smaller growth among what the U.S. Census Bureau calls high-propensity business applications, or HBAs. These are business applications with a high likelihood of the business transitioning into one with payroll. The number of HBAs is up 9.5%, year over year.

Methodology

LendingTree researchers looked at the number of new business applications and high-propensity business applications filed in each state in November 2021, compared to November 2020.

To rank the states, researchers found the percentage change in business applications between the two periods. Business applications — per 2020-21 data from the U.S. Census Bureau — are defined as all applications for an Employer Identification Number (EIN), except for applications for tax liens, estates and trusts.

Small business loan FAQs

Business owners can take out small business loans — generally between $5,000 and $500,000 or more — to finance expenses like payroll, 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.

Several types of business loans are available for small business owners, including term loans and business lines of credit for general business expenses. Financing is also available for specific purchases like equipment and commercial real estate. In addition, invoice factoring and accounts receivable financing are available for businesses that collect a high volume of invoices.

Yes, bad credit business loans are available for business owners with personal credit scores as low as 500. However, lenders may assign high interest rates to low-credit borrowers.

A personal guarantee is a common feature of business loans, which requires the business owner to be personally responsible for their company’s debt in case of default. A personal guarantee lowers the risk for a lender, but for the business owner, it may limit any protections your business structure offers.

Online lenders may be the best option for a startup business loan. They typically require only a few months in business, as opposed to brick-and-mortar banks that often have stricter eligibility requirements. Other options for startup capital include crowdsourcing, self-funding or grant funding.

It depends. Each lender will have its own criteria, sometimes varying based upon the loan type. The lowest interest rates are often reserved for applicants with higher credit scores, however. If this doesn’t fit your business, online lenders may be more lenient with credit score requirements.

If your application for a business loan is denied, revisit the reason why. Focus on repairing your credit if your credit score was too low; if you haven’t operated in business long enough, simply wait until you’re eligible. In the meantime, consider a small business credit card to get access to the capital you need.