Best Small Business Loans

Small business loans provide financing for purchasing equipment, expanding operations, and moving into larger spaces. Whether you need a few thousand dollars or a few million, business loans can inject working capital into your company to take it to the next level. 

We’ve researched the best small business loans for specific categories, including real estate, line of credit, fast funding, and more.

Reviews of the best small business loans

Each lender provides unique advantages tailored to specific business needs, whether for expansion, cash flow management, equipment financing, or other needs.

• Best marketplace: LendingTree
• Best for rental property: New Silver
• Best business line of credit: Bluevine
• Best for customization: Kapitus
• Best for fast funding: OnDeck
• Best for growing businesses: Funding Circle

LendingTree

Best Marketplace

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Why it’s one of the best

LendingTree is a top choice for small business owners seeking loans. Through its extensive network of lenders, it offers a wide array of financing options. With a single soft credit inquiry, borrowers can compare multiple loan offers without impacting their credit score.

Its ability to connect businesses of all sizes with tailored solutions is a significant benefit of LendingTree’s platform. You can compare terms, rates, and loan amounts, ensuring you find the best fit for your business.

• Funding from $10,000 to $1 million+
• Explore offers from a network of lenders
• It doesn’t affect your credit score

New Silver

Best for Rental Property

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Why it’s one of the best

New Silver is best suited for small business owners in the real estate sector, particularly those focused on fix-and-flip projects. Its specialization in real estate investment financing means it understands such ventures’ unique needs and timelines. With its fast approval and funding process, New Silver can be an excellent partner for businesses looking to capitalize on market opportunities.

New Silver offers a variety of loan options tailored to different stages of real estate investment, making it a versatile choice for entrepreneurs in this sector. Its expertise in the real estate market allows New Silver to provide valuable insights and support to its clients.

• Specializes in real estate investment financing
• Quick approval and funding process, ideal for time-sensitive projects
• Loans are designed for fix-and-flip projects

Bluevine

Best Business Line of Credit

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Why it’s one of the best

Bluevine is an excellent option for small businesses needing flexible cash flow solutions. Its lines of credit and invoice factoring services can help businesses manage their finances more effectively, providing access to funds when needed. 

Bluevine’s simple online application and fast funding can be crucial for businesses facing immediate financial challenges or opportunities. Bluevine’s products are best for businesses with variable cash flow or needing to bridge gaps between receivables and payables. 

Its focus on short-term financing solutions makes it a strong ally for small businesses looking for agile financial products.

• Provides lines of credit and invoice factoring, enhancing cash flow
• Quick and easy online application process
• Competitive rates for short-term financing needs

Kapitus

Best for Customization

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Why it’s one of the best

Kapitus provides small businesses with a broad spectrum of loan products, making it a versatile choice for various financing needs. Whether it’s purchasing new equipment or funding expansion efforts, Kapitus’s tailored solutions can fit different business models and growth stages.

Kapitus’s commitment to offering customized financing solutions means it can accommodate businesses with unique needs or those in niche markets. Its comprehensive suite of loan products allows businesses to find the right type of financing to support their objectives.

• Offers a wide range of financing products, including equipment financing and term loans
• Tailored solutions to meet specific business needs
• Competitive rates and flexible terms

OnDeck

Best for Fast Funding

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Why it’s one of the best

OnDeck is ideal for small businesses looking for quick access to capital. Its focus on short-term loans and lines of credit provides businesses with the flexibility to manage cash flow. OnDeck’s transparent terms and speedy funding process remove much of the uncertainty in securing business financing.

OnDeck’s products are best suited for businesses needing immediate financial support, whether to cover unexpected expenses or take advantage of timely opportunities. Its commitment to making funding accessible and straightforward makes it a reliable choice for small businesses.

• Specializes in short-term loans and lines of credit
• Get a decision in minutes and funding as soon as the same day
• Transparent terms and conditions

Funding Circle

Best for Growing Businesses

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Why it’s one of the best

Funding Circle’s term loans are ideal for small businesses looking to invest in long-term growth initiatives. Its competitive rates and longer repayment periods allow businesses to finance major projects without straining their cash flow.

Funding Circle’s personalized service ensures businesses receive the support and guidance they need throughout the loan process.

Funding Circle’s term loans are best for businesses planning significant investments in their operations or infrastructure. Its approach to lending combines the benefits of competitive financing with personalized customer service, making it a top choice for businesses focused on sustainable growth.

• Focuses on term loans with competitive rates
• Longer repayment periods available
• Personalized service with dedicated account managers

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How do small business loans work?

Small business loans exist to help entrepreneurs start and grow their businesses. If you’re a business owner—or a future business owner—you can apply to borrow money from a lender to help with short-term, long-term, and even one-time business expenses.

There are many different types of business financing and lenders. Some lenders specialize in lines of credit, loans for entrepreneurs with bad credit, or equipment financing. The federal government also offers business loans through the Small Business Administration (SBA) for qualified businesses. 

Lenders evaluate borrowers based on their creditworthiness, financial documents, business needs, and loan purpose. 

How to choose the best small business loan

The best small business loan for your business largely depends on how you’ll use the funds. Here is a detailed guide showing common uses of small business financing and the best loan type for that use.

Loan type	Best for
Term loan	Large expenses
Invoice factoring	Temporary dips in cash flow
Equipment loan	New equipment needs
SBA loan	Real estate purchases, improvements, or refinancing
Business credit card	Small expenses
Business line of credit	Unexpected or variable expenses

Term loan

A term loan is best if you own a business and want to make a large purchase, like a real estate asset. A term loan is a standard loan that provides a lump sum upfront to be repaid in installments. Term loans can have monthly payments lasting up to 10 years. 

Interest rates vary depending on how much you want to borrow and your credit profile. However, the median rate for small business term loans is 8.55% to 9.06%.

Invoice factoring

If you have a temporary dip in cash flow due to unpaid invoices, you can apply for a type of financing called invoice factoring. This enables you to turn outstanding invoices into cash if you have a business with slow-paying customers. 

The downside is interest rates can be 25% to 200% or more, according to Nav. These are not loans but rather short-term financing where you sell your unpaid invoices to a company in exchange for a portion of the payment.

Equipment loan

Operating a company often involves buying new equipment, whether running a doctor’s office or a large farm. Some lenders offer loans specifically for purchasing equipment where the equipment is the collateral.

Interest rates for equipment loans vary depending on several factors, including the term, which can be as little as a couple of months to several years. Of the lenders who publish interest rates, rates can start from 4.99% to 27.30% or more. 

SBA loan

An SBA loan is a good option for purchasing, improving, or refinancing real estate. The SBA partially guarantees these loans, which have lower interest rates and longer repayment terms than some other forms of business financing. 

You must meet specific criteria to qualify for an SBA loan, and there are several different types with varying maturity terms and interest rates. The current SBA loans are based on the base rate plus a certain percentage.

Business credit card

If you must purchase smaller expenses, like utilities, office supplies, or conference travel, applying for a business credit card might be a better option than a standard loan. Some business credit cards enable you to earn points every time you use them, which you can use to fund other business expenses.

Like other credit cards, though, business cards have high interest rates which can compound your balance if you don’t pay it off at the end of each month. The Consumer Financial Protection Bureau reports the average credit card APR rose to 22.8% in 2023.

Business line of credit

Consider applying for a business line of credit if you have unexpected or variable expenses. This type of loan is flexible in that you can tap into it when you need it. If you encounter unforeseen expenses, a cash flow shortage, or a spike in operational costs, a business line of credit can help your business quickly when needed.

A business line of credit typically has better interest rates than credit cards but operates similarly in that you only pay interest on what you use. Then, once you pay off the credit you’ve used, you free up space to use it again should you need it in the future.

What is the best financing option for you? 

The types of business financing mentioned above are helpful for various business uses. Which is best for your business depends on your company’s specific needs. Here are some examples of how business owners can pinpoint which financing option might be best based on specific business scenarios.

If you …	Consider …
Want straightforward repayment terms	Term loan
Flexibility for ongoing expenses	Business line of credit
Own a startup or new business	Business credit card; equipment financing
Are an experienced entrepreneur	SBA loan
Need to borrow a large amount	SBA loan

Term loans are popular for their straightforward repayment terms, but lines of credit offer flexibility for ongoing expenses.

For start-ups and other types of new businesses, business credit cards and equipment financing are particularly useful. These options cater to early-stage needs, offering lower borrowing amounts and sometimes more lenient credit requirements, making them accessible for new entrepreneurs.

Meanwhile, experienced entrepreneurs or those looking to borrow large amounts for an extended term can benefit from an SBA loan.

Ask the expert

Eric Kirste

CFP®

Have clear goals in mind before you start researching lenders. How much money do you need and for what purpose? Are you looking for a short-term or long-term loan? How much collateral can you put up? What’s your credit score? What’s the status of you cash flow and expenses? Understanding the answers to these questions will ensure you don’t overpay for financing or waste time with loan types you don’t need

How to evaluate small business loan lenders

Once you choose the type of business loan that’s best for you, evaluating and comparing lenders is important to ensure you’re getting the best rate and terms. Here are some important considerations when choosing a lender.

• Loan amount: Lenders have different limits on how much money you can borrow.
• Loan purpose: Lenders might require you to state the specific purpose for your business loan.
• Repayment terms: Short-term loans have daily or weekly repayment schedules because they’re often paid back within 18 months. Traditional term loans have monthly payments lasting up to 10 years. SBA loans can go up to 25 years.  
• Interest rates: With so many types of loans, interest rates and fees can be wide-ranging. It’s common to see rates of 3% to 36%—or more depending on the loan type and your credit profile. 
• Funding speed: You can get funding for many term loans and lines of credit in 24 hours. However, invoice factoring can take weeks, and SBA loans can take months.
• Lender reputation: Check review sites to ensure the lender has a good reputation and excellent customer service.
• Fees: Some lenders will charge fees, like origination fees, and others won’t. 
• Penalties: Find out whether or not the lender charges penalties for late payments or early payoffs.
• Collateral required: Not all lenders require collateral. But some will ask you to sign a personal guarantee, which states you’ll be personally responsible if you can’t repay your business debts.

Evaluate at least three to five lenders using the factors above to ensure you make an informed choice. Be sure to understand the repayment terms, fees, funding speed, and interest rate of the lender you choose before signing on the dotted line.

How much do small business loans cost?

To be an informed borrower, it’s important to know the total cost of your business loan. Here are the factors that impact the cost of business loans.

• Interest rates: Interest rates are the cost to borrow a loan. Some lenders offer fixed rates for your loan term and others offer variable rates that fluctuate based on market conditions.
• Fees: Lenders can also charge fees, which add to the cost of your loan. Origination fees can be between 1% to 5% of your loan amount. Lenders might also charge late payment fees and other fees.

Understanding the interest rates and fees charged by each lender can help you compare the total cost of a business loan.

For example, if you took out a $50,000 term loan with a 6% fixed interest rate over five years, a 3% origination fee, and $500 in other fees, the total cost of the loan would be approximately $60,998.40. This includes the principal, interest, origination fee, and other fees.

Cost component	Details	Amount ($)
Loan amount	Fixed	$50,000
Origination fee	3% of loan amount	$1,500
Total interest	Monthly payment ($966.64) × 60 – $50,000	$8,998.40
Other fees	Fixed	$500
Total cost	Principal + fees +interest	$60,998.40

By understanding these components, you can better compare the total cost of different business loans and make an informed decision.

Ask the expert

Eric Kirste

CFP®

The question of how much business debt is too much can be a challenging question to answer. There is a great deal of dependency on the type of debt the business carries and the kind of business you run. In addition, how well you manage that debt matters a lot. For example, if you regularly miss payments or run out of cash before the month is over, that indicates you have too much business debt. A ratio to monitor is if your business debt exceeds 30% of your business capital, this is another signal you’re carrying too much debt.

What’s required to be approved for a small business loan

Ensuring you qualify is the first step to getting a small business loan. Lenders have unique criteria. Check what credit score, revenue, and time in business the ones you’re considering require. You might find more lenient terms with online lenders. 

Remember that it is illegal for lenders to discriminate against borrowers based on sex, age, or race. Additionally, the Women’s Business Ownership Act of 1988 gave female business owners the right to apply for business loans without a cosigner.

Many lenders have these three requirements: 

• Time in business: Most lenders require at least one year in business, but others will lend to companies that have been operational for six months or less.
• Credit score: You may need a minimum credit score of 650 or higher, but some lenders will accept scores as low as 500 for certain loan types. 
• Annual revenue: Lenders typically require at least $8,000 in monthly revenue, which translates to $96,000 in annual revenue. 

Lenders will review your personal and business credit when applying. Depending on the loan type, you may need these documents: 

• Business financial statements and tax returns
• Personal financial statements and tax returns
• Business plan and cash flow projections
• Collateral you can pledge (if required)
• Articles of incorporation/organization
• Accounts receivable aging report
• Debt schedules

Funding times will hinge on what business loan you choose. Term loans from online lenders may take just a business day to process. SBA loans require significant paperwork and can take up to three months for approval.

How to apply for a small business loan

Here are the steps to apply for a small business loan.

1. Gather documents: As mentioned above, you’ll likely have to provide documents such as financial statements, tax returns, personal identification documents, and a business plan in some cases.
2. Choose a lender: After following the steps above and determining the type of business financing that’s best for you, choose a lender.
3. Fill out an application: Work with your lender to complete the application process. Respond promptly to the lender’s questions and upload any required documents.
4. Wait for approval: After you submit your application, lenders will review your documents. Depending on the lender, this could take days or weeks.
5. Review the loan offer: Once your lender approves you for a business loan, carefully review the loan offer. Ensure you understand the loan’s total cost, interest rate, and potential fees. If you have questions, ask.
6. Accept the loan: Once you are confident you approve the terms of the loan, sign the agreement. Funds will be on the way soon.

Alternatives to small business loans

If you don’t qualify for a small business loan, consider these alternatives: 

• Bootstrapping. This is where you start with what you have. You could use personal savings or tap into friends and family willing to invest in your vision.
• Crowdfunding. You could try pitching your business idea to the public. If enough people are interested, you could raise funds through small contributions. 
• Angel investors. Also known as venture capitalists, these individuals specialize in providing capital for startups—but often in exchange for equity ownership in your company. 
• Grants. Government and private grants aim to support small businesses, especially those in specific industries or owned by people of color, women, or veterans. Grants have significant competition but can help you get funding you don’t need to repay.
• Personal loans for business use. A personal loan could be an option if your company is too new to qualify for a business loan. But it ties your personal credit to your business’s success. Some lenders prohibit the use of personal loans for business use.

Small business loan FAQ 

What are the interest rates for small business loans?

Interest rates vary depending on several factors including your credit score, the amount you want to borrow, the type of loan you’re applying for, and your lender. 

Some lenders charge fixed interest rates, which don’t change during the term, while others offer variable interest rates depending on market conditions.

Here are some average interest rates for common small business financing products.

• New bank fixed-rate small business term loan: 9.06%
• New bank variable-rate small business term loan: 8.55%
• SBA 7(a) fixed interest rate loans: up to 13.5 to 16.5%
• SBA 7(a) variable-rate loans: up to 10.75 to 13.25%
• SBA Express loans: up to 13 to 15%
• SBA 504 loans: 6.58 to 6.79%
• Invoice factoring: 25 to 200% or more
• Business credit card: up to 34.99%

Lenders assign interest rates after evaluating factors like your credit history, the loan type, the loan term, and the amount you want to borrow.

How long does it take to get approved for a small business loan?

Some online lenders approve small business loans in a few days while other lenders, like traditional banks or SBA loans can take months. Before choosing a lender, ask about the typical time frame for reviewing applications and disbursing funds.

What credit score do I need for a small business loan?

Many traditional banks prefer a credit score of at least 680 for a small business loan for more favorable interest rates. However, alternative lenders may accept scores as low as 500. Lower scores may result in higher interest rates and more stringent repayment terms.

Recap of the best small business loans