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Updated Jun 11, 2024

The Best Business Loan and Financing Options of 2024

To get your business started or expand your growing company, you need a reputable business loan lender like businessloans.com.

Mike Berner
Mike Berner, Senior Analyst & Expert on Business Operations
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Best for Self-Service
BusinessLoans.com
BusinessLoans.com logo
  • Loans up to $3 million
  • 3 months – 5 years
  • 500 credit score required
USALinks to BusinessLoans.com
See Offers
  • Loans up to $3 million
  • 3 months – 5 years
  • 500 credit score required
Best Marketplace Lender
Biz2Credit
  • Term loans from $25k to $500k
  • 12 – 36 months
  • 660 credit score required
USALinks to Biz2Credit
See Offers
  • Term loans from $25k to $500k
  • 12 – 36 months
  • 660 credit score required
Best for Technology Features
Fundbox
  • Lines of credit up to $150,000
  • 12 – 24 weeks
  • 600 credit score required
USALinks to Fundbox
See Offers
  • Lines of credit up to $150,000
  • 12 – 24 weeks
  • 600 credit score required
Best for Flexible Terms
SBG Funding
  • Loans up to $5 million
  • 1 – 5 years
  • 500 credit score required
USALinks to SBG Funding
See Offers
  • Loans up to $5 million
  • 1 – 5 years
  • 500 credit score required
Best for Fast Funding
Rapid Finance
Rapid Finance logo
  • Loans up to $1 million
  • 3 months – 5 years
  • 500 credit score required
USALinks to Rapid Finance
See Offers
  • Loans up to $1 million
  • 3 months – 5 years
  • 500 credit score required

Table of Contents

Open row

To determine the best business loan and financing options for business owners needing capital, we examined the type of funding offered by each lender, as well as the rates, terms and qualifications for approval. We also investigated the ease of the application process, whether personal guarantees and special documentation were required, and how fast funding was provided. Our approach weighed both the pros and cons of each loan provider, allowing you to make an informed decision based on the facts.

business.com has spent years evaluating and testing hundreds of business software and services to guide business owners to the best solutions on the market. Our in-depth review process involves participating in vendor demos, taking software for trial runs, studying service agreements and researching user feedback. Each analysis considers pricing, feature set, limitations and more, and every review is assessed for accuracy and objectivity before publication. Learn more about our methodology and editorial process.

Launching and growing a business is an exciting journey, but turning your vision into reality often requires a financial boost.  Whether you need capital for equipment, inventory, marketing, or a major expansion, securing the right business loan can be the key to unlocking your full potential. But there’s just one major problem: traditional banks reject 70-80 percent of small business loan applicants.

Fortunately, other sources of business funding exist for small organizations, including fintechs, alternative lenders and funding marketplaces. To help you choose from seemingly endless funding options, we narrowed down the list to the best lenders and marketplaces.

Tip Bulb

How We Decided

Our team spends weeks evaluating dozens of business solutions to identify the best options. To stay current, our research is regularly updated.

38

evaluated

19

researched

5

chosen

Our team spends weeks evaluating dozens of business solutions to identify the best options. To stay current, our research is regularly updated.

38

evaluated

19

researched

5

chosen

Compare Our Best Picks

BDC Ribbon
Our Top Picks for 2024
BusinessLoans.com
Biz2Credit
Fundbox
SBG Funding
Rapid Finance
Rating (Out of 10)9.08.88.78.88.8
Best for

Self service

Marketplace lender

Technology features

Flexible terms

Fast funding

Loan size

$5,001 – $3 million

$25,000 – $500,000

up to $150,000

up to $5 million

up to $1 million

Loan term

3 months – 5 years

12 – 36 months

12 – 24 weeks

1 – 5 years

3 – 60 months

Time to fund

1 – 7 days

3 days+

1 day+

1 day+

1 day or less

Minimum sales requirement

$100,000

$250,000

$100,000

$120,000

none

Required minimum credit score

500

660

600

500

500+

Required minimum time in business

6 months

18 months

6 months

6 months

3 months

Review Link
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Our Reviews

BusinessLoans.com logo
  • Loan Amount: Up to $3 million.
  • Loan Types: Term loan, merchant cash advance, invoice factoring, working capital loan, line of credit, equipment financing.
  • Minimum requirements: $100,000 in annual sales and a 500 credit score.
Editor's Rating: 9/10
See Offers

Why BusinessLoans.com is Best for Self-Service

Finding the right loan for your business can feel like searching for a needle in a haystack. But BusinessLoans.com takes the guesswork out by matching you with a loan provider using its algorithmic system, making them our top pick for self-service borrowers.

We appreciate BusinessLoans.com’s commitment to tech-powered efficiency. Its marketplace approach leverages a sophisticated algorithm and extensive data pool to match you with the most suitable funding source for your specific business needs. We found that the platform offers access to a diverse range of lenders within their network, providing a variety of loan sizes, terms, and rates to fit your specific situation. We like that the online application is easy to navigate, allowing you to apply for funding quickly and efficiently. This self-service approach empowers you to take control of your financing journey without the need for extensive back-and-forth communication with lenders.

Businessloans.com application

We appreciated BusinessLoans.com’s quick application process. Source: BusinessLoans.com

BusinessLoans.com Rates and Fees

Loan Type Rates
Term Loan Starts at 9% APR
Merchant Cash Advance (MCA) 20-40% payback on amount borrowed
Invoice Factoring 2-4.5% fee on unpaid invoices
Working Capital Loan 8-25% APR
Line of Credit $150 maintenance fee

BusinessLoans.com Advantages

  • Loan terms are broad, ranging from three months to five years
  • BusinessLoans.com’s algorithm matches you with the best source of funding in its network.
  • The online application can be completed within minutes.

BusinessLoans.com Disadvantages

  • Funding may take up to a week, which is somewhat longer than other lenders in this space.
  • Minimum annual sales requirements exclude many small businesses.
  • BusinessLoans.com excludes businesses with less than six months of operating history.

BusinessLoans.com User Scores

Trust Pilot: 4.9/5

“I needed capital to keep going, it was an extremely stressful situation. I am funded today and able to make payroll,” one user wrote.

Learn more about BusinessLoans.com in our complete review.

  • Funding Amount: Loans of up to $500,000.
  • Loan Types: Term loans, working capital loans. ERTC loans, commercial real estate loans.
  • Minimum requirements: $250,000 in annual sales and a 660 credit score.
Editor's Rating: 8.8/10
See Offers

Why Biz2Credit is the Best Marketplace Lender

Biz2Credit is our choice for the best marketplace lender because its platform connects small business owners with various funding types, and it offers fast approval and transparent pricing. We like that Biz2Credit’s term loans charge simple interest, which means that borrowing costs don’t compound. You also get a hands-on approach from Biz2Credit, with access to funding specialists who can help you determine the best loan terms for your business.

We also appreciate that Biz2Credit boasts a quick application process, which is attractive to time-crunched business owners. The lender also offers discounts for connecting a business checking account.

Biz2Credit prequalification

Biz2Credit’s prequalification form can be filled out quickly and with minimal information. Source: Biz2Credit

Biz2Credit Rates and Fees

Biz2Credit’s loans start at a 7.99% interest rate, which varies based on your credit score and other factors. The platform also charges a $250 to $400 underwriting fee, along with additional closing costs.

Biz2Credit Advantages

  • Biz2Credit provides a platform for a variety of flexible business loans with transparent pricing and competitive rates.
  • You can borrow up to $500,000 as a term loan and pay it back over 12 to 36 months.
  • Funding time is generally less than 72 hours.

Biz2Credit Disadvantages

  • To qualify for a term loan, you must have more than $250,000 in annual sales and a credit score of at least 660.
  • You must be in business for 18 months before you can get a loan.
  • Biz2Credit only accepts applicants with a 660 credit score or above.

Biz2Credit User Scores

Trust Pilot: 4.6/5

“If you have all your ducks in a row, you can get funded pretty quickly. They always answered the phone, and you received information and documentation promptly,” one user wrote.

Learn more about Biz2Credit in our complete review.

  • Funding Amount: Line of credit up to $150,000.
  • Loan Types: Business line of credit.
  • Minimum requirements: $100,000 in annual sales and a 600 credit score.
Editor's Rating: 8.7/10
See Offers

Why Fundbox is Best for Technology Features

Fundbox specializes in providing business lines of credit and focuses exclusively on this product. But what really sets Fundbox apart for us is its slate of tech tools. Features include a cash flow insights tool, a paid subscription product called Fundbox Plus and a mobile app for Android and iOS devices. Fundbox’s Flex Pay service acts as a middleman between a business’s bank account and payroll vendor to ensure that funds are always available for payroll and vendor expenses. We also like that Fundbox integrates with various accounting software solutions, including QuickBooks, FreshBooks and Zoho.

Fundbox mobile devices

Fundbox is accessible on both Android and iOS devices via its mobile app. Source: Fundbox

Fundbox Rates and Fees

Lines of credit are available for up to $150,000 for 12 to 24 weeks, with a starting interest rate of 4.66% for the 12-week product.

Fundbox Advantages

  • You can integrate Fundbox with popular accounting software.
  • Fundbox offers business lines of credit with transparent pricing and fixed payments.
  • Fundbox offers a mobile app.

Fundbox Disadvantages

  • Fundbox’s lines of credit have terms of 12 to 24 weeks, shorter than those of other lenders.
  • The company focuses on business lines of credit and doesn’t offer other financial products.
  • Fundbox requires a minimum credit score of 600 and a $100,000 sales threshold.

Fundbox User Scores

Trust Pilot: 4.4/5

“Excellent and responsive customer service. Very easy and seamless process to draw funds when needed,” one user wrote.

Learn more about Fundbox in our complete review.

  • Funding Amount: Loans of up to $5 million.
  • Loan Types: Term loans, bridge loans, line of credit, equipment financing, invoice financing, SBA loans.
  • Minimum requirements: $120,000 in annual sales and a 500 credit score.
Editor's Rating: 8.8/10
See Offers

Why SBG Funding is Best for Flexible Terms

SBG Funding is our choice as the best alternative lender for flexible terms because it offers multiple funding types, can issue loans of up to $5 million and gives you a decision in less than 24 hours. SBG Funding is also willing to customize its terms to fit your needs, rather than forcing you into a one-size-fits-all product.

We like that SBG is flexible in repayment terms. You can pay these loans back on a biweekly or monthly schedule. The terms for a business line of credit range from six to 24 months, with available credit of up to $250,000. SBG’s equipment financing terms are also flexible, lasting between one and 10 years. You can finance up to 100% of the equipment value, and there is no penalty for paying off the loan early.

SBG Funding application

SBG Funding has an easy online application that can be filled out in minutes. Source: SBG Funding

SBG Funding Rates and Fees

Loan Type Rates Loan Amounts Repayment Terms
Term Loan Starts at 1.75% per month (not APR) Up to $5 million 1 – 5 years
Bridge Loan Starts at 1.92% per month (not APR) Up to $1 million 6 – 24 months
Line of Credit Starts at 1.75% per month (not APR) Up to $150,000 6 – 24 months
Equipment Financing Avg. 3.75% monthly Up to 100% of equipment cost 1 – 7 years
Invoice Financing Starts at 0.25% per week Up to 90% of invoices N/A (flexible payment options)
SBA 7(a) Loan Not specified (generally lower rates) Up to $10 million 2 – 10 years

SBG Funding Advantages

  • SBG provides several financing types and loan sizes.
  • Funding is fast and there are no additional fees.
  • Repayment terms are very flexible.

SBG Funding Disadvantages

  • You need $10,000 in monthly revenue to qualify for a loan.
  • SBG requires that business owners provide a copy of a voided check.
  • The advertised monthly interest rates make it difficult to determine your APR.

SBG Funding User Scores

Trust Pilot: 5/5

“This company went above and beyond working with my business in order to make this a smooth transaction,” one user wrote.

Learn more about SBG Funding in our complete review.

Rapid Finance logo
  • Funding Amount: Loans of up to $1 million.
  • Loan Types: Term loans, merchant cash advance, line of credit, invoice factoring, SBA loans, bridge loans, asset-backed loans, commercial real estate loans.
  • Minimum requirements: 500 credit score.
Editor's Rating: 8.8/10
See Offers

Why Rapid Finance is Best for Fast Funding

Rapid Finance is our best pick for fast funding because it has an easy online or mobile application, quick approval turnaround and same-day funding. We like that Rapid Finance offers a variety of loan products, including small business loans, MCAs, short-term bridge loans and lines of credit.

We also like Rapid Finance’s fast application process. To apply, you need to provide a business bank account and three months of bank statements. That is a small amount of documentation compared to applying for a conventional bank loan or Small Business Administration (SBA) loan. You can borrow up to $1 million with this alternative lender for a term loan ranging from three to 60 months. Rapid Finance is willing to work with borrowers regardless of their credit score as it looks at the business’s overall performance when evaluating applications.

Rapid Finance calculator

Rapid Finance’s website includes a free online calculator. Source: Rapid Finance

Rapid Finance Rates and Fees

Although Rapid Finance doesn’t publicly disclose its rates and fees, exact terms and loan amounts will depend on the type of loan.

Rapid Finance Advantages

  • Rapid Finance offers a variety of small business loans with flexible repayment terms.
  • Same-day funding is available thanks to fast processing and an easy application process.
  • Rapid Finance will consider applicants without a high credit score.

Rapid Finance Disadvantages

  • You must have a business checking account to qualify and receive funding.
  • Rapid Finance doesn’t publicly disclose its rates and fees.
  • The company doesn’t provide much information about eligibility.

Rapid Finance User Scores

Trustpilot: 4.2/5

“Straight forward process, friendly and knowledgeable loan officers, and outstanding customer service,” one user wrote.

Learn more about Rapid Finance in our complete review.

Additional Options Worth Exploring

Fora Financial

Fora Financial offers loans of up to $1.4 million, with terms no longer than 15 months. With Fora Financial’s loans, you get flexible payment schedules, discounts for early payoff and no collateral requirements. Fora’s minimum qualifications are relatively relaxed compared to those of other lenders. You need to have six months in business, at least $12,000 in gross sales, a personal credit score of 500 and no open bankruptcies. We also like the online portal, where you can monitor your loan progress in real time.

Noble Funding

Noble Funding offers quick and easy small business financing, with starting rates and requirements that are competitive with those of similar providers we reviewed. What stood out to us is Noble Funding’s emphasis on transparency, in-person assistance and zero fees. The company also earns high praise from customers on independent review sites.

If you’re looking for long-term financing, Noble has loan options of up to $500,000. Noble’s bridge loans range from $100,000 to more than $4 million for short-term financing. Long-term loans start at 8.99% interest and don’t require any collateral. You do need a credit score of at least 650 to qualify, though.

Balboa Capital

Balboa Capital offers quick funding and a simple online application that can be completed within minutes. We like that reams of paperwork and documentation are not required, and that there are no collateral or hidden fees. If approved, funds can be immediately deposited into your account. This straightforward process makes Balboa Capital an attractive lender for business owners looking for an easy approval process.

Balboa Capital offers several niche financing options that aren’t available from many other business loan providers. The company offers a specialized product for franchisees and provides vendor funding for business owners who want to extend financing to their customers.

Crest Capital

Crest Capital offers a variety of flexible funding options designed specifically for businesses looking to invest in equipment. It offers loans between $5,000 and $500,000, fast funding and competitive rates. Crest Capital provides small business owners with equipment financing of up to 100% of the cost, including “soft” costs such as installation. If you want to finance equipment for less than $250,000, Crest Capital requires only that you fill out a quick and easy online application.

Accion

Accion Opportunity Fund is an excellent lender for underserved borrowers because this nonprofit is dedicated to helping small businesses that have trouble accessing traditional funding. With loans ranging from $500 to $150,000, a willingness to work with business owners with imperfect credit and its commitment to helping small businesses grow, Accion stands out from other microlenders.

We appreciate Accion’s focus on underserved markets, including women-owned, disability-owned and minority-owned businesses. It’s also willing to work with startups and food and beverage businesses that are often unable to access funding easily. Accion offers options for small loans, which is a plus for many businesses that are getting started. Term loan rates start at just 5.99% and vary by credit score.

Accion interest rates

Accion’s microloans feature low interest rates starting at 5.99%. Source: Accion

Truist

Truist has years of experience working with the SBA and offers a variety of funding options. Truist is the result of a merger between SunTrust Banks and BB&T and is the only bank lender on our list. SBA loans don’t fall into the alternative loan bucket but are a popular and attractive borrowing option. Since the government backs most of the loan, lenders like Truist can accept lower down payments, offer longer repayment terms and charge competitive interest rates. As an SBA Preferred Lender, Truist has demonstrated its commitment to providing efficient funding.

Rates and Terms

Rates

Accessing capital is an important part of running a small business, but it isn’t free. Banks and alternative lenders charge you interest and fees for the privilege of borrowing. These are some of the funding costs that you will likely encounter:

  • Interest rate: This is the cost to access a lender’s capital, charged as a percentage of the loan principal. The interest rate depends on several factors, including your personal and business credit score, time in business, sales and loan size. Pay close attention to the annual percentage rate. This number allows you to compare borrowing costs between different lenders.
  • Loan application fee: Some lenders charge a fee to apply for a loan. This fee doesn’t guarantee you’ll be approved. We prefer lenders that don’t charge fees simply for applying.
  • Origination fee: This fee covers the costs of processing the loan. The origination fee is assessed after you agree to the financing. It is charged as a percentage of the loan or as a flat fee,
  • Monthly and annual maintenance: Some lenders charge fees to administer your loan. This is common if you maintain a business line of credit with a lender. We prefer lenders that don’t charge fees for longer-term loans.
  • Late payment fee: Most lenders will assess a fee for past-due payments if you are late on your loan payments. This will be spelled out in your loan contract.
  • Prepayment penalties: Some lenders charge a fee if you finish paying back your loan before the term ends.
TipBottom line
The fees you’ll pay to borrow money vary by lender. That’s why it’s important to shop around so that you can make an accurate comparison of small business loans.

Terms

The term refers to the repayment period of the loan. The loan term can range from several months for a short-term loan to 30 years for real estate financing. Many small business term loans fall within the 1-5 year range. Payments usually are made weekly or monthly, depending on your loan contract. Additional conditions for financing can include putting up collateral or making a personal guarantee.

Types of Business Loans to Consider

Small business funding comes in many different forms. From SBA loans to lines of credit, small business owners can access cash in several ways.

SBA Loans

The SBA provides startups and small business owners access to capital through its lending program. The SBA backs up to 85% of these loans, which enables banks to extend funding to borrowers they may not have lent money otherwise. Some of the lending programs even provide ongoing support for the entrepreneur. Expect to pay comparable interest rates to a bank’s on SBA loans:

  • Standard 7(a) loan: With the SBA 7(a) loan, small business owners are eligible to borrow up to $5 million. The interest rate on this loan ranges from the base rate plus 2.25% to base rate plus 4.75%, depending on the loan size and term. The turnaround time from application to funding tends to be five to 10 business days. There’s no collateral required for loans up to $25,000.
  • SBA Express loan: The SBA Express loan is similar to the 7(a) loan, but funding may come in as little as 36 hours. You can borrow up to $500,000 and use it as a revolving line of credit or a term loan.
  • 504 loan: This is a long-term, fixed-rate loan in which the SBA provides 40% of the funding, a bank covers 50% and the borrower is responsible for 10%. Business owners can use 504 loans to purchase or fix equipment or property to help the business grow.

Traditional Bank Loans

Banks and credit unions offer small business loans. It may be easy to apply if you have a relationship with the bank, but that doesn’t guarantee you’ll get a loan. Banks and credit unions have gotten more stringent in approving borrowers. A bank loan tends to have a lower interest rate than you’d pay with an alternative lender, but only those with a strong credit profile need apply.

Business Lines of Credit

With a business line of credit, you draw money from the loan as needed. You pay interest only on the amount you use. Small business lines of credit range from $1,000 to $250,000, going even larger in some instances. They tend to have variable interest rates, which means your interest payment amounts will fluctuate with the market.

You don’t have to provide collateral with an unsecured line of credit, but the lender may require a personal guarantee. With a secured line of credit, you must offer something of value that the lender can seize if you can’t repay the loan. Common types of collateral include property and business equipment.

Microloans

Ideal for small business owners starting out or in need of a small amount of cash, microloans range from $500 to $500,000. Typically, they feature short terms and are offered by nonprofits. Many microlenders aim to help small business owners from underserved groups, such as women, minorities and veterans. The SBA is a big player in the microloans market, providing the funding to nonprofits that it designates as intermediary lenders.

Business Credit Cards

You can use a business credit card to make purchases while paying annual interest and fees, but this can get expensive if you carry a balance. Lenders look at your personal and business credit scores when determining your creditworthiness. A higher credit score generally translates into a lower interest rate.

Alternative Loans

Only some small business owners are eligible for a traditional bank or SBA loan, which is where alternative lenders come in. These are nonbank lenders that provide an array of loans. Alternative lenders typically are more flexible than banks, with faster application processes and funding turnarounds. They may cost you more in fees and interest, but it means you get your funding more quickly and easily. Here’s a look at three popular alternative loan types for small business owners:

  • MCA: A lender can offer you an MCA in exchange for a portion of your future credit card sales. You get access to cash quickly, sometimes within one day and then pay it back as a percentage of your daily credit card sales.
  • Equipment financing: This is a loan you take out to pay for business equipment. The collateral, in this case, is the equipment being financed. Most business owners can get approved for this, given the collateral component.
  • Invoice financing: Similar to an MCA, invoice financing gives you an advance on your clients’ unpaid invoices. It’s often referred to as accounts receivable financing. With this type of funding, the invoicing company advances you up to 85% of the value of your unpaid invoices. You receive the final 15%, minus the financing company’s fees, when your customers pay their invoices.
TipBottom line

Before you start shopping for a small business loan, think about what you need the funds for. That will help you determine the length (term) of the loan you need. You don’t want to be stuck paying off the loan long after the item you borrowed it for has lost its value.

What to Look for in a Business Loan or Financing Option

When you’re researching your financing options, you have several factors to consider that will help you narrow down your selection.

Loan Process

When small business owners need cash, they often need it quickly. The last thing you want to do is get stuck with a lender that requires reams of paperwork or takes too much time getting the funding into your bank account. With many alternative lenders, it takes minutes to apply for a loan and some offer same-day funding once you’re approved.

Term

The term refers to the loan repayment period and the schedule for when you need to make payments. You may have six months to pay off a short-term loan, for example, or five years for a long-term loan.

Qualifications

Qualifications vary by lender but, in general, they look at your credit score, the financial health of the business and how long you’ve been in operation. Some lenders work only with borrowers who have a very good credit score while others are open to higher-risk borrowers. You should understand a specific lender’s qualifications and know that you’re eligible before you apply for financing from that lender.

Collateral

Depending on the loan, you may need to offer up personal or business collateral, such as paper assets like stocks or corporate bonds or property, such as buildings, equipment or vehicles. If you default on the loan, the lender can come after that collateral. It’s important to understand the lender’s collateral requirements and the inherent risk before agreeing to the terms.

Fees/Repayment

The interest isn’t the only fee you’ll pay back to the business lender. Lenders can charge various fees that impact the cost of the loan, such as application fees, origination fees, late-payment fees, prepayment penalties and monthly and annual maintenance fees.

Time to Deposit

This is the time it takes to get money in your bank account once you are approved for the loan. Before you choose a lender, you should obtain an estimate for time to deposit. Some alternative lenders can get the funding into your bank account within several business days.

Special Documentation

Some lenders require you to provide documentation before they will move forward with your application. These include your business financial statements, such as a balance sheet, income or profit and loss statement and your statement of shareholder equity.

Lenders may require three months of your checking account statements. You’ll also need to provide your income taxes for the last three years, paperwork pertaining to any businesses you have a financial stake in and your business license or certification. If you’re renting office space or equipment as part of your operations, you’ll want to have those leases easily accessible as well. Knowing ahead of time what paperwork your chosen lender requires ― ideally gathering and preparing it before you start the application ― will ensure a smooth and quick process.

Did You Know?Did you know

Most small business loans require you to provide a personal guarantee. This means that, if your business defaults on the loan, the lender can come after your personal assets.

For more information about business loan terminology, check out our glossary of business terms.

How to Qualify for the Right Loan for Your Business

Whether you work with a bank or an alternative lender, the funding provider wants to ensure that you will repay them. That is why you must provide financial documentation and information about your business before they will approve your loan. The lender considers how long your company has been in business, your business credit score and your annual sales. Lenders also look at your personal credit score when issuing capital.

If you have a strong credit profile and your business is growing, you will find it easier to get a bank or SBA loan at favorable rates. If your credit has taken a hit, you don’t have strong revenue growth or your business is in the early startup phase, then an alternative lender may be a better option for you than a bank. That’s why it’s important to understand the type of financing you need before you begin applying for a loan.

What documentation and financial statements do you need to prepare for a loan application?

The paperwork required for small business financing varies from one lender to the next. But there is some documentation that most lenders require:

  • Bank statements: Lenders want to see the last six months of your bank statements.
  • Tax returns: Some lenders require copies of your tax returns going back several years.
  • Business plan: Many lenders will want to see your business plan for achieving profitable growth.

The number of documents required varies widely, so it’s a good idea to ask your loan specialist about it upfront. That is especially true if you’re looking for quick funding. The lender can tell you exactly what they require in your situation. The more prepared you are with documentation, the quicker the process will go and the sooner the money will land in your bank account.

FYIDid you know

Small business loans are often necessary to keep cash flowing and operations growing. Depending on your credit profile, it can be reasonably cheap to borrow money or extremely expensive. You need to weigh the benefits of borrowing against the cost to determine what will work for you.

Frequently Asked Questions

The easiest business loan to secure is one that has minimal requirements in terms of your annual revenue, time in business and credit score. This makes it possible for startups to meet a lender’s qualifications. Straightforward applications can speed up the process.

Some lenders require collateral, while others protect their investment by requiring personal guarantees. It is rare to find a small business loan that doesn’t require some level of insurance for the lender. So, yes, startup loans usually require personal guarantees, especially if the loan is unsecured. This is a lender’s way of making sure it gets your debt back, even if it’s not directly through your business.

If you’re looking for an SBA loan, a good place to start is the SBA’s Lender Match tool. It’s a free online resource that hooks up business owners with SBA-approved lenders. To use it, you answer a few questions about your business and within two days, you’ll receive an email with contact information for the lenders willing to work with you. After you compare rates, you can apply with whichever lender you choose. This tool is not for SBA disaster relief loans.

If you don’t want to wait the two days for the SBA to match you with compatible lenders, you can do your own internet search for SBA-approved lenders and apply directly through their websites.

A business installment loan is a common method of financing an asset, such as property or expensive business equipment. Rather than paying for the whole purchase upfront, you pay for your purchased asset in installments over a certain period of time. The amount of the loan and the number of payments you must make are fixed ― you don’t have access to an ongoing line of credit or credit card.

Installment loans can have many purposes, such as purchasing equipment, funding a startup or paying for property. If you are looking for an installment loan to fund a startup, you’ll need good credit, collateral, a business plan and potentially additional guarantees, depending on your credit standing and business prospects. Installment loans tend to have lower interest rates than credit cards, but you risk losing your collateral if you default on the loan. That’s not true of a credit card.

Many business owners don’t look for a loan until they need the money. They may have identified an opportunity to expand or noticed a shortage in cash flow. Then, they scramble to get a loan, focusing more on the time it will take to get cash in the bank than the terms.

The better strategy is to line up funding before you need it. That will give you the time to shop for a loan that has a low interest rate, not many fees and favorable terms. Having cash at the ready will better position your business for the unexpected.

It depends on the lender. For some, a credit score of 550 is sufficient while others require a score of at least 600. Remember that the lower your credit score is, the higher your interest rate will be. According to credit rating agency Experian, a credit score of 700 or above is considered good while a score of 800 or higher is excellent. The average credit score is between 600 and 750.

What to Expect in 2024

Credit availability and higher interest rates are potential issues for business owners in 2024. Over the last two years, the U.S. Federal Reserve has embarked on a tighter monetary policy program. In response to rising inflation, policymakers hiked interest rates to the highest level in over 15 years. The WSJ Prime Rate, an index of prime rates from 30 major banks, sits at 8.5 percent, which remains unchanged from the same period one year ago.

Over the last few months, inflation readings have fallen to the mid-3 percent level. The Federal Reserve recently paused its rate hike program, and analysts widely believe that current rates are at or near a peak. Chairman Jay Powell has indicated that the Fed could cut interest rates in 2024. For now, though, policymakers are holding interest rates in place.

Although the path forward for interest rates is uncertain, it remains possible to save money on business loans. In 2024, business owners who use online and alternative lenders may be able to access lower interest rates. Technological advances have improved the lending process, with artificial intelligence and machine learning reducing loan approval wait times. Credit scores still matter, but lenders are increasingly scrutinizing other aspects of business owners’ finances to ascertain their creditworthiness. These changes could make it easier and faster for some businesses to receive financing.

To account for rising inflation, the SBA increased size standards in 2023 to expand the definition of what is considered a small business. This means more businesses can apply for SBA loans and federal contracts. More information is available on the SBA table of size standards.

Mike Berner
Mike Berner, Senior Analyst & Expert on Business Operations
Mike Berner brings to business.com over half a decade of experience as a finance expert, having previously served as an economic analyst for the U.S. Army Corps of Engineers. His expertise lies in conducting quantitative analysis and research, providing invaluable guidance for navigating the modern financial landscape. Berner, who has a bachelor's degree in economics and a bachelor of business administration in finance, enjoys simplifying complicated financial concepts for entrepreneurs and business owners. From deciphering the intricacies of business loans and accounting to identifying the best payroll systems and credit card processors, he offers comprehensive insights tailored to meet diverse business needs. Beyond dedicating himself to exploring and evaluating the latest financial solutions, Berner has also become adept at explaining how businesses can take advantage of artificial intelligence tools. His passion for sharing knowledge extends to various platforms, including Substack, TikTok and YouTube, where he imparts tips and strategies on topics like sales tactics, savvy investing and tax saving.
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