Best Small Business Loans of 2024

As a small business owner, you may require financial support to handle various business-related expenses, like startup costs, working capital, or investment opportunities. However, obtaining financing can be a challenging task.

You need to identify your company’s most appropriate type of small business loan or line of credit and find a willing lender to work with you.

To help you with this, we have compiled a list of the best small business loans available. We have also provided detailed information about each offering and why they are deemed the best.

Our top selections include lenders offering reasonable interest rates to business owners with excellent credit and lenders willing to support startups and business owners with poor credit.

Best Small Business Loans of 2024

Funding Circle

• Loan amount: $25k- $500k Term: 6 – 84 months
• Interest rate: Starting at 7.90% simple interest
• Fastest funding: 2 business days

Additional requirements

• Business credit score: 400
• Personal credit score: 660
• Personal guarantee requirement?: No
• Minimum time in business requirement: 2 years
• Minimum business annual revenue: $50,000

Pros

• Flexible repayment terms
• Low revenue requirements
• Can help you build business credit

Cons

• Requires two years in business
• No unsecured loan option
• High origination fee

Applicants should be able to offer collateral like the liens on vehicles, equipment or even inventory. Any owner holding a stake of 20% or more must be involved in the loan, and signatories must add up to at least 51% ownership. The signatories should not have any personal bankruptcy filings within the last seven years. Funding Circle charges an origination fee of 4.49% up to 8.49%. Additionally, it sets the late fee up to 5%.

Credibly

• Loan amount: $25k- $400k Term: 3 – 15 months
• Interest rate: 1.11 factor rate
• Fastest funding: 1 business day

Additional requirements

• Business credit score: N/A
• Personal credit score: 550
• Personal guarantee requirement?: No
• Minimum time in business requirement: 6 months
• Minimum business annual revenue: $300,000

Pros

• Potential early repayment discount
• Prequalify in as little as 10 minutes
• Funds in as little as one day

Cons

• Unavailable in 13 states
• High minimum revenue requirement
• High minimum borrowing amount

To be eligible for the Credibly work capital loans, your company must have at least $25,000 in average monthly deposits over the past three months. The applicants must have at least a 51% stake in the company. The payments can be made daily or every week. Credibly is charged a 2.5% charge for origination. This loan is unavailable in the following states: CO, DE, OK, OR, SD, TX GA, Ml, MT, NV, NJ, ND, and VT.

SBG Funding

• Loan amount: $10k- $10m Term: 6 – 84 months
• Interest rate: Varies
• Fastest funding: 1 business day

Additional requirements

• Business credit score: N/A
• Personal credit score: 650
• Personal guarantee requirement?: Yes
• Minimum time in business requirement: 6 months
• Minimum business annual revenue: $400,000

Pros

• High customer satisfaction rating
• High loan amounts
• Same day funding available

Cons

• High annual revenue requirements
• Must have a business bank account
• Does not fund startups

SBG Funding can provide businesses with funding that can reach $10 million using the SBA 7(a) credit and up to $5 million in other products. You can be eligible for this lender if you have excellent to fair personal credit. However, the income requirement begins at $400,000 and could be higher for specific loans, including their term loan. Approved applicants can be granted deferred payment and discounts on prepayments.

National Funding

• Loan amount: $10k- $500k Term: 4 – 18 months
• Interest rate: Varies
• Fastest funding: 1 business day

Additional requirements

• Business credit score: N/A
• Personal credit score: 600
• Personal guarantee requirement?: No
• Minimum time in business requirement: 6 months
• Minimum business annual revenue: $250,000

Pros

• Access to high loan amounts
• Offers early payoff discounts
• Funding specialists available to help

Cons

• Limited information on website
• High minimum annual revenue
• No monthly payment option

You can apply online or via telephone. National Funding will connect you with a specialist in financing to ensure that you receive the funding options that are most suitable for you. National Funding charges an origination fee that ranges from 1 to 5 per cent and also requires the signature of personal assurance. National Funding operates in all states.

American Express Business Blueprint™

• Loan amount: $2k- $250k
• Interest rate: N/A
• Fastest funding: Not disclosed

Additional requirements

• Business credit score: N/A
• Personal credit score: 660 *
• Personal guarantee requirement?: Yes
• Minimum time in business requirement: 1 year
• Minimum business monthly revenue: Average monthly revenue of at least $3,000

Pros

• Fair monthly average revenue requirement
• No origination or early repayment fees
• Available across the U.S.

Cons

• Only available to established businesses
• High borrowing costs for longer terms
• Fees make cost comparisons hard

Fundbox

• Loan amount: $1k- $150k Term: 3 – 6 months
• Interest rate: Starting at 4.66% Weekly Fee
• Fastest funding: 1 business day

Additional requirements

• Business credit score: N/A
• Personal credit score: 600
• Personal guarantee requirement?: No
• Minimum time in business requirement: 6 months
• Minimum business annual revenue: $100,000

Pros

• Fast funds accessible by app
• Unsecured option
• Wide range of loan amounts

Cons

• Min. annual revenue may be prohibitive
• Short repayment terms
• Weekly fee makes rate comparison hard

Bank of America Business

• Loan amount: Starting at $10k Term: 12 – 60 months
• Interest rate: Starting at 6.75%
• Fastest funding: Not disclosed

Additional requirements

• Business credit score: N/A
• Personal credit score: 670
• Personal guarantee requirement?: No
• Minimum time in business requirement: 2 years
• Minimum business annual revenue: $100,000

Pros

• Free business credit score monitoring
• No collateral needed
• Bank customers can apply online

Cons

• Need two years in business
• $150 origination fee
• High credit score requirement

You can apply online if you you have a Bank of America Online Banking ID. You can also make an appointment by calling us or using the online scheduling tool to speak with a commercial expert in lending. Candidates must be the age of 18 as well as be a U.S. citizen or resident of another country. Loans are offered across all 50 states and Washington, D.C. A $150 origination charge.

Wells Fargo Business

• Loan amount: $10k- $150k
• Interest rate: Starting at 10.00%
• Fastest funding: Not disclosed

Additional requirements

• Business credit score: N/A
• Personal credit score: 680
• Personal guarantee requirement?: Yes
• Minimum time in business requirement: 2 years
• Minimum business annual revenue: N/A

Pros

• Competitive rates
• Rewards program
• Multiple lines of credit

Cons

• High credit score requirements
• Personal guarantee or collateral required
• Annual fee for some products

For an application for Wells Fargo’s BusinessLine® Line of credit or Wells Fargo Small-Business Advantage credit line, go online or stop by one of the branches; for more information on applying for the Wells Fargo Prime Line of Credit, contact 1-844-807-5060. This BusinessLine® line of credit and the Small Advantage(r) line of credit and Small Advantage line of credit requires a personal guarantee from any owner with a capital of more than 25 per cent and 20 per cent, respectively. A Prime Line of Credit requires collateral. BusinessLine® is a similar line of credit. BusinessLine® line of credit comes with an annual fee following the initial year.

OnDeck

• Loan amount: $5k- $250k Term: 18 – 24 months
• Interest rate: Starting at 29.90% APR
• Fastest funding: 1 business day

Additional requirements

• Business credit score: N/A
• Personal credit score: 625
• Personal guarantee requirement?: No
• Minimum time in business requirement: N/A
• Minimum business annual revenue: N/A

Pros

• Same-day funding
• Early repayment incentives
• Helps build business credit

Cons

• High APRs
• Loan origination and maintenance fees
• Requires personal guarantees

Applying for loans through OnDeck via the Internet or by calling (888-269-4246) is possible. Most applicants get a decision within minutes, and the funds are accessible within the next business day or in one to three days. OnDeck offers a loan origination fee of as high as 4%. There is a monthly fee to maintain the line of credit for business if you borrow less than $55,000 in the first seven days after opening the account. Both products require personal guarantees. No funding is available in the states of NV, ND and SD.

Accion Opportunity Fund

• Loan amount: $5k- $250k
• Interest rate: 7.49- 24.99%
• Fastest funding: Not disclosed

Additional requirements

• Business credit score: N/A
• Personal credit score: N/A
• Personal guarantee requirement?: No
• Minimum time in business requirement: N/A
• Minimum business annual revenue: N/A

Pros

• Low interest rates
• Helps minority businesses
• Mentoring and educational support

Cons

• Only offers a term loan
• Low maximum loan amount

Apply online or call 1-866-458-3555 for a chat with an agent. Accion Opportunity Fund checks your credit using a gentle pull so that it won’t impact your score on credit. Accion examines other aspects besides credit scores when deciding on funding; it needs to clarify what it considers. The loan is unavailable in ND, MT, SD, VT and TN states.

Compare the best business loans in January 2024

What is a small business loan?

A small business loan helps business owners start a new business, expand their existing operations, purchase inventory or equipment, resolve cash flow issues, or meet other business-related needs. Traditional banks, credit unions and online lenders offer these loans.

How does a small business loan work?

Small business loans function just like another type of loan. The applicant applies to the lender, they approve you, and you are given the loan. Then, you use it and repay it. The lender sets the minimum requirements to be fulfilled, such as time in business credit score or annual income. Contrary to personal loans, you must demonstrate that your business is viable by providing your bank account and other details.

If a lender is willing to approve you for aa loan, you’ll discuss the terms and get the contract you must sign. With specific lenders, this process could be a few days long, while it could take some weeks with others. Based on the type of loan, you may have an unrevolving loan amount that you could draw from, or your cash might be available in a lump amount.
Once you have received the money, you can start paying them back.

You can do this by making equal instalments over a certain period at regular intervals. The typical monthly payment is made; however, anything from daily to quarterly is also possible. You could also repay your loan by the percentage of your weekly or daily sales, which is popular with cash advances for merchants.

Secured vs. unsecured business loans

You can also select between the secured or unsecured business loan depending on the collateral you’ve got to back the loan. A secured business loan uses your business assets as a security to ensure that you can repay the loan. It is helpful to use collateral if you need assistance getting approved for a loan with bad credit or if you’re competing for more affordable interest.

If you cannot come up with resources or do not want to put your money at risk by backing a loan with these assets, you can choose an unsecured loan. Unsecured loans allow you to take out loans without having to put any collateral to support the money you borrow. It is essential to know that loan lenders could require an outstanding credit score or solid income stream to be eligible for an unsecured loan.

Requirements for small business loans

Each lender has their own set of guidelines for small-business loans. You’ll need to keep a few general rules in mind when you look into your options before you apply for business loans. A majority of lenders will evaluate the following factors to determine if you’re a suitable choice for a small business loan:

• Business revenue: You’ll likely need monthly or annual income to qualify for a small-business loan. This requirement shows the lender that you can pay monthly loan instalments without disrupting your business’s cash flow.
• Personal finances: Most businesses with small loans will examine your credit score and your history to determine the risk level you take. Some lenders will provide business loans to those with an average credit score of less than 500; however, they might have high-interest rates and charges. A better credit score means you’ll be more likely to get approved and lower interest rates when you work with more lenders.
• Time in business: Expect for the amount of time or months that you’ve been operating. You’ll usually require at least six months in business to qualify for financing. Specific traditional lenders require at least two years of business experience before approving a small-business loan. However, startup loans are also available.
• Industry: Lenders want to be sure that you’re operating in a stable sector or one that’s not in danger of a significant economic downturn that would significantly impact operations and your capacity to repay the loan.
• Credit history of business: Some lenders will look at the corporate credit scores in evaluating the loan application. Your credit history for your business will also be able to show the lender your record of payments with service providers and vendors.
• Business debts: Prepare a business debt plan that lists the outstanding debts of your business obligations and monthly payments towards the loan provider. This data determines the percentage of your earnings allocated to exceptional debts and whether you have the funds to take the next monthly loan instalment.

• Commonly required documents
  • Business plan and loan proposal (if applicable) 
  • Business license and operating agreement 
  • Employer identification number (EIN)
  • Recent personal and business tax returns 
  • Recent bank statements 
  • Proof of business insurance
  • Payroll records 
  • Lease agreement
  • List of accounts payable and accounts receivable 
  • Business financial statements (i.e., balance sheet, profit and loss statement)

Types of small business loans

There are a variety of kinds of small business loans to pick from. Certain loans have stricter criteria than others, specifically those provided through traditional lenders. Online lenders usually offer alternatives for newly established companies and entrepreneurs with bad or fair credit.

Here’s a review of the various loan options for businesses.

Term loan

The most popular business loan for established and new businesses, term loans permit you to take out a lump sum to cover your business expenses. Term loans are available through a wide range of credit unions and banks, and loans vary from $1000 up to the millions.

However, you’ll need to generate a significant amount of income and offer an individual guarantee to be eligible to receive funding. In addition, you could be facing higher borrowing rates in the beginning with your company.

Line of credit

Credit lines give you access to a bank account that you can draw on repeatedly and up to your credit limit. When you receive the funds, a term loan is charged interest on the borrowed amount. When you receive a line of credit, you only charge the interest on the amount you utilize.

There are some disadvantages, such as the absence of rewards and the limited time to use the credit line before it expires. Some lenders permit only interest-only payments throughout the draw, which can be advantageous if you want to improve your company’s cash flow.

Equipment Financing

Loans for equipment permit business owners to buy business-related equipment. It is beneficial when you can’t make the money available to cover the expenses of essential resources that keep your business running efficiently.

Business owners must think about equipment loans for various reasons because the equipment serves as security for the loan, which is why interest rates are typically higher than for unsecured term loans. This makes equipment loans more affordable for business owners with good or bad credit and startups.

A cash advance for merchants

You can get funding to help meet urgent needs through the help of a business cash advance. The funds are paid out in a lump sum and paid to the lender using a portion of daily sales from credit cards or bank withdrawals -usually in a short duration of less than one year. The lender will use your credit card sales to determine how much you can borrow. This means that bad credit is only sometimes an obstacle to borrowing.

Cash advances for merchants are business loans with bad credit. They do not charge interest. Instead, they charge factor rates that typically offer faster payment terms and could result in a higher cost than loans with comparable interest rates.

Factoring and financing invoicing

The two invoicing financing and invoice factoring permit you to credit your receivables that are not paid. They’re both available types of business loans, usually open to entrepreneurs and low-credit borrowers. To be approved to get these types of loans, they are concerned about the creditworthiness and repayment history of the invoiced customers.

There’s a significant distinction between the two. Invoice financing is the process of the possibility of receiving a loan of as much as 85 per cent of your business’s receivables. After the invoice has been paid, you’ll pay the customer back the amount that you lent (plus charges).

If you opt to factor in invoices, you’ll offer the outstanding invoices directly to the lending institution as a one-time payment of up to 90% of the amount owed. The customer will pay the lender now, and any remaining balance after deducting fees will be distributed to the client.

SBA loan

Supported by SBA, the Small Business Administration, SBA loans are loan products that offer low rates and favourable terms that satisfy the requirements of small-scale entrepreneurs. They’re available through SBA-approved lenders that you can find through the SBA Lender Match Tool. However, they have certain disadvantages.

Despite the SBA’s goal to help small business owners with the funds they require, SBA loans come with an application process that can take time to understand. Additionally, it could take some time before loans are paid to you.

Microloan

These loans are offered through the SBA’s microloans or through banks, non-profits, and online lenders that provide microloan programmes. With most microloans, you can get up to $50,000 as your company’s starting capital or working capital.

Specific lenders might charge you higher interest rates than what you’d pay for business term loans, as these loans target newer companies and have the risk of being a more significant risk for lenders.

Commercial real estate loan

You can use commercial real estate loans to lease or purchase an office space for your business. Some lenders will provide as much as $5,000,000 in capital with extended repayment times as well as competitive rates of interest.

The qualifying process can be challenging If you’re starting out or if your earnings are at the lower end. Additionally, you can anticipate going through a long process to apply.

Pros and cons of business loans

Pros

• This could mean having access to capital, which could help business owners grow their businesses.
• It is possible to pay for a cost over a prolonged period in the event it is needed.
• The majority of loans permit you to use the funds to pay for various purposes
• Paying on time for the business loan can aid in improving your credit score

Cons

• Businesses that are newer or that have poor credit may be only a few choices
• You’ll require a lot of financial documentation to prove you are able to repay
• Some lenders or kinds of loans can take several months to get approval and then fund the loan
• Repayments on loans can put an additional financial burden on the business, particularly when the company does not get lower rates because of a poor credit score or revenue concerns
• In default, the loan could cause the loss of your business assets, if the loan is secured, or even losing personal assets in the event that you’ve made a personal commitment to guarantee the loan.

FAQs about small business loans

How much can you borrow for a startup?

Startups typically are approved for between $9,000 and $20,000. There are loans such as SBA loans, ranging from $50,000 to $5 million. The amount you can take out will be contingent on the loan’s lender and kind, along with the features of your company and its finances, including the length of time you’ve been in business as well as annual revenue, as well as your credit score, and the list goes on. Since startups are at higher risk for lenders, the limits they can borrow may be less.

Do you need help getting a small business loan?

It could be challenging to obtain a small-business loan if you need help satisfying the minimum standards. If you can meet the lender’s criteria for funding and meet the requirements, you can stay clear of problems when applying for small-business financing. It’s helpful to research lenders to identify potential suitable matches before submitting an application so that you know what you can expect.

What documents do lenders require you to provide with small business loan applications?

Look at the latest personal and bank statements, tax records, and business licenses and incorporate action papers (if relevant). It is also helpful to keep the financial statements of your business on hand together with a record of your current receivables, debts and payables, as well as your operating agreement for your company and a business plan when you’ve developed one. The lender might only require part of the list of documents; however, keeping them in the bank in case they are needed would be good.

What disqualifies you from a small business loan?

You may be excluded from obtaining the business loan when you don’t fulfil the minimum lender criteria. These typically include an upper credit score requirement and a minimum business time as the revenue threshold. It is also possible to be disqualified if you have enough money for a down payment or collateral or if your accounts have a recent decrease in income.

How much income is needed to get a small business loan?

The requirements vary widely from lender to lender. Some require an annual minimum income in the range of $100,000. Some lenders will lend to companies with at least $33,000-$50,000 in yearly revenue. The lender may be willing to assist you even if you don’t satisfy the income requirement. However, you do have other indications of financial stability.

How much will a business loan cost?

The total cost of a commercial loan comprises the repayment of the amount borrowed and the interest and charges the lender charges. Annual percentage rates (APRs) can begin at 7 to 8 per cent on a conventional term loan to a company with good credit. However, they can reach up to 99 per cent or more depending on the factors that affect your financial status. Some fees differ depending on the lender. They can include origination fees or closing fees, which will add hundreds of dollars to the cost of your loan.

Can you get a small business loan with bad credit?

An excellent credit score is essential when seeking a small-business loan to be eligible for a favorable interest rate. However, some lenders provide loans to low-credit borrowers. Some lenders are willing to accept personal credit scores that start at 500. However, many lenders require a credit score of the 600s or more. Be aware that a poor credit score implies you’ll pay the cost of borrowing, which is likely higher.