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Updated Apr 18, 2024

Best Business Loans for 2024

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Max Freedman, Business Operations Insider and Senior Analyst
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Editor Reviewed
This guide was reviewed by a Business News Daily editor to ensure it provides comprehensive and accurate information to aid your buying decision.
Best for Comparing Loan Options
  • Quick application
  • Low borrower requirements
  • Education for new borrowers
See Offers
Links to
  • Quick application
  • Low borrower requirements
  • Education for new borrowers
Best for Marketplace Lending
  • Variety of loan types and terms
  • Funding specialists included
  • Network of lending partners
See Offers
Links to Biz2Credit
  • Variety of loan types and terms
  • Funding specialists included
  • Network of lending partners
Best for Line of Credit
  • Transparent pricing and terms
  • Fast approval and funding
  • Apply via accounting software
See Offers
Links to Fundbox
  • Transparent pricing and terms
  • Fast approval and funding
  • Apply via accounting software
Best for Flexible Terms
  • Variety of loan types and terms
  • High approval rate
  • Fast funding for large loans
See Offers
Links to SBG Funding
  • Variety of loan types and terms
  • High approval rate
  • Fast funding for large loans
Best for Fast Funding
  • Variety of loan types and terms
  • Approval within hours
  • Same-day funding
See Offers
Links to Rapid Finance
  • Variety of loan types and terms
  • Approval within hours
  • Same-day funding

Table of Contents

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What are Business Loans?

Business loans are funding sources — typically a bank or private lender — that support a small business’s launch or growth. Business loans may include term loans, usually repaid monthly with interest over a period of years; equipment financing, which uses the acquired equipment as business collateral; and lines of credit, which allow businesses flexibility in accessing working capital when funds are needed. Business loans may also include invoice financing — selling outstanding accounts receivable to a lender — and merchant cash advances, a typically high-interest loan repaid from your debit and credit card sales.

Why You Should Trust Us

At Business News Daily, our team of small business experts regularly evaluates hundreds of products and services that are essential to business operations. To determine the best business loans, we scoured the market and narrowed down our list of recommendations after in-depth, hands-on investigations that considered cost, features and ease of use, among other criteria. All evaluations were conducted with accuracy and fairness at top of mind. Learn more about our methodology.

  • Trying to secure the best business loan? Your credit score and other factors will influence how much money you can borrow, the type of loan you can get, and the cost to you (e.g., interest rate and fees).
  • The best business loan companies offer financing options for businesses of all types. Whether you’re well-established or a startup, you can find a loan to suit your situation and needs.
  • Alternative lenders provide fast funding, flexible terms and, in many cases, relaxed qualifications.
  • This guide is for small business owners seeking the best business loans for their companies.

Unless you have stellar credit and a booming business that’s been around for a while, securing a traditional business loan can be tough. That’s where the best business loan companies we examined in our reviews come in. These lenders are typically willing to work with borrowers that traditional banks may turn down for business financing.

These lenders offer a wide range of financing options, including working capital loans, merchant cash advances, equipment financing, invoice factoring and term loans. Many alternative lenders also make it easy to get financing with online applications and same-day funding.

We researched the options to help you find the best business loan for your needs. Below are the best loan companies that offer financing for a wide range of businesses and use cases.

Compare Our Best Picks

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Our Top Picks for 2024
SBG Funding
Rapid Finance
Fora Financial
Noble Funding
Balboa Capital
Crest Capital
Best for

Comparing loan options

Marketplace lending

Lines of credit

Flexible terms

Fast funding

Short-term loans

Customer service

Easy approval

Equipment financing


Loan amount

$5,001 to $3 million

Up to $6 million

Up to $150,000

Up to $10 million

$500 to $10 million

$5,000-$1.5 million

$100,000-$35 million


$5,000-$1 million


Repayment terms

One to 20 years

12 to 36 months

12 to 24 weeks

Six months to 10 years


Up to 15 months


Three to 24 months

24 to 84 months


Funding speed

24 hours to one week

24 to 72 hours

Next business day

24 to 72 hours

Same day

48 hours

24 hours to 5 days

Same day

Same day


Minimum requirements

$100,000 in annual revenue, no minimum credit score, one to six months in business

$250,000 in annual sales, 660 credit score, 18 months in business

$100,000 in annual revenue, 600 credit score, six months in business

$250,000 in annual revenue, 500 credit score, six months in business

500 credit score, 3 months in business

$15,000 in monthly sales, 500 credit score, six months in business, no open bankruptcies

$250,000 in annual revenue, no bankruptcies or liens on assets, at least 51% ownership stake; for some loan products, 650 credit score and 18 months in business

$300,000 in annual sales, 620 credit score, one year in business

24 months in business, 650 credit score

$50,000 annual sales, decent credit score, 12 months in business

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Our Reviews Best Lender for Comparing Loan Options

  • helps borrowers who are unfamiliar with the lending space understand and compare loans.
  • After a simple, quick application, you’ll receive assistance in comparing your loan options and choosing the best one for your circumstances.
  • Collateral is often required, and you might wait as long as one week for funding. This is several days longer than you’d wait with many other lenders on this list.
Editor's Rating: 9.2/10
See Offers launched in 2020 to streamline the loan application process and seamlessly connect borrowers with the best loans for them. The platform excels at welcoming borrowers with minimal knowledge about or prior experience with business loans. The company is known to work with any borrower to get them the funding they need — even borrowers who don’t meet the qualification criteria.

Applying for funding is straightforward. You’ll provide about a dozen data points that you should almost certainly know offhand. The process shouldn’t take more than three minutes. The algorithm will match you with lending partners that best fit your needs. The company works with over 35 lenders, so your likelihood of finding a lender is high.

Browse’s homepage and guides to learn more about the lending process. The company is committed to demystifying loans and making them work for any borrower. It will teach you how to effectively compare loans while providing hands-on assistance. This is why is our top pick for comparing loan options.

Biz2Credit: Best for Marketplace Lending

  • Biz2Credit offers various business financing options at competitive rates.
  • Its funding specialists match you with loans that best meet your needs.
  • Biz2Credit has tougher eligibility requirements than other lenders we considered.
Editor's Rating: 7.5/10
See Offers

We selected Biz2Credit as the best choice for marketplace lending because the company has a long track record of arranging small business loans and works with a network of lending partners to find you the best financing option. Since its founding, Biz2Credit has leveraged its network to fund more than $7 billion in small business loans.

We like Biz2Credit’s multiple loan options. You can apply for a term loan, a working capital loan, a commercial real estate loan, or an Employee Retention Tax Credit (ERTC) loan. Rates start at 7.99% and depend on your credit score. The better your credit, the lower your interest rate.

Biz2Credit charges simple interest — another unique feature we like that many business lenders don’t offer. Simple interest is calculated based on the principal balance each month. In contrast, compounding interest is calculated based on the principal balance plus any outstanding interest already accrued, which raises the loan costs.

To qualify for a term loan with Biz2Credit, you need a credit score of at least 660 and sales of $250,000 annually. That could shut out some borrowers, but it allows the lender to provide competitive rates. Biz2Credit offers an additional discount if you connect your business checking account.

Fundbox: Best Lender for Line of Credit

  • With a Fundbox line of credit, you know exactly how much you’ll pay before drawing any funds.
  • This lender provides lines of credit as high as $150,000 and can fund your account 24 hours after approval.
  • To qualify for a line of credit, you must be an established business bringing in at least $100,000 in sales, which may be difficult for some small business owners.
Editor's Rating: 7.5/10
See Offers

We recommend Fundbox as the best lender for lines of credit because it has competitive rates and transparent pricing. When you get a line of credit from Fundbox, you’ll know exactly what the cost will be before you finalize the transaction. This helps you make informed decisions, and not many lenders offer this much transparency.

Fundbox can extend up to $150,000 and has repayment terms of 12 or 24 weeks. This time frame is shorter than what other lenders offer, but that isn’t necessarily a bad thing. A line of credit is not a term loan. It’s designed to provide working capital or peace of mind. If you need money to cover a pricey piece of equipment or a longer-term business expense, a term loan is the better option.

We like that Fundbox makes repayment easy with weekly installments through its Flex Pay program. Some business owners may prefer monthly payments, but paying weekly means smaller chunks come out of your cash flow. The lender also offers an easy online application and next-day funding. That’s another reason we selected it as one of our best picks. Time is money. The sooner you can get the cash you need, the faster you can put it to work.

Fundbox goes beyond lending when supporting its customers. Another feature that stood out to us is its integration with popular programs that many businesses already use. The lender integrates with Freshbooks, QuickBooks and Zoho, three of the best business accounting software platforms. Most recently, Fundbox added integration with the online job site Indeed.

Fundbox’s line of credit may not be for startups or those with limited sales. It offers competitive rates, quick funding and transparent pricing.

SBG Funding: Best Lender for Flexible Terms

  • SBG Funding provides fast funding on loans as high as $10 million.
  • Small business owners receive favorable pricing and flexible terms on term loans, business lines of credit, equipment and invoice financing, bridge capital, and SBA loans.
  • SBG Funding requires a lot of documentation when you apply for a loan. That may not be appealing to time-crunched business owners.
Editor's Rating: 9.8/10
See Offers

Flexibility is important for small businesses. You don’t want to be locked into a loan for a long time. You also don’t want to scramble to find the cash to repay a loan in too short a period. Whether you need short-, medium-, or long-term funding, SBG Funding has an option for you. We like that SBG Funding’s loan terms can be as short as six months or as long as 10 years.

SBG Funding’s flexibility doesn’t end with its terms. You can borrow as much as $10 million, depending on the loan type. That allows you to grow with the lender. You may need a $10,000 short-term loan to start with, but later need a loan to buy a $1 million piece of equipment. SBG Funding can support that growth with its loan products.

SBG Funding is also willing to work with borrowers who have credit issues. It can make a qualifying decision in 24 hours and get funding to you the same day in some cases. However, SBG Funding requires more documentation to approve a loan than most other business lenders we reviewed. That may dissuade some borrowers. But with competitive rates, flexible terms and loans of up to $10 million, the extra effort may be worthwhile. That’s why SBG Funding is worth serious consideration if you’re looking for a flexible lender.

Rapid Finance: Best Lender for Fast Funding

  • Rapid Finance has an easy online application, quick approval times and same-day funding.
  • Rapid Finance offers various loan options and flexible repayment terms.
  • If you have a low credit score, the interest rate Rapid Finance charges may make the loan too expensive.
Editor's Rating: 9.5/10
See Offers

Rapid Finance is true to its name, delivering fast funding to approved loan applicants. Both approval and funding can occur within hours, which is much faster than most lenders we reviewed. Rapid Finance offers merchant cash advances of up to $500,000. You repay your loans by giving Rapid Finance a fixed percentage of future credit card transactions.

To apply with Rapid Finance, you must provide a government-issued photo ID, a business tax ID, your business’s checking routing and account numbers, and the last three months of your company’s bank account statements. The application can be completed online in about 15 minutes if your documentation is readily accessible.

Fora Financial: Best Lender for Short-Term Loans

  • Fora Financial’s terms last as long as 15 months, and loan amounts range from $5,000 to $1.5 million.
  • The lender does not require collateral, offers flexible repayment terms and only requires three months of bank statements.
  • Fora Financial requires borrowers to have $15,000 in monthly revenue, which is a high hurdle for startups.
Editor's Rating: 9.4/10
See Offers

We selected Fora Financial as our best pick for short-term loans because it offers flexible terms of up to 15 months, has a quick and easy qualification process, and can lend small businesses up to $1.5 million. We like that Fora Financial caps its terms at 15 months. That is a shorter period than what many lenders offer, but you won’t pay as much compounding interest. It also means you won’t have to continue repaying a loan long after it has lost its value.

The lack of collateral or personal guarantees required for Fora’s short-term loans is a bonus. It’s one less thing to worry about when applying for a loan. Fora Financial is one of the few lenders that doesn’t charge additional fees. You only pay the principal and interest.

The lender’s application process is quick and easy. It takes 24 hours to find out if you qualify, and Fora Financial can fund your account within 48 hours after you’re approved.

Fora Financial has provided $3 billion in loans to more than 35,000 small businesses over the past 15 years. It offers quick approval times and short terms, making it a top contender for small business owners who need funding but want to pay off their loans quickly.

Noble Funding: Best Lender for Customer Service

  • Noble Funding has issued more than $1 billion in small business loans. It has a good track record in the industry and has accumulated many positive customer reviews.
  • It offers a variety of loan types and terms to meet most small businesses’ needs.
  • You need a credit score of 650 or higher to be eligible for one of its loans, which poses a higher barrier to cross than some of the other lenders we reviewed.
Editor's Rating: 9.4/10
See Offers

We selected Noble Funding as our best pick for customer service because of the company’s long track record of issuing loans to small businesses, lack of upfront fees, and willingness to work with you to find the best loan product for your business. We like that Noble Funding focuses on providing top-notch customer service and has the reviews and ratings to back it up.

Noble Funding has been accredited with the Better Business Bureau for over 15 years and has an A+ rating. There are no negative reviews on the BBB and nearly 200 positive reviews on Trustpilot. That’s impressive for an alternative lender. Some lenders charge excessive fees or provide less-than-stellar customer service. Borrowers are quick to note flaws like these in their reviews of other lenders, which makes Noble Funding’s glowing assessments stand out.

We also like that Noble Funding understands that not every loan product will work for every borrower. It is willing to analyze your needs and find the best loan for your situation. That’s a refreshing level of customer service compared to other lenders we reviewed.

Noble Funding has been issuing small business loans since 2005. Consequently, it has a great deal of experience and knowledge to offer. The application is simple to complete, approval is fast, and Noble doesn’t require collateral or personal guarantees for some of its loans. Furthermore, Noble Funding offers flexible terms and affordable pricing.

Balboa Capital: Best Lender for Easy Approval

Balboa Capital
Balboa company logo
  • If you don’t want to deal with a lengthy application process and burdensome paperwork requirements, Balboa Capital is for you.
  • This lender offers small business owners a variety of loans and flexible terms.
  • If you need a longer-term loan to cover a big purchase or expensive outlay, Balboa Capital isn’t for you. Terms only last up to 24 months for its small business loans.
Editor's Rating: 8/10

We selected Balboa Capital as our best pick for easy approval because it makes getting business financing quick and easy. When you work with this lender, you won’t spend hours filling out a complex online application or scanning and submitting tons of documents. You can also expect a fast approval decision after applying.

For Balboa Capital’s small business loans, you can borrow between $5,000 and $250,000, and pay it back in between three and 24 months. These loans make the most sense for business owners who need a bridge loan to purchase inventory or run a marketing campaign. Since terms on these loans are short, it is not a viable option to finance expensive purchases, like equipment. However, Balboa Capital offers equipment financing as well.

Reputation also matters, particularly in the business lending market. Some unscrupulous lenders tack on hidden fees and charge exorbitant rates for their loans. Balboa Capital isn’t one of them. It has been in business for decades and is accredited by the Better Business Bureau since 1999.

Crest Capital: Best Lender for Equipment Financing

Crest Capital
Crest Capital company logo
  • Crest Capital offers flexible equipment financing options, with terms ranging from 24 to 84 months.
  • This lender offers fast funding and will let you finance equipment from private sales.
  • Crest Capital charges an administration fee, which may not appeal to some small business owners.
Editor's Rating: 7.3/10

We selected Crest Capital as our best pick for equipment financing because it offers 100% financing, flexible terms, and loans up to $1 million. When financing equipment under $250,000, Crest Capital doesn’t require much paperwork, which is a huge positive. Typically, business owners purchase equipment when something breaks or when they’re experiencing rapid business growth. They’re not looking to go through a time-consuming, arduous process to get financing. However, if the equipment you want to finance costs more than $250,000, Crest Capital does require a lot of documentation to prove your creditworthiness.

Crest Capital is quick to approve loans and has same-day funding. It also offers more types of financing agreements than many rival lenders. You can finance new and used equipment and apply for Section 179 qualified financing, which allows you to deduct some or all the equipment’s cost.

Another reason we chose Crest Capital as the best equipment financing lender is its track record in the industry. Crest Capital has been providing small businesses with financing for decades. That experience is important. Financing can be complicated. You want to work with a lender with flexible payment terms and transparent pricing that knows what it’s doing. You’ll get that with Crest Capital, which is why this lender should be at the top of your list if you’re looking for equipment financing.

Accion: Best Lender for Microloans

accion company logo
  • You can borrow as little as $500 or as much as $100,000, and Accion Opportunity Fund offers flexible terms and competitive rates.
  • Accion is focused on underserved markets, including women- and minority-owned small businesses.
  • Accion requires a lot of documentation when underwriting a loan, which may not appeal to all business borrowers.


Editor's Rating: 7.5/10

Accion Opportunity Fund is our best pick for microloans because it focuses on working with underserved business borrowers and will extend loans for as little as $5,000. You get more than a small business loan when you work with Accion. We like that this nonprofit, which has served the small business community for over two decades, offers educational resources, training, coaching and networking opportunities. When you’re starting a business and juggling startup costs, you can use all the help and advice you can get.

It’s easy to apply quickly online for a loan from Accion;. You can easily reach this lender’s customer support line for assistance as you go through the application process.

We also like that Accion has relaxed qualifications. It’s hard for new business owners and first-time borrowers to get funding from other lenders, even for a small amount. That’s not an issue with Accion, which has no credit score requirement. You must also have been in business for 12 months to qualify for a loan with Accion.

Microloans can help businesses get off the ground, boost working capital, or chase growth opportunities. Accion Opportunity Fund makes it easy to get funding, even if you don’t have many sales or the best credit score. It should be at the top of your list for lenders specializing in microloans.

Choosing a Business Loan Provider

When seeking a loan, you must understand the ins and outs of the lending process, the lender’s qualification requirements, and loan terms to secure the capital you need without compromising your business’s future. As you compare various lenders, consider the following elements to ensure you choose the right loan.

Loan Application Ease

While you evaluate lenders, ask how long or detailed the application process is. Your lender will collect information about your business income and debts and use that to assess your ability to repay the loan. Some lenders require a lot of paperwork, while others don’t, depending on the loan size and term length.

If you need money quickly, select a lender with an online application and relaxed requirements about necessary documentation. Speed up the approval process by having certain documents ready, including your business’s tax returns, bank statements, financials, articles of incorporation and franchise agreements.

Did You Know?Did you know

Many online lenders offer educational tools to help you understand common business loan mistakes that may be holding you back from securing a business loan.

Interest Rate

Small business loans accrue interest, which is the price you pay for a loan. Rates are either fixed or variable. Generally, alternative lenders offer a fixed interest rate. Your interest rate will depend on the lender you partner with; your business’s financials, credit score and years in business; and your personal financial history. It is important to weigh the cost of the loan against the benefits of borrowing. If the cost does not make sense for your needs, seek a lower-cost alternative.

Rules and Requirements

Lenders charge business borrowers money to access capital. That includes interest, an origination fee and other charges such as maintenance and late payments. Pay attention to the annual percentage rate (APR). That tells you the full cost of the loan, including fees.

The size of the loan also impacts how much interest you’ll pay. The loan term is the amount of time you have to repay the loan. Loan contract terms can range from as short as a few weeks to as long as several years.

Qualifying Criteria

Depending on the loan type and lender, the qualifications for approval vary. Most lenders look at your business and personal credit score, years in business, annual sales, and business plan. Lenders don’t want to lose money and will scrutinize you and your business to ensure you can repay the loan.


To build business credit, ensure your business’s legal structure is established, register the business with your secretary of state, and get your EIN (employer identification number).


Business collateral is an asset you pledge to secure your loan. If you can’t repay the loan, you forfeit the collateral to the lender. Collateral can be your building (if you own it), equipment, accounts receivables, property, or something else of value. Lenders offering secured loans require the business owner to put up a certain amount of collateral. Unsecured business loans do not require collateral.

Many lenders also require a personal guarantee, a binding legal document in which you pledge to personally pay back the loan if your business can’t. If the debt is nondischargeable and you file personal bankruptcy, you’re still obligated to repay the loan.

Funding Speed

It is important to know when you’ll have the loan funds in your bank account so you can plan accordingly and avoid a cash crunch for payroll or other business operating expenses. Some alternative lenders can fund your loan the same day you’re approved, while others take a few business days.


Some lenders require you to provide additional documentation, such as tax returns, photo ID, bank and credit processing statements, or a voided check. Each lender has specific requirements.

Key TakeawayKey takeaway

There is much to consider when applying for a small business loan, such as costs and terms. The more information you have before shopping for a loan, the better prepared you’ll be to make a good choice and properly manage your business’s finances.

What Type of Business Loan Is Best for Your Small Business?

There are many business loan options aside from traditional bank loans. The one that makes the most sense for you depends on your credit score, time in business, and the amount you’re looking to borrow. Funding speed and specific terms will vary from one product to the next. With that in mind, here’s a look at the small business financing options available to you.

SBA Loans

U.S. Small Business Administration loans are processed by lenders and banks. These low-interest loans are intended to help owners expand their businesses (e.g., buy a business, land or equipment) or recover after a natural disaster. The maximum amount you can receive from an SBA loan is $5.5 million.

There are four specific types of SBA loans.

  • SBA 7(a) loans: These are a good option for working capital, debt consolidation or buying equipment for your enterprise. You can borrow up to $5 million. SBA 7(a) loans feature a variable interest rate tied to the prime rate. Collateral is required.
  • SBA 504 loans: This loan type also has a cap of $5 million, with rare extensions to $5.5 million for manufacturing or energy-efficient projects. Many business owners use a 504 loan to purchase machinery or land. SBA 504 loans cannot be used for working capital or inventory. Interest rates are typically fixed and are based on five- and 10-year U.S. Treasury bond rates. No collateral is required.
  • Microloans: Microloans can be used for working capital and to purchase supplies, equipment or fixtures, and furniture. Rates vary from 6% to 9%. Loans are available from community-based nonprofits; the maximum amount you can borrow is $50,000.
  • Disaster loans: In case of emergency, disaster loans offer borrowers up to $2 million. They are designed specifically for small business owners who must rebuild after a natural disaster or global crisis. In late 2022, the SBA announced it would waive interest on disaster loans during the first 12 months. After that, the interest rate for for-profit businesses will be 3.04%.
Did You Know?Did you know

SBA loans are in high demand — the agency issued over 62,000 7(a), 504, and microloans in 2022. But an SBA loan may not be right for you, which is why it’s important to consider all loan types.

Term Loans

With a term loan, you get a lump sum and must repay it in installments over a set period. Term loans have different repayment schedules depending on your business needs.

  • Long-term loans: These loans have terms of at least six years. They are typically used for big purchases, such as company vehicles or property.
  • Medium-term loans: These loans have terms ranging from two to five years. They’re commonly used to purchase business equipment or to fund expansion.
  • Short-term loans: These loans have terms of less than two years. They are typically used to purchase inventory, fill cash flow gaps for working capital, or meet other short-term cash needs.

Lines of Credit

Lines of credit, or LOCs, give business owners quick access to capital. There are no rules for how the money can be used, and you only pay interest on the money you draw. The lender determines the loan size and interest rate. Many LOC loans have qualification requirements such as a minimum annual revenue, the length of time your company has been in business, and minimum credit scores of 500 or higher.

Merchant Cash Advance

With a merchant cash advance, the lender offers merchants an advance in exchange for future credit card sales. You get access to cash quickly and must repay the advance daily via a percentage of your credit card sales.

Did You Know?Did you know

Small business loans and cash advances differ. Advances are best for short-term needs, while loans are preferable for borrowers with the time and credit to obtain them.

Peer-to-Peer Lending

Peer-to-peer (P2P) lending is a loan from another business owner or individual investor interested in financing your business. This cuts out the need for banks. These loans have drawbacks and are not allowed in all states.

Unsecured and Secured Loans

An unsecured business loan doesn’t require you to put up collateral. However, you must have good credit to qualify. A secured loan requires collateral, including an asset, equipment, accounts receivable or real estate property.

Equipment Financing

Equipment financing occurs when a business owner takes out a loan to pay for equipment. The collateral is the equipment you are financing. Most business owners can get approved thanks to the collateral component.


If you don’t have the cash or desire to purchase equipment outright, consider leasing equipment.

Invoice Financing

With invoice financing, business owners receive an advance on unpaid invoices. This financing is also called accounts receivable financing. Invoicing companies can advance you as much as 80% of the value of your unpaid invoices. You receive the final 20%, minus any fees when the invoices are paid.

Alternative Loans

Alternative lenders are another small business financing option. These nonbank lenders provide loans to business borrowers. They’re typically more flexible than banks and have a quicker application process and funding time. The approval requirements are usually more relaxed than those of a bank. Any financing outside of a bank is considered an alternative loan.

Key TakeawayKey takeaway

Business owners have many options for accessing capital, all with varying costs and terms. SBA loans, term loans, lines of credit, equipment financing, private funding and alternative lending are popular options.

Business Loan FAQs

The answer to this question depends on how much money you need and how you intend to use the funds. Many lenders have minimum qualification requirements for annual revenue, time in business and the business owner’s personal credit score. This is helpful for startups that lack a financial history and can’t meet the requirements lenders have for more established organizations. Read our reviews to see which lenders have less demanding eligibility requirements.

Several types of SBA loans are available for business owners. Three of the most common include SBA 7(a) loans, SBA 504 loans and microloans, which we discussed in this article. The SBA 7(a) loan is ideal for small to midsize businesses, with low interest rates and long repayment terms. The 504 loan is well-suited for purchasing real estate or paying for construction or renovations. Finally, microloans are best for very small businesses that must offset startup or early expansion costs, because these loans are capped at $50,000.

The interest rates on SBA 7(a) loans are typically variable, though they can occasionally be fixed rate. SBA 504 loans and microloans are fixed rate.

If the loan you’re considering is unsecured (i.e., no collateral is required), you’ll usually need to provide a personal guarantee. This is the case for most startup loans because your guarantee is how lenders protect themselves if you can’t repay the loan.

If you’re a startup, your company doesn’t have a financial history. Instead of evaluating your business’s credit, lenders will check your personal credit. This is a common lender practice, especially for new business owners. Sometimes looking at your personal credit is the only option lenders have.

Your credit profile significantly impacts whether or not you’ll be approved for a small business loan. Unless your business has been around long enough to establish a good credit history, lenders will look at your personal credit profile to assess your creditworthiness. The higher your credit score, the better.

Many lenders also require collateral to underwrite the loan. The collateral could be your home, car or other private property of value. If your business fails to repay the loan, the lender can come after your collateral.

The minimum credit score you need to qualify for a business loan ranges from 500 to 640 or higher. The requirements depend on the type of loan you’re seeking and your lender.

For an SBA Express loan or SBA 7(a) loan, borrowers need a score of at least 600 or 640, respectively. If you’re interested in the SBA CAPLines program or an SBA export loan, you need a credit score of at least 660. SBA CDC/504 loans require a minimum score of 680, and for an SBA microloan, a score of at least 620 to 640 is preferred.

Online lenders often have more flexible requirements. Some provide loans to those with credit scores between 500 and 550. However, if your credit score is that low, you will likely pay higher interest rates.

Getting approved with bad credit can be challenging but not impossible. Some lenders, such as, don’t use your credit score to determine whether you qualify for a business loan. Some weigh your financial history and business success more heavily than your credit score. If your credit score isn’t great, shore up other parts of your business value, such as revenue or sales.

Often, to be approved for a small business loan, you must personally guarantee the debt. This means you will repay the loan yourself if your company doesn’t. The lender has every right to go after you individually if the loan is delinquent, and that could hurt your personal credit score. The same applies to a business line of credit. If you personally guarantee any loan and the business can’t repay it, you are on the hook for the money owed.

You may need to provide lenders documents that verify your annual business revenue and profit, bank statements, personal and business tax returns, a business plan, business licenses and permits, proof of collateral, a balance sheet, a copy of your commercial lease, and any legal contracts and agreements you already have in place.

The traditional way of borrowing money is to apply at a local bank or credit union. However, this route can take weeks before your business is approved and funded. Online lenders tend to do a better job in this regard because they can get loans into business owners’ hands in days or hours.

Alternative lenders typically offer several loan options, including working capital loans, merchant cash advances, equipment financing, term loans and invoice factoring. Depending on the type of loan you want, you could have money in your bank account in less than 24 hours.

Whichever option you go with — a traditional lender or an alternative lender — you can speed up the approval process by having your business documentation ready, including tax forms, bank statements, financials and other documents related to your enterprise.

Acceptable collateral varies. In general, anything valuable can be used. Common types of collateral for business loans are equipment, vehicles, real estate, inventory and accounts receivables. Some lenders may require you to offer personal collateral not tied to your business. This could include vehicles, real estate and cash in the bank.

Several types of business loans exist, all with varying terms. Business loan terms can be as short as a few weeks or as long as 25 years. A traditional bank loan term might last from three to 10 years. Medium-term business loans last two to five years, while short-term business loans are typically three to 24 months in length. SBA small business loans have terms of up to 25 years, but 10-year loans are more common.

A merchant cash advance gives you quick access to the money from your credit card sales. However, it’s a costly and risky way to access cash, and it comes with complicated terms.

With a merchant cash advance, you receive an upfront payout and repay it either with a percentage of your future credit card and debit card sales, or with daily or weekly fixed payments. Either way, you’ll make regular payments, plus fees and interest, until you’ve repaid the advance.

The lender assesses how likely and able you are to pay back the advance, which impacts the fees you’ll pay; your riskiness to the lender is known as the factor rate. The higher your factor rate (i.e., the greater risk the lender determines you to be), the more fees you’re on the hook for.

You can apply by searching for lenders approved by the SBA. Armed with that list, comparison shop and apply directly on the lenders’ websites or through their mobile apps.

An easier option is to use the SBA’s Lender Match tool, which connects borrowers with SBA lenders. Answer a series of questions, which the SBA says takes five minutes. Two days later, you’ll receive an email with offers from lenders. It’s up to you to pick the lender, but once you’ve settled on one, you apply directly with it. (The SBA’s Lender Match tool is not for its disaster relief loans and assistance.)

The COVID-19 pandemic EIDL loans expired at the end of 2021. Until May 6, 2022, small business owners could request an appeal or reconsideration if they were turned down. This was also the final date on which the SBA accepted applications for loan increases.

You can still get an Economic Injury Disaster Loan if your business was impacted by a fire, hurricane or other natural disaster.

An installment loan is financing you use to pay for equipment or property over a set period. Unlike a credit card, which gives you a revolving line of credit, loan payments are fixed over the loan’s term. Once you pay off the loan, the debt is settled. Interest rates on installment loans are typically lower than credit card interest rates, but more risk is involved. If you can’t repay the loan, the lender claims your collateral.

Installment loans are common for purchasing property, expensive equipment, business vehicles or other high-priced items. You can also use an installment loan to fund your startup. If you want the loan for this purpose, you’ll need good credit, collateral, a sound business plan and a willingness to sign a personal guarantee.

A business line of credit is a revolving loan that business owners tap as they need funds to grow or fill cash flow gaps.

Instead of getting a lump sum and paying interest on the full amount, you pay interest on the money you draw from the line of credit. Typically, a line of credit ranges from $1,000 to $250,000, though some lenders may issue higher amounts. Most lines of credit have a variable interest rate, which means the amount you pay changes depending on the prevailing interest rate.

A business line of credit can be secured or unsecured. With a secured line of credit, you must provide collateral.

With an unsecured line of credit, you don’t have to provide collateral, but you may need to sign a personal guarantee.

A bank loan is often the best option for small business owners with a strong credit score, a well-established and growing business, and valuable collateral. Sure, it may take longer to get the cash, but it’s often cheaper than using an alternative lender because interest rates tend to be lower. If you’re applying through a bank, the best first place to try is your local bank. It already knows you and your business and will be more inclined to offer favorable terms to an existing customer than to a stranger.

We recommend assessing how much money you need to borrow and for how long. You don’t want to take out a long-term loan for a short-term cash flow problem. Nor do you want to wait weeks for the funding you needed yesterday. If fast funding is your priority, an online lender is better.

The same goes for your credit profile. If you have less-than-perfect credit, you’ll do better with an online lender versus a bank. If you care about the cost of borrowing above all other considerations and are in good financial standing, choose a bank.

What to Expect in 2024

Credit availability and rising interest rates are two major themes for business loans in 2024. Over the last two years, the U.S. Federal Reserve significantly raised its benchmark interest rates. The WSJ Prime Rate, an index of prime rates from 30 major banks, has ballooned to 8.5%, compared to 8% a year ago.

Over the last few months, inflation readings have fallen into a normalized range. More recently, the central bank has paused its rate hike campaign, and many analysts believe that rates are at or near a peak. Federal Reserve Chair Jay Powell has publicly indicated that rates could fall somewhat in 2024. For now, policymakers are holding interest rates at elevated levels and assessing the impact on the economy.

The good news for businesses in need is that many lenders are still approving small business loans at high rates. A down economy and rising inflation may leave many small business owners looking for additional funding. Alternative lenders are ready to meet that demand, and it also appears that the SBA will have more money to lend in 2024.

Additionally, artificial intelligence and machine learning are reducing loan approval wait times and increasing the speed with which funds are deposited into business owners’ bank accounts. Credit scores still matter, but lenders are increasingly scrutinizing other aspects of a business owner’s finances to ascertain their creditworthiness. Altogether, these changes are designed to make getting a small business loan easier and faster in 2023.

In response to rising inflation, the SBA has expanded its size standards for what is considered a small business. That means more businesses are now eligible for SBA loans and federal contracts.

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Max Freedman, Business Operations Insider and Senior Analyst
Max Freedman has spent nearly a decade providing entrepreneurs and business operators with actionable advice they can use to launch and grow their businesses. Max has direct experience helping run a small business, performs hands-on reviews and has real-world experience with the categories he covers, such as accounting software and digital payroll solutions, as well as leading small business lenders and employee retirement providers. Max has written hundreds of articles for Business News Daily on a range of valuable topics, including small business funding, time and attendance, marketing and human resources.
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