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By Joan PabónElizabeth O'Brien and Norma Rodríguez
Updated: August 6, 2021 1:42 PM ET | Originally published: July 28, 2021

Small business loans are used to cover payroll, new equipment, or almost anything that can enable a business to grow. For this guide, we selected the best small business loans of 2021 that offer competitive rates, reasonable repayment terms, and fees for qualifying borrowers.

Our Top Picks for Best Small Business Loans

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Best Small Business Loans Reviews

BlueVine - Best for Invoice Factoring

Types of loans: Invoice factoring and lines of credit

Pros
  • An unlimited number of bank transactions per month
  • Account earns interest
  • Free bill and vendor payments
Cons
  • $2.50 fee for using an out-of-network ATM
  • No out-of-network fee reimbursement
  • $4.95 fee for cash deposits at Green Dot retailers

BlueVine is a financial technology company, not a bank, that offers business checking, business loans, and invoice factoring for small businesses. Their competitive invoice factoring service helps businesses with cash flow challenges to get larger credit limits by providing 85-90% of the money upfront.

BlueVine offers up to 5 million for invoice factoring with an interest rate of 0.25% per week. Minimum qualifications include: 530 FICO score, three months or more in business, $10,000 in monthly revenue, and your business must be B2B (business to business).

OnDeck - Best for Short Term Loans

Types of loans: Short term business loans and business lines of credit

Pros
  • Lines of credit with limits of $100,000 and small business loans up to $250,000
  • Online loan application and approval in minutes
  • Requires low minimum credit score
Cons
  • You have to be in business for at least one year with OnDeck and have a business bank account to qualify for a loan
  • Required minimum revenue of $100,000
  • Requires business lien and personal guarantee

OnDeck term loans stand out for their fast funding, loyalty, and prepayment benefits. If you already have business with this lender, they will waive any remaining interest rate when you take out a new business loan and even obtain a 0% origination fee.

OnDeck’s prepayment benefits allow the borrower to pay off their loan fully while having the remaining interest waived without any other fees. However, OnDeck takes a blanket lien on all of a business's assets and also requires borrowers to sign a personal guarantee, saying that the lender can go after the borrower's personal assets in the event of nonpayment of the loan.

Fundbox - Best Small Business Loans for Quick Approvals

Types of loans: Line of credit and term loans

Pros
  • Lines of credit are available in amounts up to $150,000
  • No minimum credit score or minimum revenue requirements
  • No prepayment penalties
Cons
  • The term loan is currently in beta and it's not available to all applicants

Fundbox is an AI-powered small business lending platform offering lines of credit and short-term loans. The company states you can get a credit decision in as little as three minutes, making it one of the easiest ways to get approved with an online lender for a small business loan today.

With the Insights Advantage program, borrowers can connect their business accounts, obtain cash flow predictions, view balances, and simulate business scenarios by adding potential transactions. To qualify for a line of credit, the business needs to have been using a compatible business bank account for at least three months before applying for the loan.

Funding Circle - Best for Lower Interest Rates

Types of loans: SBA loans, lines of credit, working capital loans, merchant cash advance, and invoice factoring.

Pros
  • Loans up to $684,000
  • Online application, with disbursement in as little as three business days
  • No minimum revenue requirement
Cons
  • A one-time fee when you take out a loan
  • Requires a lien on business assets and a personal guarantee

Funding Circle offers small business loans with fixed fee interest rates starting at 4.3% per year for qualifying borrowers, which is still lower than most short-term small business lenders.

You’ll be connected with a loan specialist within an hour of applying online, who will help you determine the best option for your business.

Funding Circle loans come with fixed monthly payments, and you’ll never owe an early payment penalty if you pay your loan off early. The company also requires a lien on your business assets and a personal guarantee from the primary business owners.

National Funding - Best for Borrowers with a Low Credit Score

Types of loans: Small business loans, equipment financing & leasing, merchant cash advance, working capital loans, business loans for bad credit, unsecured business loans

Pros
  • Loan amount up to $500,000 with no upfront costs
  • Early payoff discounts
  • Loan terms for 6 to 15 months
Cons
  • No information about interest rates, discounts, or origination fees

National Funding offers a variety of loan options, including small business financing for people with low credit. To qualify for a loan with National Funding, borrowers need a personal credit score of 500 for a direct loan (one of the lowest required scores among this type of lender) and 475 for renewals.

For approval, National Funding also considers the annual business revenue, checking account, and years in business. Apply online and have your loan approved the same day, and you can even receive your loan funds in as little as 24 hours.

TD Bank - Best for Healthcare Professionals

Types of loans: SBA loans, lines of credit, commercial real estate mortgages, and USDA loans

Pros
  • Offers credit cards, checking accounts, and merchant solutions
  • Online application and mobile banking
  • PPP loan forgiveness is available for loans originated in 2020
Cons
  • Applying requires extensive documentation and meetings with the lender

TD Bank has a wide variety of loans and lines of credit for business owners. However, the company stands out for offering banking solutions for healthcare professionals, with customized financing options for dentists and veterinarians, eye care professionals, and other physicians.

TD Bank funds practice mergers and finances acquisitions, partner buy-ins or outs, business expansion or relocation. It offers lending solutions for up to 12 million with 100% practice financing and working capital. In addition, TD Bank Merchant Solutions powered by Clover allows businesses to accept cash, credit and debit cards, Apple Pay, Google Pay, and others.

Biz2credit - Best for Fast Funding

Types of Loans: SBA loans, lines of credit, unsecured business loans, equipment financing, and merchant cash advances, among others

Pros
  • No application fees
  • Obtain funding options and a decision within 24 hours
  • Special lending programs for women, veterans, and minorities
  • Covid-19 Resource Hub with information and advice for small business owners
  • CPA Business Funding Portal
Cons
  • Origination fee at loan closing
  • Underwriting fee for most non-bank financing products

Biz2credit is an online marketplace that uses a proprietary platform to match businesses with the right business funding source and loan program. Their fast process allows potential borrowers to create a profile in around 1 minute, submit an application in 4 minutes, obtain funding options in 24 hours, and have the funds available 48 hours after final approval.

This marketplace provides financing for all kinds of small businesses, and their minimum loan requirements, interest rates, and fees will depend on the lender selected.

Lendio - Best Marketplace

Types of loans: SBA loans, credit cards for businesses, line of credit, short term loan, business term loan, merchant cash advance, equipment financing, accounts receivable financing, real estate loans, startup loans, business acquisition loan, express bridge loans

Pros
  • SBA loans up to $5 million
  • Free tools to manage cash flow
  • Terms up to 25 years
Cons
  • Some lenders charge prepayment penalties

Lendio is a marketplace that partners with more than 75 different lenders, including Bank of America, American Express, On Deck Capital, Mulligan Funding, Funding Circle, and Fundbox, to offer various business financing options. Borrowers can apply online in as little as 15 minutes, and once approved, the money is funded within 24 hours.

Lendio not only provides access to a variety of alternative lenders and financing options for small businesses but can also help you get in contact with credit repair companies, bookkeeping services, and legal assistance. On their website, you can find various loan calculators, an informative blog, and business resources.

Fundera - Best for Features and Resources

Types of loans: SB(7) loans, SB disaster loans, small business grants, lines of credit, term loans, invoice financing

Pros
  • Interest rates start at 6%
  • Loans from $5,000-$5 million
  • Online application
Cons
  • Some lenders might transfer fees to the borrower

Fundera is a marketplace that stands out is in its extensive features and online business resources. After completing an online application, a loan specialist will analyze your information, present you with the best lending solutions, and guide you in the process of selecting a lender and loan product.

Fundera has several sections on their website to find information about credit cards, banking, accounting, POS systems, HR & payroll, and legal services. Each section has articles and recommendations and legal advice about payroll taxes and software, and bookkeeping.

Other Companies We Considered

Kabbage

Pros
  • No origination fees, annual fees, monthly maintenance fees, or documentation fees
  • You can return your loan within 24 hours at no extra cost
  • Online application
Cons
  • Only offers lines of credit
  • Fee for each month you have an outstanding balance

Kabbage, an American Express company, didn't make it into our main company list because of its limited offerings. This lender only lends through lines of credit; however, it also has available business checking accounts and debit cards.

Kiva

Pros
  • Supports artisans, small businesses, and developing communities
  • Available in 77 countries
  • Loans start at $25
Cons
  • Longer waiting period as individuals fund loans through Kiva's online platform

With Kiva, loans are funded through a system similar to GoFund me and other similar platforms, where you have to wait for individuals to support your cause or business. This innovative lending platform didn’t make it into our main list because obtaining a loan can be slower than with more traditional banks or lending institutions. The loans have a 96% repayment rate.

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Business Loans and Covid-19

The Paycheck Protection Program (PPP) ended on May 31st, 2021. Eligible borrowers can now apply for the PPP loan forgiveness program. A borrower can apply for loan forgiveness up to the maturity date of the loan. For the application, the borrower has to submit forms and payroll and non-payroll evidence of how they used the money.

The Small Business Administration (SBA) has other relief programs to support small businesses during the ongoing pandemic.

  • Economic Injury Disaster Loan (EIDL): This program helps small businesses and nonprofit organizations, including agricultural, that have experienced a loss in need of capital to meet financial obligations and operating expenses. The deadline to apply is December 1st, 2021.
  • SBA Debt Relief: Loan payments will be deferred for borrowers who apply for loan forgiveness until the Small Business Administration remits the borrower’s loan forgiveness amount to the lender. If a borrower does not apply for loan forgiveness, payments are deferred ten months after the end of the covered period for the borrower’s loan forgiveness (either eight weeks or 24 weeks).
  • Shuttered Venue Operations Grant (SVOG): This grant was created to support small businesses, non-profits, and venues affected by the pandemic. Applicants can request up to 45% of their gross earned revenue and must have been in business before February 29, 2020.
  • Restaurant Revitalization Fund (RRF): Created to provide relief to restaurants, bars, and other related businesses affected by Covid-19. This fund prioritizes businesses that are 51% or more owned by women, veterans, and socially and economically disadvantaged individuals.

Some of these funds are available until exhaustion. Check their availability with your preferred lender or with the SBA. Protect your business from other emergencies with business insurance. Before selecting an insurer, check our selection for the best business insurance.

Business Loans Guide

How Do Business Loans Work

A small business loan is a type of loan where capital is provided at a fixed interest rate to qualifying business owners. Similar to a personal loan, a business loan requires an application, documentation that establishes creditworthiness, tax returns, and a good credit score.

There are different types of business loans and financing options; however, for small businesses, the Small Business Administration has partnerships with banks and lenders to provide loans and microloans with competitive terms and lower down payments. Business loans come in a variety of terms, borrowing amounts, and interest rates.

Types of business loans

There are several types of small business loans:

  • SBA 7(a): The most common type of small business loan is best suited when the borrower is interested in acquiring real estate. However, this loan can also be used as short- and long-term working capital, refinance, furniture and supplies, acquisition, and expansion.
  • SBA 504: This loan provides fixed-rate financing up to 5 million dollars to promote business growth and employment development. This loan can be used to purchase land, facilities, equipment, and renovations. The SBA 504 loan cannot be used as working capital, paying or refinancing debt, or investing in renting real estate.
  • Microloans: This program assists small businesses and specific non-profit childcare centers. There are microloans available up to $50,000. This type of loan can be used as working capital and the acquisition of supplies, equipment, furniture, and inventory.

In addition to the loans offered by the Small Business Administration, there are several other options for business owners who need financial assistance.

  • Lines of Credit: Work as an emergency fund that allows borrowers to obtain a specific amount and only use a portion of the fund as the need arises. You pay interest on the quantity used, and repayments are scheduled daily, weekly, or monthly.
  • Invoice Factoring: You can use unpaid invoices as collateral for the cash flow loan. Once you receive payment from your customer, you repay the loan plus any interest and fees.
  • Merchant Cash Advances: The lender advances you an amount of money guaranteed by your future credit and debit card sales. Repayments are taken from these future sales instead of within a set term.
  • Vendor Credits: You work out an arrangement with your vendors to get time to pay for a product or service instead of having to pay for it on delivery. There is no interest tied to vendor credits, and a fee will only be charged if you fail to pay within the predetermined period.
  • Business Credit Cards: Can be a source of immediate funding for a business needing some short-term cash flow.
  • Personal loan for business: An option for startup companies and new businesses without a strong record. These loans have high APRs and report to your personal credit history.

Business Credit vs. Personal Credit

When applying for a business loan, it is vital to keep in mind that lenders will look at your business credit score, and they will also consider your credit score.

Your personal credit score is different from your business credit score. However, both measure creditworthiness and the ability to pay back loans. FICO credit score ranges from 300 to 850, based on your individual credit profile. Your business credit score is usually measured from zero to 100.

Most business lenders require you to have solid personal credit to qualify. You should consider improving your credit score before applying for a loan. To help you in that process, we have selected the best credit repair companies for 2021.

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

How Does the Business Administration Work?

The U.S. Small Business Administration partners up with lenders to provide loans to small businesses. The SBA sets guidelines for lenders, including banks, community organizations, and microlenders. These guidelines reduce risks for lenders and allow easier access to loans for small business owners. Small business loans guaranteed by the SBA have lower down payments, flexible requirements, and in some cases, no collateral.

How Do You Choose the Right Small Business Loan?

Before beginning to search for funding, figure out how much money you’ll need and how you plan on using it. You can use small business loans for multiple business needs, including payroll, equipment, refinancing or debt consolidation, and real estate. Here are several funding options that can help you and your business:

  • Compare Interest Rates and Fees: Find out the loan fees and how they are calculated. Many lenders use a fixed fee factor to calculate the interest you’ll be paying. The fee factor used by the lender will depend on your business’s (or your personal) creditworthiness, the amount of the loan, and the term for repayment.
  • Ask about origination fees: Some lines of credit ask for draw fees — an amount charged every time you use it. Depending on the lender, you may pay loan fees upfront or finance them in your loan payoff amount.
  • Avoid Prepayment Penalties: This fee can be charged on some loans when the borrower pays their loan off early. We recommend that you consider only small business lenders that let you pay off your loan at any time without penalty. Some lenders will even offer a discount if you repay the loan before its term, which can represent significant savings on interest.

What Do You Need to Get a Business Loan?

Almost all businesses will at some point need a little help when it comes to cash flow. Prepare yourself for this possibility by maintaining a good credit history, establishing a good business credit score, and establishing a relationship with a financial institution through business checking accounts.

Some lenders require a minimum amount of proven, established business income for you to qualify. When applying for a loan, most lenders require:

  • Loan application
  • Business history
  • Business plan
  • Business credit report
  • Income tax returns
  • Bank statements
  • Accounts receivable and accounts payable
  • Collateral
  • Legal documents

Compare the lending options available to you and choose the one that will provide the funding you need with the terms and fees that make sense for your business.

Best Small Business Loans FAQs
What small business loans are available?
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Instead of a traditional bank loan, small business owners have these financing options: SBA loans, business term loans, business lines of credit, invoice factoring, and invoice financing. You can also reach out to credit unions for personal loans that can be used for business purposes.
Who offers the best small business loan?
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We selected the best in the following categories: best for fast funding, best for quick approvals, best for short term loans, best for borrowers with a low credit score, best for healthcare professionals, best marketplace, and the best with low APR.
How do SBA loans work?
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Unlike traditional loans, SBA loans provide financing options for small businesses. They connect small businesses with lenders instead of traditional banks, making it easier for them to access capital. This type of loan does not affect the equity or stake in the business.
Who can apply for a small business loan?
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Lenders usually have different requirements. The SBA establishes that to be eligible for a loan, a business must present evidence of what it does to receive income, its ability to repay the loan, where the company operates, and have a business purpose.
What credit score do you need for a small business loan?
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When applying for a small business loan, it is essential to remember that lenders will look at your personal and business credit score. In most cases, you will need a score of at least 600 in your personal credit history. However, not all lenders require the same score. For example, SBA loans require a score of at least 640.
What documents are needed to apply for a small business loan?
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To apply for a small business loan, you will need to have your business financial statements, tax returns, personal financial statements, business license and permits, and a copy of your business lease.

How We Chose the Best Small Business Loans of 2021

Here are all the most important factors we considered as we compiled this list of the best business loans and lenders for 2021.

  • Easy Application Process - We gave the highest marks to business lenders that provide a quick and easy online process, especially those that offer loan decisions the same business day.
  • Transparency - We gave precedence to lenders who are transparent about the cost of their loans.
  • Fast Loan Funding - The top lenders on this list make it possible to receive your loan funds anywhere between 24 hours and three days after getting approved.

Summary of Money’s Best Small Business Loans of 2021