Millions of small-business owners rely on suboptimal sources of financing — or no financing at all. This deficit threatens their profitability, expansion plans, and in some cases their enterprises’ very existence.
According to statistics collected by the Small Business Administration (SBA), many businesses don’t even realize they’re eligible for small-business loans. Some 45% don’t know they have a business credit score separate from their owners’ personal credit scores. More than 70% don’t know where to find business credit score information and more than 80% wouldn’t know how to interpret it if they did.
- 5% cash back on grocery store purchases on up to $12k spent in your first year, in addition to cash back rates for typical categories. (If you sign up by Jan 13, 2021)
- $200 sign-up bonus (after spending $500 in the first 3 months)
- 0% intro APR for 15 months.
As a result, many small-business borrowers rely on some combination of small-business credit cards, personal credit cards, and personal lenders offering unsecured or secured loans. SBA-collected data reveals that nearly half (46%) of small businesses rely on personal credit cards for working capital, equipment financing, and other short-term credit needs.
Many of these borrowers don’t actually need to mix their business and personal finances — a practice that can expose business owners to increased personal liability, among other downsides. Instead, they can turn to a hearty crop of small-business lenders offering secured and unsecured business loans, SBA loans, business lines of credit, and specialized business credit products like merchant cash advance loans, equipment financing loans, and invoice factoring (invoice financing) loans.
Best Small-Business Loans
Whether you’re evaluating your company’s financing options for the first time or looking for a new lender or type of loan to help grow or diversify your business, keep this list of business lenders close at hand. All offer competitively priced commercial financing products for smaller enterprises, including solopreneurs and microbusinesses.
Bear in mind that the lending offers — rates, terms, and loan amounts — you receive from these providers may vary based on your business or personal credit score, assets, annual revenue, time in business, and other factors.
Invoice Financing Lines Up to $5 Million
BlueVine is a pioneering online lender that offers two permanent business lending products: business lines of credit and invoice factoring lines.
BlueVine’s business lines of credit are available to businesses with at least $40,000 in monthly revenue and two years of operational history. The minimum eligible owner FICO score is 600, but a higher score likely qualifies you for a lower interest rate and higher funding amount. The application process is super easy: Just provide some basic information about your business, submit your application, and use your online dashboard to request funds, which typically arrive within hours.
BlueVine’s invoice factoring loans use borrowers’ accounts receivable — customer invoices issued but not yet paid — to secure revolving credit lines as large as $5 million. Depending on borrower creditworthiness and BlueVine’s determination of the likelihood of repayment, borrowers receive anywhere from 85% to 90% of the invoice value upfront and the rest when the customer pays. BlueVine typically approves or denies invoice factoring requests within 24 hours.
BlueVine’s underwriting standards for invoice factoring lines are quite lenient, making them appropriate for businesses with low annual revenues or bad credit. The minimum owner credit score (FICO) is 530, the minimum monthly revenue is $10,000, and the minimum time in business is just three months. The catch: This product is available only to “B2B” companies — businesses that sell to other businesses — not business-to-consumer (B2C) companies.
As a Paycheck Protection Program lender, BlueVine originated PPP loans and assisted borrowers with PPP loan forgiveness applications in 2020. If Congress reauthorizes the PPP program in the future, BlueVine may resume this offering.
- Products: Business lines of credit, invoice factoring lines.
- Loan Amounts: Business lines of credit up to $250,000; invoice factoring lines up to $5 million.
- Terms: Business line of credit draws must be repaid on six- or 12-month schedules (monthly payments). Invoice factoring lines’ repayment schedules depend on invoice due dates.
Flexible Business Term Loans and Lines of Credit
OnDeck was one of the first online lenders to make business term loans and business lines of credit available to startups and growing businesses with relatively low annual revenues. Today, it remains a top financing choice for enterprises of all sizes.
OnDeck offers two permanent business credit products: business term loans and business lines of credit. OnDeck also offered PPP loans and may do so again if Congress reauthorizes the program.
With a repayment term no longer than 18 months, OnDeck’s term product qualifies as a short-term loan. Loan amounts start at just $5,000, and funding typically arrives on the same business day after approval. The prepayment option is unusually generous too: Approved borrowers can pay their loans off early, in full, and have all outstanding interest waived. This is more generous than the typical “no prepayment penalties” offer.
OnDeck’s business lines of credit have 12-month repayment terms that reset after each withdrawal, one consolidated weekly repayment regardless of how many draws remain outstanding, and no prepayment penalties. Funding is near-instantaneous, even during weekends and evenings. For both permanent products, OnDeck has relatively lenient underwriting requirements: minimum credit score of 600 (FICO), at least one year in business, and at least $100,000 in annual revenues.
- Products: Business term loans, business lines of credit.
- Loan Amounts: Term loans range from $5,000 to $250,000; lines of credit range from $6,000 to $100,000.
- Terms: Lines of credit repayment terms last as long as 12 months; business loan repayment terms last up to 18 months.
Short-Term Financing Solutions for Growing Businesses
Fundbox offers a single permanent business funding option: short-term business lines of credit as large as $150,000. Fundbox participated in the PPP loan program and may do so again if the program is reauthorized.
Fundbox has reasonable qualification requirements for prospective borrowers: an active business bank account, operational history of at least six months, U.S. business registration, and at least $100,000 in annual revenue — although Fundbox advises that the median borrower pulls down more like $300,000 per year. Applicants stand a better chance of approval if they’re willing to share two to three months of business bank transactions or bookkeeping history.
Fundbox’s key differentiators include rapid funding — near-instantaneous draws after initial approval — and transparent pricing with no prepayment penalties. Just be aware that Fundbox is very much a short-term borrowing solution — the maximum draw term is 24 weeks (less than six months).
- Products: Business lines of credit.
- Loan Amounts: Up to $150,000.
- Terms: Repayment terms last 12 to 24 weeks.
Nonprofit Business Lender Offering Microloans to Underserved Communities
Accion is a nonprofit business lender more notable for the types of enterprises it caters to than the types of loans it makes.
Accion’s borrowers, broadly speaking, are businesses that have historically been neglected or underserved by traditional sources of capital: those owned by women, people of color, veterans, and disabled individuals, among other groups underrepresented in the broader business community. These businesses tend to be smaller, service-oriented — with restaurants, salons, and similar businesses featured prominently in Accion’s promotional materials — and capital- and credit-poor, including businesses whose loan applications have been denied elsewhere.
Accion’s core loan product is a business term loan available nationwide. Funding amounts start as low as $300, making Accion one of the few business funding options for bona fide microentrepreneurs and side hustlers seeking microloans. Unlike many lenders, Accion doesn’t require borrowers to have any operational or credit history — all that’s required for a startup business loan is a 12-month cash flow projection or business plan.
Accion also offers SBA Community Advantage Loans for established and startup businesses with fewer than 100 employees.
- Products: Business term loans, SBA Community Advantage Loans
- Loan Amounts: Business term loan amounts range up to $1 million; SBA Community Advantage Loan amounts top out at $250,000.
- Terms: Terms vary based on borrower location, creditworthiness, revenue, and other factors.
Rapid Nontraditional Financing Solutions for B2B and B2C Businesses Without Good Credit
Lendr offers two nontraditional types of business financing: invoice factoring loans and merchant cash advance loans. Its key selling points are rapid approval and funding — as little as two hours — and relatively high borrowing limits, up to $1 million for invoice factoring loans and $500,000 for merchant cash advance loans. Because both of its loan products are secured by future revenues, Lendr is ideal for businesses and owners with not-so-good credit.
Lendr’s invoice factoring solution is appropriate for businesses that count other businesses or government agencies as customers. The cost is typically less than 3% per loan, which works out to a very low interest rate. Lendr’s merchant cash advance product is a bit more expensive, but its unique combination of speed and lack of credit underwriting make it an ideal choice for business owners who might not qualify for traditional credit products.
- Products: Invoice factoring loans, merchant cash advance loans.
- Loan Amounts: Loan amounts for range up to $500,000 for merchant cash advances and $1 million for invoice factoring.
- Terms: Invoice factoring loan repayment schedules vary by invoicing schedules and other borrower-specific factors. Merchant cash advance repayment terms range from four to 14 months.
Best Small-Business Loan Marketplaces to Compare Options
Small-business lending is a competitive industry. The lenders on the list above constantly vie to offer the best interest rates and loan terms, with borrowers as the main beneficiaries. But applying for multiple loans is a time- and labor-intensive process.
That’s where small-business loan marketplaces come in. These resources allow prospective borrowers to check rates and terms from multiple lenders in one place, without entering the same information multiple times or fielding calls from more loan officers than they can count. The end result is basically the same: putting in a loan application, and hopefully accepting a loan offer, from the lender best suited to meet your business needs.
1. Funding Circle
Broad Range of Financing Solutions or Businesses of All Sizes
Funding Circle connects business owners with financing offers from dozens of lending partners, from mold-breaking online lenders to some of the biggest banks in the world. According to Funding Circle’s own data, the platform has facilitated more than $12 billion in loans to nearly 100,000 businesses in at least 700 industries.
In an ever-more competitive environment for business lending marketplaces, Funding Circle’s biggest selling point might be its commitment to transparency. It was among the co-writers of the Small Business Borrowers’ Bill of Rights — a roadmap for fair, responsible, nonpredatory small-business lending practices — and a leader of the Marketplace Lending Association.
But its broad array of financing solutions is notable as well, mixing traditional term loans and lines of credit with larger SBA loans and nontraditional solutions like invoice factoring and working capital loans.
- Products: Business term loans, business lines of credit, SBA loans, merchant cash advance loans, invoice factoring loans, working capital loans.
- Loan Amounts: SBA loan amounts range from $25,000 to $500,000. Business term loan amounts range from $5,000 to $500,000. Merchant cash advance and working capital loan amounts range up to $400,000. Invoice factoring lines range up to $5 million. Business lines of credit range from $6,000 to $250,000.
- Terms: SBA loans have a 10-year repayment term. Business term loans’ repayment terms range from three months to 10 years. Merchant cash advance and working capital loan terms range from six to 18 months. Invoice factoring and line of credit terms vary by borrower- and lender-specific factors.
Specialized Short- and Long-Term Loan Products for Small and Midsize Businesses
Lendio is another business lending marketplace with no shortage of options for would-be borrowers. Like Funding Circle, Lendio brokers offers from dozens of reputable lenders and serves businesses of all sizes, from one-person operations — albeit with established operational histories and decent revenues — to enterprises with tens or hundreds of employees.
Lendio’s advantages include extremely long-term financing options (SBA loans with terms up to 30 years) and nontraditional financing solutions, such as equipment financing loans to finance major equipment purchases and business acquisition loans to finance the purchase of competitive or complementary businesses.
Eligibility requirements vary by loan type and lender, but borrowers typically need to show operational histories of at least 12 months, solid cash flow for at least three months, and annual revenues of at least $50,000.
- Products: Business term loans, business lines of credit, SBA loans, merchant cash advance loans, invoice factoring loans, equipment financing loans.
- Loan Amounts: Merchant cash advance loans range up to $250,000. Business lines of credit range up to $500,000. Business term loans range up to $2 million. SBA loans and equipment financing loans range up to $5 million. Other products depending on lender- and borrower-specific factors.
- Terms: SBA loan terms range up to 30 years. Business lines of credit last one to two years. Business term loans and equipment financing loans must be repaid within one to five years. Invoice factoring loan terms range up to 12 months.
Long-Term Financing Options
SmartBiz doesn’t have quite the product breadth of Lendio or Funding Circle, but it excels at serving a common business borrowing need: long-term financing with predictable pricing and repayment terms.
SmartBiz specializes in smaller SBA loans and does massive lending volumes. According to its own data, banks use the platform to process more than 10% of all SBA 7(a) loans under $350,000, with more than 50% of the loans funded by its partner financial institutions destined for women-, minority-, and veteran-owned businesses.
And SmartBiz’s proprietary underwriting process has a success rate of more than 90%, meaning more than nine in 10 qualified applications sent to partner lenders get funded. That’s a massive selling point for businesses that have struggled to qualify for financing in the past.
- Products: Business term loans, business lines of credit, SBA loans, invoice financing loans.
- Loan Amounts: Business line of credit, invoice financing, and business term loan amounts range up to $500,000. SBA loan amounts range up to $5 million.
- Terms: Repayment terms range from 24 to 60 months for business term loans and lines of credit. SBA repayment terms range from 10 to 25 years. Terms for other products vary by lender- and borrower-specific factors.
Comprehensive Lineup of Business Lending Solutions
Fundera offers access to a comprehensive lineup of traditional and nontraditional business lending solutions from dozens of financial partners. Business term loans, lines of credit, SBA loans, equipment financing, you name it — if it’s a reputable type of business credit, it’s probably available here.
Fundera also provides specialized government loans for businesses impacted by the COVID pandemic and more localized disasters, including SBA disaster loans.
- Products: Business term loans, business lines of credit, SBA loans, invoice factoring loans, equipment financing loans.
- Loan Amounts: Business line of credit amounts range up to $500,000. Business loan amounts range up to $600,000. Equipment and invoice loans range up to 100% of the securing assets’ value. SBA loan amounts range up to $5 million.
- Terms: Repayment terms range up to five years for business term loans and lines of credit. SBA repayment terms range from 10 to 25 years. Terms for other products vary by lender- and borrower-specific factors.
Keen-eyed readers might notice that this list of small-business financing options omits two common sources of commercial funding: traditional banks and credit unions.
That’s no accident. I have nothing against big banks and community-focused credit unions. Both types of institutions offer excellent business bank account products, including a few with totally free business checking options. And some traditional banks’ solutions appear on marketplace lending platforms like Lendio, which works with Bank of America, JPMorgan Chase, and other megabanks.
But it’s also true that traditional banks, in particular, tend to be friendlier to larger, established enterprises, especially during periods of economic uncertainty. Smaller businesses with limited revenues and shorter operational track records suffer as a result.
The good news, of course, is that small-business lenders like the ones on this list are more than willing to step up and fill the gap. If your business needs financing now, there’s a good chance you’ll find it from one of these lenders or marketplaces — even if you have spotty or downright bad credit.