11/06/2024

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6 Best Small Business Loans in 2023

6 Best Small Business Loans in 2023

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Disclaimer: This is sponsored content. All opinions and views are of the advertiser and do not reflect the same of WFTS.

Business owners may get a small business loan in order to have access to capital for things like payroll, inventory, and other operational costs. Traditional small business loans often come in the form of a one-time lump sum payment together with predetermined monthly payments and interest rates. 

However, there is a wide variety of other ways that loans for businesses may be structured. Take a look at the six best options for small business loan financing. 

The 6 Best Small Business Loans

  • LendingTree – Best Small Business Loan Overall
  • BlueVine – Best  Small Business Loan for Accessible Credit Lines
  • Lendio – Best  Small Business Loan for Lender Comparison 
  • Credible – Best  Small Business Loan for Flexible Options
  • AmOne – Best  Small Business Loan for Fast Approvals
  • Fundera by NerdWallet – Best SBA Small Business Loan 

LendingTree: Best Small Business Loan Overall

Star rating: 4.95/5

LendingTree is an online lending platform that connects businesses to an extensive range of lending partners. Therefore, LendingTree does not actually originate any loans. Instead, LendingTree matches you with the best lending partner based on your application. LendingTree offers SBA loans, short-term loans, business lines of credit, equipment financing, and invoice factoring.

Why we chose it: LendingTree offers the best small small business loans because this company matches you with multiple potential lenders. Therefore, you can easily find a loan offer with reasonable terms once you complete the application. 

Pros: 

  • Reasonable borrower qualifications
  • Multiple types of financing are available
  • Quick and easy application process

Cons: 

  • You may be subject to additional fees
  • Uninformative website advertising
  • Pushy customer service

Pricing 

The terms and fees for your small business loan depend on the specific loan offer’s rates. Check out your pricing by filling out the quick LendingTree online application.

Application Process

LendingTree’s quick and simple application process is one of the primary reasons it’s the best small business loan platform. Since the application is online, you can complete it within 10 minutes. The application asks for your business’s classification, credit score, profitability, and time in business. After you complete the application, LendingTree will show you your small business loan offers within two minutes.

Borrower Qualifications

The great part about LendingTree is that it’s inclusive of most businesses. Rather than having specific criteria to rule out potential borrowers, LendingTree uses your credit score, annual revenue, and profitability to find a lender willing to work with your business.

Loan Limits

Your specific loan limits depend on which lending partner LendingTree matches you with. That being said, you can ask to borrow up to $2 million on the LendingTree application. 

Terms and Fees

Since LendingTree works with several lending partners, your terms and fees depend on your specific loan offer. For this reason, reading through the entire loan offer is essential. This is the only way to determine if the terms and fees are reasonable for your business to pay off. 

 

 

BlueVine: Best Small Business Loan for Accessible Credit Lines

Star rating: 4.90/5

BlueVine is an established online lending platform that provides short-term business lines of credit between $5,000 and $250,000. You can choose from Flex 6 or Flex 12 lines of credit, designed around six and 12-month repayment periods. Therefore, BlueVine is an excellent choice for small business owners that need short-term working capital or small business loans. 

Why we chose it: BlueVine is the best online lending platform for flexible credit lines because you can finish your application and receive a decision on the same day. This lending platform also considers borrowers with poor credit and six or more months in business. 

Pros: 

  • Funding within one business day
  • Multiple term lengths
  • Low minimum credit score requirements

Cons: 

  • You may be subject to weekly repayments
  • Requires a personal guarantee
  • Unavailable in North Dakota, South Dakota, and Nevada

Pricing

The terms and fees for your small business loan depend on the specific loan offer’s rates. Check out your pricing by filling out the quick BlueVine online application.

Application Process

BlueVine stands out as one of the best small business loan providers with a simple and fast application process. You can complete the online application in under 10 minutes. Furthermore, you will receive your loan offers within a few minutes and funding within one business day. 

Borrower Qualifications

BlueVine features more lenient borrower qualifications than other online and traditional lending platforms. However, BlueVine focuses on your business’s cash flow, time in business, and credit score.

Furthermore, BlueVine is one of the best small startup business loans. This is because BlueVine considers borrowers with just six or more months in business.

Loan Limits

You can access a line of credit and borrow between $5,000 and $250,000 from BlueVine. 

Terms and Fees

BlueVine offers two different payment structures: Flex 6 and Flex 12. Borrowers who choose Flex 6 are subject to weekly payments over 26 weeks. On the other hand, Flex 12 borrowers make monthly payments over 12 months. Furthermore, you can expect interest rates ranging from 15% to 78%. 

 

 

Lendio: Best Small Business Loan for Lender Comparison 

Star rating: 4.82/5

Similar to LendingTree, Lendio is another loan platform with an extensive lender marketplace. In fact, Lendio lets you compare small business loan options from more than 75 direct lenders. In addition, your loan can be deposited into your bank account as quickly as 24 hours. Therefore, Lendio is an excellent option for small business owners who need fast cash.

Why we chose it: Lendio is the best small business loan provider for finding quick and comprehensive loan offers because it provides over 75 loan options once you complete the application. Therefore, you can use Lendio to find the best rates and terms you can possibly qualify for. 

Pros: 

  • Compare loans from over 75 lenders
  • Rapid funding time
  • Can borrow up to $500,000

Cons: 

  • Not a direct lending platform
  • Borrower requirements vary by lender

Pricing 

The terms and pricing for each small business loan from Lendio depend on which lender it matches you with and your business’s financial situation.

Application Process

Lendio has a 15-minute online application process. Once you finish the application, you receive your decision on the same business day. Therefore, Lendio is a fantastic choice for small business owners who need a quick list of small business loan options to compare. 

Borrower Qualifications

Since Lendio isn’t a direct lending platform, the borrower qualifications vary depending on which lender it matches you with. It depends on your business’s annual revenue, time in business, and your personal credit score.

Loan Limits

In terms of Lendio’s small business loan limits, you can borrow between $25,000 and $500,000. Furthermore, you can repay the loan over a one to five-year time period.

Terms and Fees

Although your terms and fees depend on your specific loan offers, your APR can be as low as 4.5%. However, your specific terms and fees are based on your credit score, time in business, and several other financial factors. 

 

 

Credible: Best Small Business Loan for Flexible Options

Star rating: 4.73/5

Credible is another online lending platform that shows you real prequalified rates for loans without impacting your credit score. Therefore, Credible is similar to the two options above and not a direct lender. Instead, Credible matches you with the best potential lenders in its network based on your application and business information. 

Why we chose it: Credible is one of the best lending platforms for small business loan options because you can check rates from multiple lenders. This lending platform is free to use, and you can see prequalified rates in only two minutes. 

Pros: 

  • Easy prequalification process
  • Multiple lenders
  • Additional financial products

Cons: 

  • You may be subject to origination fees
  • High APR for borrowers with poor credit

Pricing 

The specific rates and terms for your small business loan from Credible depend on various factors, such as your credit score and business financials. 

Application Process

Credible is a customer-focused online lending platform. Therefore, Credible simplifies the loan application process and lets you quickly compare rates from multiple lenders.

Borrower Qualifications

The borrower’s qualifications vary from lender to lender. However, lenders typically view your credit score, proof of income, and debt-to-income ratio to see the type of loan offer they can present. 

Loan Limits

You can borrow anywhere from $600 to $100,000 for a small business loan from Credible.

Terms and Fees

The interest rate for your Credible loan ranges from 3.99% to 35.99%. Luckily, you can find your specific terms and fees in just two minutes through the online application process.

 

 

AmOne: Best Small Business Loan for Fast Approvals

Star rating: 4.67/5

AmOne is another loan marketplace that matches borrowers with the best potential lender based on personal and business details. AmOne’s lending partners include Marcus, SoFi, Best Egg, Prosper, LendingPoint, and Avant. In addition, AmOne matches you with a list of loan offers within minutes. This lending platform doesn’t require a minimum credit score.

Why we chose it: AmOne offers the best small business loans with fast approvals since this lending platform doesn’t require a minimum credit score. You can view your loan offers within minutes after completing your application.

Pros: 

  • CCC
  • No credit score check
  • Range of loan terms

Cons: 

  • Lenders may call you to specify loan terms
  • Must provide personal info
  • Rates by lender

Pricing 

Your loan terms and interest rates depend on your application and business details. 

Application Process

AmOne has a quick application process. You must provide simple information in your application, such as your name, address, income, and date of birth. However, AmOne does not ask for your Social Security number or conduct a hard credit check. AmOne will display your list of loan offers within 45 seconds after submitting your small business loan application.

Borrower Qualifications

AmOne has a wide range of lending and financial partners that cover the entire range of American consumers. Therefore, approval requirements are determined by each lender themself. 

Loan Limits

You can borrow $1,000 to $100,000 with your AmOne small business loan. Although AmOne offers small business loans, you can also take out unsecured personal loans for debt consolidation or home improvement and secured loans to purchase boats or vehicles. 

Terms and Fees

AmOne welcomes borrowers with a wide range of credit histories and business financials. Therefore, your specific rates and terms depend on your application and business finances. 

 

 

Star rating: 4.57/5

Fundera is a unique alternative lender that acts as both a direct lender and loan marketplace. For this reason, Fundera can fund the entire loan. However, Fundera may also choose to match you with several lenders in its network. This provides the flexibility and speeds small business owners need. Furthermore, Fundera can help business owners with low credit scores. 

Why we chose it: Fundera by Nerdwallet offers the best SBA loans because it offers loans from Cadence Bank and BayFirst. Fundera also offers multiple SBA loan types, including the 7(a) Program, CDC/504 Program, and Microloan Program.

Pros: 

  • Extensive lender marketplace
  • Competitive interest rates
  • Soft credit check

Cons: 

  • Potentially long turnaround time
  • Unclear borrow qualifications

Pricing 

Your Fundera small business loan’s pricing depends on your specific loan offers and the terms they present. You should compare your options and choose the one with the most reasonable payback terms. 

Application Process

Fundera offers an easy application process and access to SBA 7(a) loans, term loans, invoice factoring, and more. Furthermore, you can receive funding faster than you would at your local bank. 

Borrower Qualifications

The borrower qualifications for a Fundera loan depend on each specific lender. They will look at relevant details such as your credit score and business financials. 

Loan Limits

You can borrow up to $5,000,000 from Fundera with an SBA 7(a) loan. However, you need a minimum credit score of 650. This program includes lenders such as Live Oak Bank and Wells Fargo. 

Terms and Fees

Your interest rate will range from 7.75% to 10.25% for your SBA loan from Fundera. However, you can expect higher interest rates for small business loans, online term loans, and online lines of credit. 

 

 

What Is a Small Business Loan?

Small business loans are a source of capital that business owners may tap into to meet the expenditures involved with their firm’s growth and operation. Since business owners depend on loans for purchasing machinery and supplies, running payroll, and keeping the books balanced while they wait to be paid by customers, it follows that small business loans are an essential  factor of the business sector.

Small business loans enable entrepreneurs to have access to a line of credit, or a lump-sum amount of cash, both of which they may utilize to maintain their firm’s operating status and continue to build their enterprise for many years to come.

Similar to personal loans, small business loans are available to company owners via conventional banks and credit unions, as well as internet lenders, some of which have the support of the United States SBA (Small Business Administration).

It’s interesting to note that conventional banks do not provide the greatest small business loans accessible today. Rather, online lenders provide these loans. This is due to the fact that, for the most part, internet lenders are able to provide the most user-friendly application and financing procedures, in addition to offering reasonable costs and the most favorable loan conditions.

In this article, we have picked a handful of the best small business loan providers. These lenders provide speedy financing as well as a number of loan alternatives to choose from, which allows you to get the cash you need when you want it.

How Do Small Business Loans Work?

As is the case with personal loans, the minimal qualifications for obtaining a small business loan vary depending on the lender and the kind of loan. 

However, in order to be eligible for any kind of financing, owners of small businesses should have a strong credit score as well as have the appropriate paperwork that evidences the income that their businesses generate.

The owners of small businesses have access to a wide variety of financial opportunities, and these opportunities might originate from different places. Direct bank lenders may be able to provide financing for small business loans. 

These loans often have lower interest rates, but they also have more severe qualifying standards, and the funding process may take longer.

You may also access small payday loans online with no credit check from online lenders that are not banks. The financing timelines and qualifying standards of online lenders are often far more flexible than those of bank lenders. However, the interest rates that online lenders provide are typically significantly higher than those given by banks.

Small business loans are often given out in the form of a single quantity of money that may be used to either make a particular acquisition or manage cash flow, and which must then be returned with interest.

Furthermore, there are other kinds of small business loans, such as merchant cash advances, lines of credit, the best payday loans, and invoice finance. These may be used to have access to funds in a more expedient manner and on the basis of arising need.

Your business’s creditworthiness, the amount of money you require, the purpose for which the money will be used, and how fast you require access to the proceeds of the loan are some of the criteria that determine which kind of loan will serve you best.

>>Apply for a small business loan with LendingTree

Choosing the Best Small Business Loan

Bank loans, loans from the SBA (Small Business Administration), business lines of credit, term loans, and equipment financing are all potential sources of funding for owners of businesses that meet the eligibility requirements.

One of the requirements for getting a loan is having been in business for a year or longer and making a steady profit. Alternative funding strategies are available for new businesses that have been operational for under a year.

There are a number of considerations that will determine which loan is ideal for your small business, including:

  • How quickly you need financial assistance
  • Why you need funding
  • How much funding is required
  • Overall cost of the loan
  • Qualifications of your business

 

 

Types of Small Business Loans

Small business loans, in general, make it easier for companies to have access to the capital they need to continue operations and expand. However, there are many different kinds of loans available to small businesses, and it is essential to pick the one that is the most suitable for your circumstances.

There is a wide variety of potential sources of finance for which owners of small businesses may be eligible, including the following:

  • Bank loan: Comprising lines of credit, loans for small businesses, and term loans
  • SBA loans: Government-backed loans for small businesses that meet SBA requirements
  • Terms loans: Conventional method of financing with fixed payments period
  • Line of credit: A predetermined sum of money that is made available to the owner of a business on an ongoing basis
  • Invoice factoring: Sale of unpaid debts for a single lump amount by a company
  • Merchant cash advances (MCAs): Lending institutions provide business owners with a flat amount of capital in exchange for a share of their future revenues
  • Equipment financing: A loan for small businesses that is used to buy machinery and other essential tools
  • Commercial real estate loans: Employed for the acquisition of commercial property or its improvement
  • Franchise loans: Provide access to first funding to pay franchise costs

>>Apply for a small business loan with LendingTree

Bank Loan

Term loans, SBA loans, and lines of credit are just some of the small business loans that banks may provide. 

In most cases, a high personal credit score (beginning in the 700s) is required to get a bank loan, along with a proven track record of company financials, such as consistent cash flow, and a minimum of three years in operation. Banks may request collateral in certain loan situations.

  • Work capital and company expansion are the best uses.
  • APRs will likely be between 3.19% and 6.78 %.
  • Borrow between $10,000 and $1,000,000 using this loan range

SBA Loans

The SBA (Small Business Administration) offers a number of loan programs for small businesses, including the 504, SBA 7(a), CAPLines, Export, Microloan, and Disaster loan programs, all of which are guaranteed by the government.

Borrowers may expect to get loan amounts between $30,000 and $5,000,000 with interest rates as low as 1% and payback lengths of up to 25 years.

However, to be approved for a federally guaranteed loan, you’ll need to meet stricter conditions and go through a more involved application procedure.

SBA Loans and How They Work

The Small Business Administration (SBA) guarantees a part of the default on conventional bank loans made to small firms. Lenders are willing to provide more favorable conditions and lower interest rates on SBA-backed loans because they pose less risk to the government agency.

Small business owners were among those hit hard by the Covid-19 outbreak, and the SBA responded with a suite of assistance initiatives, including the postponement of principle and interest payments on catastrophe loans.

Please be aware that the SBA doesn’t offer direct loans to small companies unless they are situated in a federally designated disaster region. The SBA, instead, establishes lending standards for the banks, non-profits, and micro-lenders with whom it works.

Difference Between SBA Loans and Other Small Business Loans

There is less of a need for a down payment or collateral when applying for an SBA-guaranteed small business loan. However, getting an SBA-backed loan might take as long as three months.

The Small Business Administration (SBA) offers loan guarantees for sums between $30,000 and $5,000,000 with interest rates between 5.5% and 8% annually. 

Long-term investments, such as those made in real estate investments or equipment acquisition, purchases of other firms, or refinancing of existing debts, are ideal candidates for this kind of financing.

>>Apply for a small business loan with LendingTree

Types of SBA Loans

Typical Small Business Administration Loans include the following.

SBA 7(a) Loans

It’s the most typical kind of financing for small businesses. The SBA’s flagship product is the 7(a) lending program, which allows for loans of up to $5 million.

The purchase of real estate is the most common use for these loans; however, they may also be used for short-term and long-term operating capital, the purchase of furnishings and supplies, acquisitions, and expansions.

As of the 7th of October, the interest rate on a 7(a) loan from the Small Business Administration may range between 5.5% to 11.25%.

Real Estate and Equipment Loans (CDC/504)

To encourage the expansion of businesses and the creation of new job opportunities, banks will provide up to $5 million in fixed-rate financing. These loans may be used toward the purchase of property, the construction of facilities, the acquisition of equipment, as well as the funding of restorations.

They are not allowed to be used for day-to-day operations, debt consolidation, investing, or financing rental properties.

The interest rates for SBA 504 loans vary from roughly 2.81% to 4%, which is much lower than the rates that are set by the 7(a) program.

SBA Microloans 

SBA microloans may go up to a maximum of $50,000 and are designed to assist small businesses in either starting out or expanding their operations. 

Utilizing the cash for  inventory, working capital, machinery, equipment, as well as other fixtures and fittings or supplies essential to running a firm may be one way to do this. The rates normally run anywhere between 8% to 13%, however this may vary significantly depending on the lender.

Disaster Loans 

Small enterprises situated in locations that have been designated disaster zones are eligible for low-interest financing. Personal property, real land, machinery and equipment, inventory, and company assets are all eligible for repair or replacement with the assistance of disaster loans.

>>Apply for a small business loan with LendingTree

Term Loans

Traditional small business loans have a repayment schedule that is predetermined in advance and are referred to as term loans. Short-term loans often have terms ranging from three months to one year and a half, and long-term business loans might have terms extending all the way up to ten years.

Although there are certain term loans that are meant for very particular purposes, such as financing equipment or inventory, term loans, in general, may be used to cover the majority of significant expenditures connected to a company. 

The maximum amount that may be borrowed with a business term loan is normally approximately $500,000, and the APRs (annual percentage rates) start around 9%.

>>Apply for a small business loan with LendingTree

Lines of Credit

A business line of credit, as opposed to a term loan, which is paid out in one lump sum, is a predetermined amount of money that the owner of the business may access on an ongoing basis. 

This indicates that the borrower has access to the line of credit for a predetermined amount of time, which is often between one and five years.

When a borrower pays back an early part of the line of credit, they will be able to access the remaining balance of the line of credit until the draw term is through.

The borrower will enter the payback term after the draw period has concluded, at which point they will no longer have access to the revolving funds. 

When a business owner taps into a line of credit, the interest that is accrued is only calculated based on the amount of money that is actually used, as opposed to the total amount, as it is with a term loan.

Businesses that want to be able to obtain funds on an as-needed basis for items such as unforeseen bills and other cash-flow concerns may find that lines of credit are a useful choice for them to pursue. 

Borrowing limits are typically between $2,000 and $250,000, and annual percentage rates (APRs) may vary anywhere from 10% to 99%.

>>Apply for a small business loan with LendingTree

Invoice Factoring and Financing

Invoice factoring is the practice of selling a company’s outstanding invoices in return for a one-time payment in the form of a lump amount of cash. This kind of financing is also known as accounts receivable finance. Because your bills are discounted and sold to a factoring firm that is not affiliated with you, you will not get the whole amount that is owed to you for those invoices.

Furthermore, once an invoice is sold to a factoring business, the factoring firm is responsible for collecting payment from the customer.

The factoring business will offer you a percentage (let’s say 90%) of the entire amount that is still due and will then collect payment from your clients directly. After the factoring business has received payment from your clients, it will provide the remaining monies to you, less the factoring charge.

Instead of waiting the standard 30–90 days for consumers to pay bills, this kind of financing may provide immediate access to much-needed cash.

Because of this, invoice factoring is indeed a useful approach to use if you want a source of short-term finance or assistance with managing your cash flow. On average, the quantities that may be financed via invoices can go as high as $5 million, and the APRs can range anywhere from 10% to 79%.

Merchant Cash Advances

A merchant cash advance, often known as an MCA, provides business owners with access to a large amount of cash in exchange for a part of future sales revenues. The lender is typically a merchant services organization.

When compared to a conventional loan for a business, a merchant cash advance as well as any fees associated with it are paid back out of the business’s actual sales or through payments made to an ACH (automatic clearing house) on a weekly or daily basis. This is in contrast to a typical loan for a business.

The owner of a business may use this tactic by borrowing a predetermined sum of money at a factor rate that is often in the range of 1.2 and 1.5. For the business to be able to pay back the loan, they will have to pay back the advance using a certain proportion of their everyday credit card sales for a predetermined amount of time.

Businesses that have a high number of sales and have a need for rapid access to cash may find that a merchant cash advance is a smart alternative. This is particularly true if the firm does not qualify for a conventional small business loan.

Equipment Financing

One kind of loan for small businesses is known as equipment finance, and its primary purpose is to assist companies in the acquisition of the machinery and equipment necessary to launch and continue their company.

Generally speaking, this adaptable financing may be used for anything from office furnishings and consumer gadgets to the machinery employed in production.

Because the products that are being bought serve as collateral for equipment loans, the amount of a loan is determined by the worth of the equipment as well as the amount of the first down payment.

On the other hand, the greatest firms that provide equipment financing may provide repayment periods for a maximum of 25 years and ceilings of at least one million dollars.

There is a possibility that the interest rates associated with financing equipment will be lower than those associated with other forms of financing, and these rates normally vary anywhere between 8% to 30%. 

Similar to the case with other types of loans for small businesses, interest rates are contingent both on the lender and the borrower’s creditworthiness.

Commercial Real Estate Loan

To finance the acquisition of new commercial property or the completion of necessary renovations, borrowers turn to commercial real estate loans. In order to be eligible for this kind of loan, lenders often demand that company owners occupy at least half of the property.

Franchise Loan

You are able to acquire front-end financing via franchise loans, which may be used to pay for things like legal fees, franchise fees, real estate prices, and other day-to-day expenditures associated with being a franchisee.

 

 

How to Get a Small Business Loan

The application for a business loan and the underwriting procedure might differ from one lender to the next, but the majority of banks and other lenders adhere to the same broad principles. You might anticipate to take these broad processes in order to acquire a loan for your small business:

1. Determine the Type of Loan You Need

Determine how you want to spend the money before asking for a loan, since some lenders have restrictions on the types of businesses they will finance or the ways in which loan money may be utilized.

You should also consider how much money you intend to borrow, as this will likely have an effect on the kind of loan you request and the financial institutions that are the most qualified to provide you with funding.

2. Familiarize Yourself With Your Credit Profile

When deciding whether or not to provide a small business loan, financial institutions will often consider the applicant’s personal credit history.

If you want to apply for an SBA loan or a regular bank loan, you need to have a credit score of at least 680. However, if you want to qualify for business lines of credit or equipment financing, your score just has to be 630.

Less strict requirements—averaging roughly 600 and 550, respectively—apply to merchant cash advances and short-term lending in general.

3. Research Lenders and Compare Interest Rates

Whether you are in the market for a small business loan, one of the first things you should do is check to see if the bank you already have an account with provides loans for small businesses that are tailored to your

Remember that certain forms of financing, including credit cards, revolving loans, accounts receivable finance, and merchant cash advances, may include interest rates that are greater than those offered by other sources of funding. 

In addition, non-bank internet lenders have a tendency to charge much higher interest rates than banks do.

Since the bank already got your financial records, the application procedure might potentially be streamlined as a result of this. Next, evaluate the available loan amounts, periods of repayment, and interest rates among a number of different internet lenders, as well as traditional brick-and-mortar banks and credit unions.

4. Gather Required Documentation

The types of papers that are required might differ from lender to lender. On the other hand, the majority of financial institutions want a business plan, personal and company bank statements for at least a year and a half, tax returns records for a minimum two years, and information on any current and previous business loans.

In addition to this, lenders need copies of any appropriate company licenses and legal papers, information about any available collateral, and an explanation of how the money from the loan will be utilized.

5. Submit a Formal Loan Application 

Submit an official loan application when you have completed your research on the most beneficial loans for small business and have made the necessary preparations for your business to undergo due diligence. 

Get acquainted with the application process, and if you have any queries, don’t hesitate to contact customer support. The procedure differs from lender to lender.

>>Apply for a small business loan with LendingTree

How to Choose a Small Business Loan

It’s possible that certain lenders are a better fit for your business than others, just as some kinds of loans are better suited for various kinds of enterprises. When choosing a loan for a small business, keep these things in mind:

1. Lender Reputation

Before you put your name on the dotted line, it is important to read internet reviews so that you are aware of any warning signs or possible problems. 

If you want to do business with a credit union or local bank, you should inquire with the proprietors of other local companies to find out which financial institutions have the greatest reputation.

2. Qualification Requirements 

The majority of loans for small businesses are personally guaranteed, and the terms of the loan are often determined by the personal credit score of the firm owner. 

When applying for a loan for a small business, the lowest credit score necessary to qualify might vary depending on the lender as well as the kind of loan. 

Therefore, it is recommended that you examine your personal credit rating and then do research on various lenders in order to compare the minimal credit score criteria.

3. Available Loan Amounts

Different types of lenders provide varying maximum loan amounts. Evaluate the requirements for borrowing that your company has, and then look for a loan that meets those specifications before selecting a small business lender.

4. Underwriting and Funding Speed

There is a large degree of variation in the length of time required to complete an application and get cash based on the lender as well as the kind of loan. 

After filing an application, the time it takes to obtain money might range anywhere from a few days (for merchant cash advance) to a couple of months (in the case of an SBA loan). 

If you require a loan urgently, you should choose a form of loan and a lender that can accommodate the time limits you have.

5. Annual Percentage Rate

The annual percentage rates (APRs) of loans may range anywhere between 5% to 99%, depending on the kind of loan and the lender. Applicants with the best credit histories are eligible for the best rates, but not all financial institutions are as competitive as others.

6. Additional Costs

Numerous lending institutions levy origination fees, which are intended to compensate the expenses incurred in the processing of loan applications and the underwriting of loans. 

In a similar vein, some lenders levy prepayment penalties on borrowers who choose to return their loans ahead of schedule, while others levy draw charges on lines of credit. 

However, application costs should not be imposed on borrowers, and any fees that are assessed prior to the approval of the loan should raise a red signal.

 

 

How We Chose the Best Small Business Loans

When compiling our list of the best lenders and small business loans, we gave careful consideration to a variety of crucial criteria, which are detailed below.

  • Flexible qualification requirements: We gave priority to lending institutions that accepted credit scores of 660 or below, had been in existence for between six and twelve months, and had annual sales of not more than $200,000.
  • Easy application process: We searched for financial institutions that provided a fast and easy online application process, with a particular emphasis on same-day approval.
  • Variety of funding options and high loan amounts: We made very few exceptions, although we gave preference to lending companies who offered a wider choice of financing alternatives and loan amounts that were greater than the norm.
  • Fast FundingTimes: After approval, the fastest money may be obtained from our top lenders in as short as 24 hours and as long as three days.

>>Apply for a small business loan with LendingTree

Best Small Business Loans – Frequently Asked Questions (FAQs)

We answer your questions on small business loans.

Can You Get a Small Business Loan With Bad Credit?

It is possible to receive small business loans for bad credit—ratings as low as 580—just like it is possible to get a personal loan. You will, however, need to establish a good cash flow, and the bank will most likely want collateral in order to lessen the risk associated with lending to you.

Borrowers seeking financing for their small businesses that have poor credit ratings are not only eligible for less favorable rates, but they also end up paying so much through interest rates over the course of the loan. 

If you have a credit score that is below 580, an alternate choice such as invoice factoring could be the best option for you to pursue.

What Can You Do if You’re Denied a Small Business Loan?

In the event that you are not approved for a loan for your small business, you have many options available to you. To begin, make an effort to learn why your loan request was not accepted. 

If your application for a loan from the SBA is rejected, you have the right to obtain a communication of denial that explains the reasons for the rejection. You may get this notification either directly from either the SBA or via your lender.

If, on the other hand, you are not authorized for a small business loan via an online lender or any other kind of financial institution, you should get in touch with them to find out the reasons why you were not accepted. They may very well be able to give you some advice on how to enhance your chances of being approved in the future.

Once you have determined why your application for a loan was denied, you may next take action to address the underlying problems. You may, for instance, need an increase in your credit score, the establishment of more consistent sales, or a reevaluation of the amount of money you require borrowing.

What Documents Are Needed to Apply for a Small Business Loan?

Expect to present  business and/or personal  tax returns, business bank statements, business permits and licenses evidence of business registration, and your business’ EIN (Employer Identification Number) or FTIN (Federal Tax Identification Number) when applying for a loan for a small business.

You may also be required to give copies of financial documents, such as a profit-and-loss statement, balance sheet, and cash flow statement, in addition to a business plan in order to get funding for your company.

You can also anticipate being asked to provide information on accounts payable (preferably the best business checking account), and current accounts receivable in addition to data regarding any outstanding debt. You could be required to provide evidence of collateral in addition to your creditworthiness, depending on the kind of loan you’re applying for.

Are Small Business Loans Hard To Get?

When compared to other forms of finance, such as company credit cards, obtaining a loan for a small business may prove to be more difficult. 

Although the standards for qualifying might vary from lender to lender, the majority of lenders will normally look at the personal credit score of the company owner as well as the yearly income of the firm.

The minimum individual credit score required by the majority of lenders is between 600 and 660, and yearly income must be in the range of $100,000 and $250,000.

Before submitting an application, we strongly suggest checking the qualifying conditions with your selected lender.

How Much Can I Get for a Small Business Loan?

Loans for new businesses generally run somewhere around $1,000 to $250,000 in total value. However, the amount of the loan you are granted is contingent upon the creditworthiness of both you and the company.

The majority of creditors demand that businesses to have been running for a period not less than six months and two years and have minimum standards for yearly income before they can provide financing. Check with the financial institution of your choice to see whether your new business qualifies for a loan.

 

 

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