We may earn a fee if you click on the links below. Compensation does not determine ranking. Not all brands are included. Learn more.

By: and
Updated by:
Published: Jul 02, 2024 38 min read
Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
Our Partner
Company Highlight
Our Partner

Applying won’t affect credit score

  • Loan Amounts: $5,000 to $250,000
  • Average Yearly Revenue requirements:$100,000
  • Minimum Credit Score: 625 FICO
  • Minimum Time in Business to apply: 1 year
Our Partner

BBB Accredited Company with cash in as little as 24 hours

  • Loan Amounts: Up to $500,000
  • Average Yearly Revenue requirements: $250,000
  • Minimum Credit Score: 600 FICO
  • Minimum Time in Business to apply: 6 months
Our Partner

Online tracking platform + personal Account Manager keep your business goals in check

  • Loan amounts: $5,000 to $500,000
  • Average yearly revenue requirements: $250,000
  • Minimum credit score: None
  • Minimum time in business to apply: 1 year
Our Partner

Merchant cash advances, invoice factoring, equity financing, and debt financing option

  • Loan Amounts: Up to $5 million
  • Average Yearly Revenue requirements: $120,000
  • Minimum Credit Score: 620 FICO
  • Minimum Time in Business to apply: 1 year
Our Partner

No cost and no credit check application that can be filled out in minutes

  • Loan Amounts: Up to $3 million
  • Average Yearly Revenue requirements: $200,000
  • Minimum Credit Score: 620 FICO
  • Minimum Time in Business to apply: 1 year
Our Partner

Loans best for small to mid sized businesses who need capital, FAST

  • Loan Amounts: $10,000 to $500,000
  • Average Yearly Revenue requirements: $250,000
  • Minimum Credit Score: 600 FICO
  • Minimum Time in Business to apply: 6 months

*Rates and APYs may have changed. Use the provided links for the specific lenders to contact the lender and confirm current terms.

If you're looking to expand or sustain your venture, taking out a small business loan could be a worthwhile step to consider. An infusion of new capital can allow you to build up inventory, purchase new equipment or have extra cash on to cover overhead expenses.

Small business financing is available through online lenders, traditional banks, credit unions and even peer-to-peer lending platforms. Business loans come in a few different varieties.

Since 2020, our writers and editors have invested hundreds of hours to finding the best small business loans. For this report, we vetted 29 lenders for more than 20 data points each, including their qualification requirements, application process and funding options. Based on this research, we selected 5 top companies, including BlueVine, OnDeck and Fundbox.

Read on for more on those picks, and for a guide that provides more information on how to qualify for a business loan.

Our Top Picks for Best Small Business Loans

The companies listed below are in alphabetical order.

  • Biz2credit - Best for Business Insights
  • Bluevine - Best for Lines of Credit
  • Fundbox - Best for Cash Flow Predictions
  • Lendio - Best for Startup Loans
  • OnDeck - Best for Prepayment and Loyalty Benefits
Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
Small Business Owner, get the working capital you need.
If you want more flexibility than a commercial bank might offer, an alternative lender like OnDeck is ready to offer you a loan. Click on your state and take the first step today.
HawaiiAlaskaFloridaSouth CarolinaGeorgiaAlabamaNorth CarolinaTennesseeRIRhode IslandCTConnecticutMAMassachusettsMaineNHNew HampshireVTVermontNew YorkNJNew JerseyDEDelawareMDMarylandWest VirginiaOhioMichiganArizonaNevadaUtahColoradoNew MexicoSouth DakotaIowaIndianaIllinoisMinnesotaWisconsinMissouriLouisianaVirginiaDCWashington DCIdahoCaliforniaNorth DakotaWashingtonOregonMontanaWyomingNebraskaKansasOklahomaPennsylvaniaKentuckyMississippiArkansasTexas
Learn More

Best Small Business Loans Reviews

Why we chose it: Biz2credit is an online business loan marketplace that stands out for its excellent analytic tool. BizAnalyzer gives business owners a scorecard based on the business's creditworthiness and financial health while also providing personalized feedback and financial recommendations.

  • Matches small business with bank and non-bank financing products
  • No application fees
  • Special lending programs for women, veterans and minorities
  • Charges origination or closing fee for most bank financing products
  • Charges underwriting fee for most non-bank financing products
Types of loans:
Business term loans, working capital loans and commercial real estate loans
Not disclosed.
12 to 36 months
Min. credit score:
575 for working capital loans and 650 for term loans
Min. revenue:
$120K annually for line of credit, $250K for working capital and term loans
Max. loan amount:
Up to $2M for working capital loans, $500k for term loans and $6M for commercial real estate loans
Underwriting fee ($250-$400) at the time of closing

Biz2credit is an online marketplace that matches small business owners with a variety of funding options based on the profile of the business and its needs. The scorecard features of the BizAnalyzer tool include metrics on how well the business is performing against competitors, and suggestions on how performance might be improved.

Biz2credit also offers a broad selection of financing options from banks and online lenders, including special lending programs for women, minorities and veterans. The lending platform states you can apply in as little as four minutes, get approval in just 24 hours and obtain funding in as fast as 72 hours. Of course, this will depend on the lender and loan type you select, as will the specific qualification requirements for the financing type you choose.

To qualify for a working capital loan through Biz2credit, you will need a minimum credit score of 575. Your business must also be at least six months old and have a minimum of $250,000 in annual revenue. For a term loan — available to only "a small percentage of our customers," Biz2credit warns — you’ll need the same minimum revenue but a credit score of at least 650 and to have been in business for at least 18 months.

Read full review

See rates on Biz2credit's Secure Website >>

Why we chose it: Bluevine’s quick funding time — of between one and three business days — and high credit line limit make it our top loan provider for lines of credit. Bluevine customers can get up to $250,000 in revolving credit.

  • No limit on deposits, withdrawals or ACH transfers
  • No minimum deposit required
  • Zero monthly fees or overdraft charges
  • Earns 2% interest with $500 monthly spending or $2,500 in monthly payments
  • $4.95 cash deposit fee
  • Bill pay with credit card fee is 2.9%
  • $10 fee applies to same-day bank wire transfers
Types of loans:
Lines of credit
Starting at 6.2% (Disclaimer: This rate is a simple interest rate calculated from total repayments over 26 weeks)
6 or 12 months
Min. credit score:
625 or 650 depending on payment plan
Min. revenue:
$120K annually
Max. Line of credit:
1.7% per week or 7% per month for line of credit draws, $15 for bank wires (same-day funding)

Bluevine offers business checking accounts and lines of credit. A line of credit can provide your small business with quick funding from which you can continue to draw as you repay the credit line. That said, consider that the Bluevine line of credit comes with high annual percentage rates and payments must be made weekly or monthly.

To qualify for a Bluevine line of credit (issued by Utah-based Celtic Bank), your business must be an LLC or corporation that’s been in operation for at least 12 months. The business must also make at least $10,000 in monthly revenue and have a personal credit score of at least 625.

Business owners interested in same-day funding should note that Bluevine charges a $15 fee for direct wire transfers. ACH transfers are free, but the funds may take up to three days to be reflected in your account.

Read full review

See rates on Bluevine's Secure Website >>

Why we chose it: Fundbox Insights provides cash flow predictions based on transaction history for qualifying businesses. This tool offers future revenue projections and sends alerts when cash flow drops below a predetermined threshold.

  • Three-day grace period on line of credit payments
  • No prepayment penalty or origination fee
  • No inactivity fees for credit lines
  • Cash Flow Insights currently in beta and not available to all companies
  • Charges draw fee for lines of credit
  • Funds are available within two business days
Types of loans:
Lines of credit
Starting at 4.66%–8.99%
12 or 24 weeks for lines of credit, 24 or 52 weeks for term loans
Min. credit score:
Min. revenue:
$100K annually
Max. loan amount:
Up to $150K for lines of credit
Late payments, non-sufficient funds and credit line draws

Fundbox offers free access to an Insights feature that lets you connect your compatible business accounts to see cash flow predictions based on historical data. You can also simulate business scenarios by adding potential future transactions and get alerts if your cash flow drops below the predetermined threshold. On the downside, the Insights feature is still in beta and may not be available to all companies.

Fundbox does not charge prepayment penalties or origination fees. It does, however, charge draw fees on its lines of credit but extends a three-day grace period for missed payments for this particular funding option.

To qualify for a line of credit with Fundbox, your business must have been using a compatible business bank account for at least three months before applying. You also need to have been in business for at least six months and have a minimum personal credit score of 600, a business bank account and at least $100,000 in annual revenue.

See rates on Fundbox's Secure Website >>

Why we chose it: Lendio is among the few marketplaces that offer startup loans with terms of up to 25 years, and at competitive rates.

  • Startup loans for up to $750,000
  • Compare over 75 online and bank lenders
  • Up to $2 million for term loans and merchant cash advances
  • Up to $5 million for business acquisition and other loan types
  • Prepayment penalties vary by lender
  • Online application requires several documents including three months of business bank statements
Types of loans:
SBA loans, term loans, equipment financing, cash advances, acquisition loans, lines of credit, business credit card
3% to 60% depending on funding type
30 days to 25 years depending on loan type
Min. credit score:
Depends on lender and type of funding, but 650 and up for most
Min. revenue:
Depends on lender and type of funding
Prepayment penalties and origination fees, depending on lender

As a marketplace, Lendio offers a broad range of small business loan products from which to choose. Chief among them are startup loans, which not all lenders offer and can be instrumental in building a new business from the ground up. You can obtain a startup loan through Lendio for amounts of up to $750,000 and terms of up to 25 years.

Another advantage of working with Lendio is that the marketplace offers loans from over 75 different lenders, including Bank of America, American Express, On Deck Capital, Mulligan Funding, Funding Circle and Ready Capital, to name just a few. Borrowers can apply online in as little as 15 minutes and obtain funding within 24 hours, depending on the type of funding. Depending on the lender, collateral in the form of business or personal assets may be required.

See rates on Lendio's Secure Website >>

Why we chose it: OnDeck rewards its customers for being loyal and financially responsible with prepayment and loyalty benefits. The company will waive the remaining interest on your existing loan if you renew your contract, take out a new loan or pay your loan off early.

  • No-cost same-day funding in certain states
  • No opening, closing, prepayment or draw fees
  • Loyalty benefits when you pay down 50% of your loan and request a new one
  • Same-day funding only available in certain states and for loans of up to $100k
  • Requires a business lien and personal guarantee
  • Not available in Nevada, North Dakota or South Dakota
Types of loans:
Short term business loans, business lines of credit
Average interest rate for term loans is 52% and for lines of credit is 52.6% APR
Up to 24 months for term loans and 12 months for lines of credit
Min. credit score:
Min. revenue:
$100K annually
Max. loan amount:
$250,000 for term loans and $100,000 for lines of credit
Monthly maintenance fee on lines of credit.

Existing customers who take out a new small business loan with OnDeck may benefit from the lender’s loyalty perk, which waives the remaining interest of the previous loan (provided at least 50% of the current balance has been paid down).

OnDeck also offers an attractive prepayment benefit. If eligible, business owners could waive the remaining interest payments on a loan they’ve paid off before the end of its term. Business owners who pay off their loans early and do not qualify for the prepayment benefit would still be responsible for 75% of the remaining interest. Moreover, the prepayment benefit comes with a higher interest rate, so they could end up paying more for what they borrow.

Another important consideration is that OnDeck requires customers to sign a personal guarantee and agree to a blanket lien on their business assets. This means you would be liable to repay your business’ debts if your company defaults on the loan.

To qualify for a short-term loan with OnDeck, you must have a minimum FICO score of 625, make at least $100,000 in annual revenue and have been in business for at least one year — longer than other lenders require. However, the company claims their average customer has been in business for over three years, makes $300,000 in annual revenue and has a credit score of 650 or higher.

Applicants with less than stellar credit and lower annual revenue streams may want to look elsewhere, especially considering OnDeck’s high average rates.

Read full review

See rates on OnDeck's Secure Website >>

Ads by Money. We may be compensated if you click this ad.AdAds by Money disclaimer
Get the capital you need to get your small business running
When things get tight, OnDeck is here to help you stay afloat and move forward. Click here to explore your loan options today.
Learn More

Other small business loan companies we considered

When researching small business lending, we found countless options, especially in the online lending sphere, and it wasn’t possible to include them all in our top picks. You’ll find short reviews of our “honorable mentions” below, as well as the pros and cons of each lender and why they didn’t make it to our top picks.


  • Matches applicants with the best funding options
  • Participating lenders may accept credit scores as low as 500
  • Funding time may take a week in some cases
  • Limited information online

Using a proprietary algorithm, Businessloans.com matches business owners to the right lenders and funding, based on the type of business, loan amount and loan purpose. Funding options include loans for expansion, equipment purchasing, accounts receivable, inventory, marketing, payroll and working capital. Funding through Businessloans.com is capped at $3 million and funds may be available as soon as the next day.

Why it didn’t make the cut: Businessloans.com lacks information about its loan options and the borrower requirements of its partner lenders. The FAQ section was also sparse and didn’t offer additional information regarding the platform and what users can expect from the application and matching process.

See rates on Businessloans.com's Secure Website >>

National Funding

  • Approval in 24 hours, subject to lender requirements
  • Early payoff discount for certain loan options
  • No collateral required
  • No information about average interest rates or fees
  • High revenue requirement
  • Requires daily or weekly payments for working capital loans

National Funding features a simple online application and fast access to funds. In addition, the lender uses alternative credit data to evaluate businesses with less than stellar credit and has an entire section with information on how to improve your chances of approval for a small business loan when you have bad credit. Finally, National Funding’s early payoff discount offers 6% off for equipment financing customers and 7% off for working capital borrowers who pay off their remaining balance within 100 days of signing their contract.

Why it didn’t make the cut: Business owners may find that the company’s website lacks information compared to other lenders. National Funding does not disclose average rates or fees, for example, and its annual revenue requirements are on the high side.

See rates on National Funding's Secure Website >>


  • No minimum credit score required to apply
  • No collateral requirements
  • Charges origination fees
  • Limited information about borrower requirements and loans

Quickbridge, owned by National Funding, offers business owners term loans and equipment financing. Applicants don’t have to put up collateral and don’t need a perfect credit score to apply — Quickbridge’s credit scoring model considers time in business and average monthly revenue in its credit decision. After receiving your online application, a loan specialist will work with you to find the right funding option. As with other online lenders, funds may be available within 24 hours after approval.

Why it didn’t make the cut: Quickbridge’s website has less information than most lenders about borrower requirements, loan terms and funding options. Business owners will need to apply for prequalification (which includes a soft credit pull) and get in touch with a loan specialist to see loan terms and rates.

See rates on Quickbridge's Secure Website >>

American Express Business Blueprint™

  • Accepts fair to excellent credit scores
  • No application or origination fees
  • No prepayment penalties
  • Credit lines of $2,000 to $250,000
  • Only offers lines of credit
  • Draws are treated as separate installment loans
  • Every loan requires a personal guarantee

American Express Business Blueprint™, formerly known as Kabbage, offers business lines of credit and cash flow management services to small businesses with short credit histories. Business owners can apply for between $2,000 and $250,000 in credit and choose between four repayment terms, of 6-, 12-, 18- and 24 months. Total monthly fees incurred over the loan term range from 3-9% for 6-month loans, 6-18% for 12-month loans, 9-27% for 18-month loans, and 12-18% for 24-month loans, and are subject to change for future loans drawn under the available line of credit.

Since the monthly fee increases according to the term length, borrowers are encouraged to choose the shortest repayment term.

Why it didn’t make the cut: American Express Business Blueprint™ didn't make it into our top picks because its sole funding option — a line of credit — requires businesses to be active for at least a year before applying, unlike Bluevine, which accepts businesses that have been open for at least six months.


  • Supports artisans, small businesses and developing communities
  • Recipients can repay the loan over time, without interest
  • Available in 77 countries
  • No minimum credit score requirement
  • Longer waiting period since loans are crowdfunded
  • Direct sales, financial investing and franchise businesses are ineligible
  • Loans disbursed through microlenders (MFI) have higher interest rates

Kiva operates on a crowdfunding model where loans are financed through the contributions of individuals. Kiva first assesses the creditworthiness of applicants in an unconventional way. Candidates must get between five and 35 people from their community to lend them money, proving that they are deemed creditworthy by their support network.

Once this prerequisite is met, the fundraiser is posted on Kiva’s public lending platform, where you'll have 35 days to meet your fundraising goal. Once you reach the goal, the funds are disbursed, and you can begin repaying the loan over time, free of interest.

Why it didn’t make the cut: Kiva is an excellent option for individuals with low credit scores or limited access to capital. However, as a crowdfunding platform, if the targeted amount is not reached within 35 days, investors will be refunded and the person hosting the fundraiser will not receive any funds.

See rates on Kiva's Secure Website >>

Funding Circle

  • Online application, with disbursement in as little as two business days
  • Set up automatic weekly or monthly payments on term loans
  • Same-day funding for lines of credit under certain conditions
  • Higher credit score requirement than other online lenders
  • Must have been in business for at least two years
  • Personal guarantee or lien on assets required for most 3-5 year term loans

Funding Circle is a direct lender. The platform offers funding in as little as 48 hours for term loans and same-day funding for lines of credit. Business owners who meet the lender’s eligibility requirements can borrow up to $500,000 and select a repayment plan of up to seven years. The business line of credit is capped at $250,000. Unlike other lenders, there are no monthly maintenance fees or prepayment penalties.

Why it didn’t make the cut: Funding Circle’s underwriting guidelines may be hard to meet. The lender has a high credit score requirement for all loan types (620) and applicants must have been in business for a minimum of two years (other lenders require six months to a year).

See rates on Funding Circle's Secure Website >>

Small Business Loans Guide

Table of Contents

Small businesses — defined as those with 500 employees or less, according to the U.S. Small Business Administration (SBA) — typically hit a point in their development where additional capital is required to continue growing. In the past, such funding primarily came from traditional banks or credit unions. Now, the likes of online lenders and lending marketplaces provide new alternatives for small-business funding.

This guide walks you through the different types of small business loans, how they work and how to qualify for them. We also dedicate a section to business loans backed by the SBA. These loans have caps on interest rates, long repayment terms and more lenient credit requirements than traditional bank loans.

How do small business loans work?

Small business loans provide funding to entrepreneurs, whether they need capital to expand, cover payroll, purchase real estate, or acquire new equipment or inventory.

As with personal loans, small business loans have minimum qualification requirements that vary by lender and loan type. In general, however, small business owners will need to have a good credit score and evidence of business revenue to qualify.

There are many different funding options available to small business owners, and these can come from several sources:

  • Bank lenders – Traditional banks typically have lower rates but more stringent qualification requirements. Funding times may take longer as well.
  • Non-bank online lenders – Online lenders offer quick funding times and have more flexible qualification requirements. However, rates tend to be much higher than those offered by bank lenders.
  • Peer-to-peer lending – Lending platforms connect business owners to potential investors. This type of lending is riskier for investors, who may not recoup the money if the borrower defaults. Borrowers, on the other hand, may find lower interest rates and better loan terms.

Pros and cons of small business loans

  • Money can be used to finance everything from equipment to payroll
  • Builds business credit history
  • Fund your business without involving investors
  • Lump sum of money improves cash flow
  • Lower interest rates compared to personal loans
  • Requires strong personal and business credit
  • Lenders generally require a minimum revenue and time in business
  • Long underwriting process and may require collateral

Types of small business loans

Business loans are available from a range of funding sources, from online lenders and brick-and-mortar institutions to banks and credit unions. The loans aim to serve a variety of business types, from startups to long-time family enterprises. The various financing options can replace or supplement personal loans with various loan types, including lines of credit, term loans and invoice solutions.

The best fit depends on your business type, loan purpose, credit history and financial background. Application processes and eligibility vary by lender, as do such requirements as the need for a business plan and the amount of annual revenue. Here's a rundown of the key loan options:

Commercial real estate loans

These loans provide business financing for purchases or renovations of commercial property. Often, you'll need to occupy at least half of the property's space to qualify.

Invoice factoring

This option involves selling your invoices to a factoring company at a discount. The buyer then pays you a percentage upfront (think 90%) and collects from your customers. Once collected, the company releases the remaining funds minus a fee.

Invoice financing

Not to be confused with invoice factoring, invoice financing involves borrowing against unpaid invoices. You use them as collateral for a cash advance, and repay the invoices when your customers pay you. Unlike factoring, you retain ownership of your invoices and the responsibility to collect on them.

Equipment loans

This loan option provides you with working capital to acquire equipment without upfront costs. The equipment itself acts as collateral — if you can't repay, the lender takes it — which can allow greater leeway in the loan amount.

Business lines of credit

Business lines of credit function like credit cards; they offer a pool of funds that refills as you repay. These products are ideal for short-term loans to meet unexpected expenses. You only pay interest on what you use, with regular repayments.

Business credit cards

Business credit cards allow you to keep personal expenses distinct from those of your business. Your business can then enjoy higher credit limits, authorized user cards for employees and rewards programs for common purchases. Using these cards can also help with monthly cash flow and build credit history for the business. That means as a business owner you needn't rely solely on your personal credit and credit score, although blemishes on your individual record, such as bad credit, may still hurt you and the business.

Term loans

With a business term loan, you receive a lump sum upfront to repay over a set period (the term). These loans can have fixed or variable interest rates with repayment terms up to five years. Some such loans are SBA loans, guaranteed by the Small Business Administration.

Merchant cash advances

These allow you to get a lump sum in exchange for a percentage of your future credit and debit card sales. MCAs offer same-day funding, making them attractive for emergencies, but beware of their terms: MCA rates can be very high, and require daily or weekly repayments.

Franchise loans

Franchise loans allow you to get upfront financing to cover franchise fees, legal fees, real estate costs and other day-to-day expenses related to starting a franchise.

How to get a small business loan

If you’re an entrepreneur on a search for a small business loan, whether for working capital to expand or to solve a short-term funding gap, here's a battle plan to secure the best business financing for your enterprise.

1. Decide which loan type is best

Every business borrower has particular needs at particular times, and there should be a funding option to fit every scenario. Are you expanding or plugging a hole in your cash flow? Or starting a new business and need working capital in order to expand? Microloans, short-term loans, equipment loans, a business line of credit and real estate financing are just a few of the loan options at your disposal. Consider an SBA loan (from the U.S. Small Business Administration) for a government-backed loan through a bank, or explore online lenders and peer-to-peer platforms. All of these loan programs can work for both established businesses and startups.

2. Compare the various lenders

From traditional banks and credit unions to modern online options and peer-to-peer lending, your business financing options and choice of financial institution are vast. Start by researching reputation and reliability. Once you have a shortlist, consider your qualification, loan type, and preferred banking experience (online vs. traditional) to find the perfect match.

3. Compare interest rates

Shop around. Different lenders offer differing annual percentage rates. Generally, revolving loans, business credit cards, accounts receivable financing, and merchant cash advances carry higher interest rates than the other options. Non-bank online lenders often have steeper rates than traditional banks as well. While comparing rates, factor in the lender's maximum loan amounts and term lengths.

4. Beware hidden costs

Be mindful of the varying fees associated with lenders and loan types. While most lenders have origination fees, some waive prepayment penalties and closing charges. Other potential charges include fees for funding, opening an account, closing a loan, maintaining an account, and sending a wire transfer Naturally, you will also want to scrutinize the repayment terms for each loan option.

5. Prepare to apply

Credit history counts during the loan application process. You'll need a strong business credit score or personal credit score (ideally above 660; lower scores may be considered to be bad credit) and a business checking account. Eligibility often requires meeting a minimum revenue threshold (many online lenders require at least $100,000) along with essential documentation:

  • Loan application form
  • Evidence of business history
  • Business plan
  • Business credit report
  • Personal and business tax returns
  • Bank statements
  • Financial statements, such as accounts receivable and accounts payable
  • Collateral in the form of business or personal assets
  • Legal documents such as articles of incorporation

Business credit vs. personal credit

When applying for a business loan, lenders will look at your business credit score as well as your personal credit score. While these scores are different, both measure creditworthiness and the ability to repay loans.

The table below shows a summarized comparison between the two:

Business credit Personal credit
Measures the creditworthiness of your business Measures your creditworthiness as an individual
Scored from zero to 100 Scoring ranges from 300 to 850, based on your personal credit history
Identifies the creditor by the Employer Identification Number (EIN) of the business Identifies the creditor by their Social Security Number
Reported to commercial credit bureaus like Dun & Bradstreet, Experian and Equifax Reported to the three major credit bureaus, Equifax, Experian and Transunion
Business credit errors or issues are harder to resolve and agencies aren’t obligated to respond Consumer credit laws afford legal protections such as the right to refute incorrect entries

Since most business lenders require you to have solid personal credit to qualify, consider improving your credit score before applying for a loan.

You can improve your credit on your own at no cost or pay for help from the best credit repair companies.

If you need financial assistance now and don’t have time to work on credit repair, take a look at our selection of the best loans for bad credit.

How to get a small business loan with bad credit

First, what counts as bad credit? If we look at FICO’s scoring chart, scores lower than 669 are a red flag for lenders. VantageScore, on the other hand, sets the cutoff point a little lower: scores lower than 661 aren’t good.

Poor credit can make qualifying for a business loan difficult but not impossible. Follow these steps if you need a business loan but don’t meet the credit score requirements yet:

Evaluate your credit

Take a close look at your credit score to identify what needs improvement. There are no short-term fixes for negative marks like late payments but you can boost your score in various ways. For example, lowering your credit utilization ratio (how much of your available credit you are using) below 30% may increase the score as soon as the next reporting cycle (which is usually a month). You can also request credit reports from the three major credit bureaus — Experian, Equifax and TransUnion — and dispute any errors.

Look for lenders with flexible credit requirements

Many lenders set lower credit score requirements and consider alternative credit when evaluating your creditworthiness. For example, robust savings and a positive rent payment history may be enough to offset a low credit score. The downside to such loans is that the lender will set higher interest rates and fees, so a clear business plan and repayment strategy are crucial.

Get a cosigner

Loan approval and favorable rates and terms is possible with a cosigner who has good to excellent credit. This financial relationship requires trust, especially on the cosigner’s part since they’ll be responsible for the debt if you default. To get a cosigner on board, we recommend you write a thorough business plan including how you plan to repay the debt.

Put up collateral

Business owners can leverage unpaid invoices or future credit and debit card transactions to secure credit lines and cash advances. Such collateral tells lenders that the business will have enough assets to pay back, even if it has a less than stellar credit score now.

Having a steady cash flow also works to your advantage. You can improve your chances of approval if you use that cash towards a large down payment.

Consider an SBA microloan

The SBA offers microloans of up to $50,000 to support small businesses and eligible childcare centers. Microloan lenders — unlike other SBA lenders — generally accept borrowers who wouldn’t qualify for a standard SBA 7(a) loan due to limited capital and lack of credit history.

The average such microloan is about $13,000, making this option best for startups and enterprises that need only a modest injection of funds.

Where to get a small business loan

You can apply for a small business loan through a bank (also known as a traditional lender), a non-bank online lender or a credit union.

Another form of lending that’s become popular for small businesses is peer-to-peer lending.

Traditional lenders

The term “traditional lender” typically refers to established brick-and-mortar banks. These institutions generally offer business loans with lower rates as well as access to a professional banker or loan officer at a local branch.

The downside to working with traditional lenders is that most require a good credit score and collateral. Borrowers will also have to complete more paperwork and endure a longer wait time before funds are disbursed.

Credit unions

Unlike banks or online lenders, credit unions are member-owned financial institutions. These generally provide the same services as banks and are known to offer financial products with lower interest rates and lower transaction costs.

Many credit unions are also certified as Community Development Financial Institutions (CDFI), a designation given to lenders that promote economic growth for individuals, organizations and businesses in underserved communities. In fact, credit unions are the second-largest group of CDFIs in the United States, according to the list of certified institutions published in 2023.

If you're interested in working with a credit union, know that you’ll have to meet membership requirements and the institution may have a smaller branch network than a bank.

Online lenders

Business owners may seek funding through online servicers (also known as non-bank lenders). These companies offer multiple financing options issued by a partner bank or financial institution. Business owners can complete the application and loan processing online and receive funds within a few days. Online lenders tend to have flexible eligibility requirements, which may work in favor of borrowers who won’t qualify for business loans elsewhere.

However, online lenders set higher interest rates than traditional banks or credit unions and, obviously, lack in-person customer service. The latter may be a dealbreaker for business owners who prioritize building a relationship with their bank and getting personalized advice and customer support.

P2P loans

Peer-to-peer loans are funded by individual investors as opposed to lending institutions. These loans are available through P2P lending platforms that act as intermediaries to match investors with qualifying borrowers.

SBA loans and how they work

The SBA backs small business loans provided by traditional banks by covering a portion of the loan if the borrower defaults. Since there is less risk for lenders, rates for SBA-backed loans are more competitive and may feature better terms.

For example, during the COVID-19 pandemic, the SBA extended a number of relief programs to help small business owners affected by the health crisis. In addition to deferring principal and interest payments for disaster loans, the SBA created the Economic Injury Disaster Loan (EIDL), the Shuttered Venues Grant and the Paycheck Protection Program (PPP). Although applications for these programs are now closed, eligible small business owners can still apply for PPP loan forgiveness.

It’s important to note that the SBA does not lend money directly to small businesses unless they are located in a declared disaster area. Instead, the SBA sets lending guidelines for small business lenders including banks, community organizations and microlenders.

Many SBA loan programs also require businesses to have the appropriate insurance policies in place. If you’re applying for an SBA loan and you’re missing insurance coverage, check out our list of the best small business insurance companies.

Types of SBA loans

The following are some common types of SBA loans:

SBA 7(a) loans: The most common type of small business loan. This loan is best suited for real estate acquisition. Yet it can also be used for short- and long-term working capital, furniture and supplies, acquisition and expansion.

Real Estate and Equipment loans (CDC/504): A loan that provides fixed-rate financing of up to $5 million to promote business growth and employment development. Borrowers can also use funds to purchase land, build facilities, obtain equipment and fund renovations. The loan may not be used as working capital, to pay or refinance debt, or for investments or rental properties.

Microloans: A loan designed to assist small businesses and specific non-profit childcare centers. These are microloans available for up to $50,000. This type of loan can be used as working capital and to acquire supplies, equipment, furniture and inventory.

Disaster loans: Low-interest loans offered to small businesses located in declared disaster areas. Disaster loans can be used to repair or replace real estate, personal property, machinery, equipment, inventory or business assets.

Difference between SBA loans and other small business loans

Small business loans guaranteed by the SBA have lower down payments, flexible requirements and, in some cases, do not require collateral. However, it can take up to three months after applying to receive an SBA-backed loan.

The SBA guarantees loans for amounts between $30,000 and $5 million, with annual percentage rates typically ranging from 6% to 13%. The actual rate will depend on the loan program, loan amount and repayment term. SBA loans are best suited for long-term investments, buying real estate or equipment, purchasing other businesses and refinancing existing loans.

How to get an SBA loan forgiven

Business owners who got funding through the SBA’s Paycheck Protection Program (PPP) can get their loans forgiven on one condition: the funds must have been used for qualifying expenses such as employee payroll or overhead costs.

To get SBA loan forgiveness, you first need to use up all the funds you’d like to have discharged. Unused funds aren’t eligible. After that, the SBA accepts loan forgiveness applications anytime up until the loan term’s end date.

Be prepared to submit evidence of how you used the funds, both for payroll and non-payroll expenses. This includes but isn’t limited to:

  • Evidence of compensation to employees (bank statements or tax forms)
  • Contributions to employee health insurance or retirement plans
  • Invoices, receipts or evidence of payment for overhead expenses like utilities, rent or mortgage interests

You can submit the application through the SBA PPP Direct Forgiveness portal if your bank is on the list of lenders participating in direct forgiveness. Borrowers whose banks aren't listed have to contact their lender directly and fill out the necessary forms.

Please visit the SBA’s main support page for more information.

Latest News on Small Business Loans

If you’re an aspiring e-commerce entrepreneur but have no idea where to begin, check out our guide on how to start an e-commerce business to learn what you need to do and how to do it to get your business off the ground.

For owners of new companies or established businesses, knowing how to check your business credit score is essential for maintaining a healthy financial reputation and securing favorable loan terms to help your business grow.

Best Small Business Loans FAQs

How to get a small business loan?


Building a business from the ground up with a loan may be difficult because most banks require businesses to operate for a few years and provide evidence of revenue. That's not the case with many startups.

To get a bank loan to start a business, you might need to put up personal assets as collateral. If that's not viable, consider alternative funding sources such as venture capital, crowdfunding or loans targeted toward startups. Keep in mind that such loans may come with higher interest rates and fees.

How to apply for a small business loan?


You can apply for a small business loan online through a non-bank lender but most traditional lending institutions require you to submit your application in person at a branch.

As with any other type of loan, you will need to complete an application form and have your financial and legal documentation at hand. This could include your business and personal tax returns, personal financial statements, and business license and permits, among others.

How hard is it to get a small business loan?


It depends on several factors. If you're just starting out, have a limited credit history, no collateral and no cosigner, it may be very difficult to get a business loan, especially from a traditional bank. The economic climate and your area of industry also play a role — lenders set stricter lending requirements during difficult economic times and they may hesitate to lend to newcomers in high-risk industries like retail or restaurants.

That said, there are institutions willing to work with borrowers who don't meet the requirements of traditional banks. You can further increase your chances of approval by developing an iron-clad business plan and building up your credit history.

Where to get a small business loan?


You can get a small business loan from traditional banks or financial institutions as well as non-bank online lenders, including lending marketplaces and peer-to-peer lending platforms.

Check out our current top picks for small business loans if you're unsure where to start.

What happens if you default on a business loan?

When you default on a business loan, the first consequence is it will affect your business and, potentially, your credit score. Then, depending on the loan terms, your lender may charge late fees or penalties. The lender might also suddenly request you pay the balance in full. Failing to do so may result in the lender taking legal action to collect the payment. Additionally, a default will affect your ability to get future loans, credit or loan offers for the business.

How We Chose the Best Small Business Loans

To compile this list of the best business loans and lenders for 2024, we considered the following:

  • Application process. We looked for lenders offering a quick and simple online application, especially those offering same-day approval.
  • Funding times. Our top lenders provide funding in as little as 24 hours and as much as three days after approval.
  • Qualification requirements. We gave precedence to lenders that accept credit scores of around 660 or below, require that you've been in business for only between 6 and 12 months and have annual revenue for your enterprise of less than $200,000.
  • Range of funding options and high loan amounts. With few exceptions, we favored lenders that offer a variety of funding options and higher-than-average loan amounts.

Summary of Money’s Best Small Business Loans of 2024

The companies listed below are in alphabetical order.

  • Biz2credit - Best for Business Insights
  • Bluevine - Best for Lines of Credit
  • Fundbox - Best for Cash Flow Predictions
  • Lendio - Best for Startup Loans
  • OnDeck - Best for Prepayment and Loyalty Benefits