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The Best Business Loan and Financing Options of 2023

Mike Berner
Staff Writer
| Updated
Feb 28, 2023

Many small businesses need funding to get started. Learn about the different financing options to decide which would work best for your small business.

Best for Self-Service
Loans up to $3 million
Algorithm matches you with a lender
Works with startups
Best Marketplace Lender
Loans from $25,000 to $500,000
Starting rate of 7.99%
Connects you with funding
Best for Technology Features
Lines of credit up to $150,000
Mobile app available
Accounting software integration
Best for Flexible Terms
Loans up to $5 million
Tailors terms to your needs
Fast funding available
Best for Fast Funding
Loans up to $1 million
Same-day funding
Terms from 3 to 60 months
Many small businesses need funding to get started. Learn about the different financing options to decide which would work best for your small business.

Access to capital is essential to running a small business, whether for funding operations, filling gaps in cash flow, or taking advantage of an opportunity to grow and expand. There are many sources of funding for small businesses, including traditional banks, but their eligibility requirements and restrictions frequently exclude applicants. To help you choose from among seemingly endless fintechs, alternative lenders and funding marketplaces, we narrowed down the list to the best options. When examining different lenders to determine our best picks, we considered the cost to borrow, whether the lender requires collateral, loan terms and more.

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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.

Compare Our Best Picks

CompanyBest forEditor’s scoreLoan sizeUnsecured loansLoan termPersonal guarantee requiredTime to fundMinimum sales requirementRequired minimum credit scoreRequired minimum time in business
Biz2CreditMarketplace lender8.8$25,000 – $500,000Yes12 – 36 monthsYes3 days+$250,00066018 months
BusinessLoans.comSelf service9.0$5,001 – $3 millionYes3 months – 5 yearsYes1 – 7 days$100,000none6 months
Noble FundingCustomer service8.9$75,000 – $500,000Yes3 – 5 yearsNo2 – 3 days$200,00065018 months
Fora FinancialShort-term loans8.5$5,000 – $1.4 millionYesup to 15 monthsYes1 – 3 days$150,0005006 months
SBG FundingFlexible terms8.8up to $5 millionYes1 – 5 yearsYes1 day+$120,0005006 months
Balboa CapitalEase of approval8.6up to $250,000Yes3 – 24 monthsYes1 day$300,00062012 months
Crest CapitalEquipment financing8.7$5,000 – $500,000Yes1 – 7 yearsYes1 dayN/A500+2 years
FundboxTechnology features8.7up to $150,000Yes12 – 24 weeksYes1 day+$100,0006006 months
AccionUnderserved borrowers9.0$5,000 – $100,000YescustomYes7 days+nonenone<1 year
TruistSBA loans8.4up to $250,000Yesup to 5 yearsYes7 days+N/A600+2 years
RapidFinanceFast funding8.8up to $1 millionYes3 – 60 monthsYes1 day or lessnone500+3 months

Our Reviews Best Loan Option for Self-Service

Loan terms are broad, ranging from three months to five years
|’s algorithm will match you with the best source of funding in its network.
Funding may take up to seven days. is a marketplace lender designed to match you with the most appropriate funding source for your business’s needs. The platform leverages its proprietary data and employs algorithms to predict the best match. strives to work with every applicant and makes it easy to apply for funding using technology, making it our best business loan provider for self-service.

Editor’s Score: 9.0/10 can match you with a wide variety of loans in its network. Loan sizes range from $5,001 to over $3 million, with terms going from as short as three months to as long as five years. Rates start at 9%, which is about the middle of the pack for lenders we reviewed. You can expect your loan to be funded within seven days if approved.

The platform differentiates itself from the competition by making it easy for business owners to identify a funding option that works best for their unique needs. The online application is quick and easy to fill out, and the algorithm uses’s trove of data from previous users to pinpoint a match based on the information you provide.

Importantly, also gives you the option to speak to a representative to ask questions and obtain guidance on documentation, and the company says that most borrowers utilize this feature. is willing to work with many types of business customers, including startups. For its unique ability to automatically match businesses to funding sources, is our pick for the lender with the best self-service.

Read Full Review

Biz2Credit: Best for Marketplace Lending

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.
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 also have to be in business for 18 months before you can get a loan.

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 platform matches small businesses with sources of capital that meet their unique needs. 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.

Editor’s score: 8.8/10

Biz2Credit offers term loans, working capital loans and commercial real estate loans through its lending platform. We like that it is transparent about loan rates and terms. Term loans charge simple interest, which means that borrowing costs don’t compound. That saves you money on interest payments because the overall rate stays fixed. Biz2Credit’s term loan rates start at 7.99%, varying by credit score and other factors. It also offers fast funding turnarounds of 72 hours for term loans and 24 hours for working capital loans.

Biz2Credit boasts a quick application process, which is attractive to time-crunched business owners, and offers discounts for connecting a business checking account. Not all alternative lenders provide these benefits. Biz2Credit’s ability to connect you with the right loan through its extensive network makes it our best pick for marketplace lender.

Read Biz2Credit Review

Fundbox: Best Loan Option for Technology Features

You can integrate Fundbox with popular accounting software.
Fundbox offers business lines of credit with transparent pricing and fixed payments.
Fundbox's lines of credit have terms of 12 to 24 weeks, which is shorter than those of other lenders.

Fundbox is our choice as the best alternative lender for technology features. Its digital platform integrates with popular accounting software, such as QuickBooks, and allows you to match payments to cash flow. Fundbox also offers transparent pricing, quick and easy approvals, and fast funding.

Editor’s score: 8.7/10

Fundbox specializes in providing business lines of credit. The line of credit is 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 is currently testing term loans on an invitation-only basis for qualified borrowers. These short-term loans are structured to be repaid over the course of six to 12 months.

Fundbox’s technology platform is what separates this lender from the competition. Features include a cash flow insights tool, a paid subscription product called Fundbox Plus, and a mobile app for both 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. The company also integrates with various accounting software solutions, including QuickBooks, FreshBooks and Zoho.

Read Fundbox Review

SBG Funding: Best Loan Option for Flexible Terms

SBG provides several financing types and loan sizes. Funding is fast, and there are no additional fees.
Repayment terms are very flexible.
You need $12,000 in monthly revenue to qualify for a loan.

SBG Funding is our choice as the best alternative lender for flexible terms because it offers different funding types, can issue loans of up to $5 million, and will give you a decision in under 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.

Editor’s score: 8.8/10

SBG Funding is an alternative lender that provides small businesses with funding to support their growth. Borrowers can access term loans, lines of credit and equipment financing. We like that SBG offers you a choice of loan types. Some business owners may prefer a line of credit, drawing on it when needed, while others want a lump sum to cover operating expenses, or funding for a pricey piece of equipment. You can access funding for all this through SBG.

SBG is also flexible in repayment terms. Its small business loan terms range from one to five years, with funding up to $5 million. 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 $150,000. 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.

Read SBG Funding Review

Rapid Finance: Best Loan Option for Fast Funding

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.
You must have a business checking account to qualify and receive 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, merchant cash advances, short-term bridge loans and lines of credit. It services a broad array of industries and is dedicated to helping small businesses get funding fast.

Editor’s score: 8.8/10

Another reason we selected Rapid Finance as the best for fast funding is its application process. To apply, you will need to provide a business bank account and just three months of bank statements. That is a small amount of documentation compared to applying for a conventional bank loan or SBA loan. You can borrow up to $10 million with this alternative lender for terms 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.

For small business owners looking for fast funding, Rapid Finance stands out. Regardless of the loan product, this lender can get money in your account on the same day as approval. Add a straightforward application that you can complete from a smartphone, and it’s clear why Rapid Finance is our best pick for fast funding.

Read Rapid Finance Review

Fora Financial: Best Loan Option for Short-Term Loans

Short-term loans and merchant cash advances come with a term of up to 15 months.
There are no additional fees.
To qualify for a loan, you must have gross annual sales of $150,000.
See Offers

Fora Financial is our best pick for short-term loans because it 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. This lender serves many industries, including construction, medical, automotive, wholesale and manufacturing. We also like that there are no restrictions on how you can use the cash.

Editor’s score: 8.5/10

Fora Financial offers an online application and requires only three months of bank statements. You can find out if you qualify within 24 hours of applying, and you can have the funding in your account within 72 hours after approval. 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.

Sometimes you just need access to capital for a short time and don’t want to spend years making interest payments. Fora Financial’s focus on this type of funding and ease of application and approval make it our best pick for short-term loans.

Read Fora Financial Review

Noble Funding: Best Loan Option for Customer Service

Noble Funding is a decades-old lender with a strong reputation for customer service.
Noble works with a variety of industries, offers flexible terms and provides ongoing support once it issues funding.
Noble Funding requires a FICO score of at least 650.
See Offers

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 really stands out is Noble Funding’s emphasis on transparency, in-person assistance and zero fees. The company earns high praise from customers on independent review sites, which makes Noble our pick for the business funding provider with the best customer service.

Editor’s score: 8.9/10

If you’re looking for long-term financing, Noble has loan options of up to $500,000. For short-term financing, Noble’s bridge loans range up to $2 million. If you choose its BankLite long-term loan, you can be approved within three business days. Those 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. The short-term bridge loans have less stringent requirements, same-day approval and funding in as quick as two days.

Noble Funding offers a variety of financing options, including short-term bridge loans, long-term business loans and asset-based loans. It doesn’t charge any upfront fees and receives compensation only if the borrower is funded. Noble Funding prides itself on listening to clients, analyzing their needs and developing financial packages unique to each business. With so many funding options, it can be challenging to determine which is best for you. We like that Noble goes the extra mile, making it our best lender for customer service.

Read Noble Funding Review

Balboa Capital: Best Loan Option for Ease of Approval

Balboa Capital offers fast approval, same-day funding, and a variety of loans that have no hidden fees and do not require collateral.
Documentation requirements are minimal compared with those of other lenders.
Balboa Capital's small business loans have a maximum term of 24 months.

Balboa Capital offers quick funding and a simple online application that can be completed within minutes. Reams of paperwork and documentation are not required, and 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.

Editor’s score: 8.6/10

We like that Balboa Capital is willing to look at more than your credit score when approving loan applications. Although there is a minimum FICO threshold, Balboa Capital also looks at the business’s fundamentals and growth prospects when underwriting loans.

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 it also provides vendor funding for business owners who want to extend financing to their customers. Borrowers can take out loans of up to $250,000 for three to 24 months. With application decisions made within hours, Balboa Capital is a good choice for businesses seeking an immediate answer to their funding needs.

Read Balboa Capital Review

Crest Capital: Best Loan Option for Equipment Financing

Crest Capital offers multiple equipment financing options with flexible terms.|
Same-day funding is available for loans less than $250,000.
You need to be in operation for at least two years to qualify.

Crest Capital is our choice as the best alternative lender for equipment financing because it provides a variety of flexible funding options that are designed specifically for businesses looking to invest in equipment. Crest Capital offers loans between $5,000 and $500,000, fast funding, and competitive rates.

Editor’s score: 8.7/10

Crest Capital provides small business owners with equipment financing of as much as 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. We like that you can check your eligibility on its website before proceeding; you don’t want to waste time applying for a loan you have no chance of getting.

We like Crest Capital’s flexible terms. You can finance your equipment for 24 to 84 months. Some lenders will let you finance equipment for a short period only. We also like that Crest Capital enables you to finance used equipment, even those from private sales. Crest Capital also offers Section 179 qualified financing, which allows tax deductions on the cost of equipment, and is willing to work with you to create a loan or lease that meets your needs. Specialized loans for business-related vehicles and software are available as well. This focus on providing great options for businesses looking to reinvest in their operations is what makes it our best pick for equipment financing.

Read Crest Capital Review

Accion: Best Loan Option for Underserved Borrowers

Through the Accion Opportunity Fund, business owners can get access to microloans of up to $100,000.
Accion is willing to work with all types of borrowers and focuses on helping business owners in underserved markets.
Not all small businesses are eligible for an Accion loan.

Accion Opportunity Fund is our choice as the best alternative 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.

Editor’s score: 9.0/10

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 easily access funding.

Accion offers options for small loans, which is a plus for many businesses that are just getting started. Term loan rates start at just 5.99% and vary by credit score. Another plus for us is Accion’s flexibility. The lender doesn’t try to shoehorn borrowers into a one-size-fits-all solution, but instead will work with you to create a repayment schedule that fits your situation. Importantly, Accion is also willing to work with borrowers without any credit history, which is a key differentiating factor from other lenders that focus heavily on credit scores.

The Accion Opportunity Fund also provides free coaching, networking and other resources for small business owners. Although not all businesses will fit the profile that Accion is looking for, those that do should give it serious consideration. The focus on addressing the needs of businesses that are often shut out of funding is what makes Accion our best pick for underserved borrowers.

Read Accion Review

Truist: Best Loan Option for SBA Loans

Truist is an SBA Preferred Lender, which means it understands the ins and outs of SBA loans.
You get help applying for SBA loans and access to a wealth advisor who can provide business tips.
There is no online application for an SBA loan through Truist; you must visit a branch or call the lender directly.

Truist is our choice as the best lender for SBA loans because it has years of experience working with the Small Business Administration (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.

Editor’s score: 8.4/10

SBA loans don’t fall into the alternative loan bucket, but they 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.

When you work with Truist, you get access to an advisor who can determine which SBA loan is right for you.

SBA loans are a popular choice for their low interest rates and long terms, but that doesn’t mean they are easy to navigate. You need a lender who can walk you through the process, and that’s where Truist comes in. With Truist, you get an experienced lender who knows what it takes to process your loan quickly, which is why it’s our best pick for SBA loans.

Read Truist Review

Rates and Terms


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

  • Interest rate: This is the cost to access a lender’s capital, charged as a percentage of the loan. The interest rate you pay 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, or APR. This tells you the loan costs, including all of the fees.
  • Loan application fee: Some, not all, lenders charge a fee to apply for a loan. This fee doesn’t guarantee you’ll be approved, and you should avoid applying to lenders that charge it.
  • Origination fee: Charged as a percentage of the loan or as a flat fee, this covers the costs of processing the loan.
  • Monthly and annual maintenance: Some lenders charge fees to administer your loan. They aren’t considered a best practice in the industry; you should avoid lenders that charge them.
  • Late payment fee: Spelled out in a reputable lender’s contract, this is the fee you pay if you are late on your loan payments.
  • Prepayment penalties: Some lenders charge a fee if you finish paying back your loan before the term ends.

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.


Depending on the type of loan or financing you choose, you may have to make payments daily, weekly, biweekly or monthly. Different lenders offer different terms (the time you have to pay off the entire loan, such as five years for a long-term loan), and some lenders require you to put up collateral as part of the agreement. That means you have to offer something of value the lender can possess if you default on your loan, such as your house or business building.

Buying Guide

Types of Business Loans to Consider

Options abound for small business funding. From SBA loans to lines of credit, there are several ways small business owners can access cash.

SBA Loans

The U.S. Small Business Administration 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 can’t exceed the SBA maximum of 8%. 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 $350,000 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.

SBA loans are popular among small businesses for their low rates and flexible terms.

Traditional Bank Loans

Banks and credit unions offer small business loans. It may be easy to apply if you have an existing relationship with the bank, though 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

Similar to a credit card, a line of credit is a revolving loan that you can tap into as you need it. You pay interest only on the money you use. You can use it to fill cash flow gaps, to chase business growth or simply for peace of mind. A business line of credit can be secured (which means it requires collateral) or unsecured (meaning it doesn’t require collateral). It’s typically easier to get a line of credit with collateral, such as a piece of equipment or real estate, because that gives the lender something to take if you don’t repay your credit.


Ideal for small business owners starting out or in need of a small amount of cash, microloans range from $500 to $500,000. They typically have short terms and are offered by nonprofits. Microlenders aim to help small businesses in underserved markets that are owned by members of traditionally underfunded demographics in particular. The SBA is a big player in the microloans market, providing the funding to nonprofits it designates as intermediary lenders.

Business Credit Cards

As with personal credit cards, you can use a business credit card to make purchases while paying annual interest and fees, which can get expensive if you carry a balance. Lenders look at both your personal and business credit scores when determining your creditworthiness. The higher your credit score is, the lower your interest rate will be.

Alternative Loans

Not every small business owner is suitable for a bank, and that’s where alternative lenders come in. These are nonbank lenders that provide an array of loans. Alternative lenders are typically more flexible than banks, with quicker application processes and funding turnarounds. They may cost you more, but if it means you get the funding you’re unlikely to get from a bank, it may be worth it. Here’s a look at three popular alternative loan types for small business owners:

  • Merchant cash advance: A lender can offer you a merchant cash advance 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 a merchant cash advance, 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.

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 usually need it as quickly as possible. 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 just minutes to apply for a loan, and some offer same-day funding once you’re approved.


This is the time you have to pay back your loan 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 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.


Depending on the loan, you may need to offer up personal or business collateral, such as paper assets (e.g., stocks or corporate bonds) or property (e.g., 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.


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 know how long its entire process takes.

Special Documentation

Some lenders require you to provide a ton of documentation, including tax returns and bank and credit card processing statements, while others just need your credit score. 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?

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, its main goal is to get paid back. It’s why it puts you and your business through the paces before approving your loan. It 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, it should be easy to get a bank or SBA loan. If your credit has taken a hit, you don’t have strong revenue growth or your business is in the early startup phase, 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.
  • Business plan: To ensure your business model is solid and they won’t lose money on you, many lenders will want to see your business plan.

The number of documents required varies so widely that it’s a good idea to ask your loan specialist about it upfront – especially if you’re looking for quick funding. They’ll be able to tell you exactly what the lender requires 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.


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

What is the easiest business loan to get?

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 and simple application processes also make a loan easier to get.

Does a startup business loan require a personal guarantee?

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.

Do business loan providers look at personal credit?

It is common for a lender to check your personal credit, especially if you are a new business owner and don’t yet have a business credit score for it to check. When you’re starting a company, the business doesn’t have a financial history, so a lender will check your personal credit score to determine if you qualify.

What credit score is needed for a small business loan?

It really 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.

Can I get a startup business loan with bad credit?

It can be hard to get a loan or financing with bad credit, so if this is your situation, look into lenders that consider more than your credit score. Credit score will always hold some weight, but if there are other attributes of your financial history and behavior that make you look trustworthy, you could be approved for a startup loan from an alternative lender (not likely from a bank).

What assets can be used to secure a business loan?

You can use a wide range of assets to secure a business loan. Real estate, land, equipment, inventory and accounts receivable are all types of assets you can use as collateral.

What are the repayment terms for SBA loans?

There are different types of SBA loans, and once you qualify, your repayment plan options are based on the terms of the loan. If you have a loan with a fixed interest rate, you’ll pay the same amount on each payment date. If you have a loan with a variable interest rate, the amount you pay may change – for example, if you have a cash advance or your loan is based on a prime rate. If that rate goes up, so does the amount you pay.

You may make repayments on a monthly, biweekly, weekly or daily basis; you will agree on these terms with your lender beforehand. The preferable payment method is an automatic payment that pulls money directly from your account, which ensures you make your payments regularly and on time.

How do I choose the right loan for my business?

Small business loans come in many varieties, and shopping for one requires you to focus on more than just the interest rate.

Before you decide on the type of loan to pursue, you’ll need to know which ones you’ll qualify for. A quick look at your credit score and debt-to-equity ratio will clue you in. Some lenders require a high credit score, while others are willing to lend to subprime borrowers. Having a good idea of your credit profile will help you narrow down the list.

You must also weigh the cost to borrow, including the interest rate, fees and possible prepayment penalties. The term – the length of time you have to pay it back – and any application fees should also factor into your decision. By doing some homework, you can make sure you apply for a loan that makes sense for your business.

What documentation do I need to qualify for a business loan?

When considering you for a business loan, lenders may require some documentation that is unique to them, but there are some key documents that every financial institution requires for the underwriting process. 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.

What type of loan is a small business loan?

Small business loans have varying interest rates and terms. Here are three of the most common options:

  • Business line of credit: This is a popular choice among business owners who need flexibility. Instead of receiving a lump sum, you draw money as you need it and pay back only what you use.
  • Business term loan: Typically provided by banks and credit unions, this type of loan is usually funded in a lump sum, and you have a predetermined amount of time to pay it back. The interest rate is typically fixed.
  • SBA loan: This type is largely geared toward small business owners who are just starting out. Because the SBA backs most of the loan, banks, credit unions and lenders are more willing to extend money to small business owners who may not be eligible for term loans.

Can I get a business loan if I have bad credit?

Banks and credit unions extend loans to business owners with an excellent credit score. Unwilling to take on the risk of not being paid back, they typically won’t consider you if your score is under 680. That doesn’t mean you can’t get a business loan if you have bad credit, though. There’s a whole industry of alternative lenders waiting to serve you.

Small business owners with bad credit can get loans with terms of three years or less from alternative lenders, but the interest on these loans will be higher for borrowers with a poor credit score. A hard-money loan is another option if you’re willing to put up collateral. Instead of judging you on your credit score, these lenders require an asset – usually real estate – to back the loan.

How important is my credit profile in applying for a small business loan?

Your credit score has a big impact on your small business loan. It dictates the interest you pay and whether you’re even eligible. In many cases, you need a good credit score to be approved for a small business loan. According to credit rating agency Experian, a credit score of 700 or above is considered good; a score of 800 or higher is excellent. You can still get a business loan with a score in the mid-600s, but it won’t be easy and you’ll pay more in interest. Experian says the average credit score is between 600 and 750.

What payback terms can I get for a small business startup loan?

The payback term is the amount of time you have to pay back a loan. Depending on the type of loan, the payback terms could be as short as six months or as long as 25 years. For example, SBA loans have terms from five to 25 years. Your funding needs will dictate the terms. A short-term loan lasts no more than two years, while a long-term loan has an average span of five years.

Where can I find an SBA loan application?

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.

What is a business installment loan, and why would I need one?

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.

What is a business line of credit, and how does it work?

With a business line of credit, you draw money from the loan as you need it. 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.

With an unsecured line of credit, you don’t have to provide collateral, 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.

What are other loan options now that COVID-19 SBA loans expired?

The SBA still offers Economic Injury Disaster Loans (EIDLs) for businesses located in areas affected by fires, hurricanes, tornadoes, floods or other disasters. These low-interest-rate loans are issued directly through the SBA. Businesses owners can receive up to $2 million to help meet obligations and repair or replace equipment and buildings.


SBA EIDLs can be used to repair or replace real estate, personal property, machinery and equipment, and inventory and business assets that are damaged or destroyed during a disaster.

When is it a good time to take out a business loan?

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.

What to Expect in 2023

Amid a deteriorating economic backdrop, tightening credit availability and higher interest rates are potential issues for business owners in 2023. In times of economic uncertainty, lenders tend to approve fewer loan applicants, and those receiving financing often must abide by stricter terms. A recent report from the Kansas City Fed shows that more banks are citing deteriorating small business financials and credit as a reason for declining loan approval rates. Given the chance that credit could tighten even further, business owners who are considering seeking financing should make a decision sooner rather than later.

Over the last year, the U.S. Federal Reserve has embarked on a program of tighter monetary policy.  Policymakers have aggressively hiked the benchmark interest rate in response to rising inflation. As of February 2023, the WSJ Prime Rate, an index of prime rates from 30 major banks, now sits at 7.75 percent, versus 3.25 percent a year ago. Federal Reserve officials have indicated that they expect interest rates to remain high for the foreseeable future, and further rate hikes are possible.

Due to the unpredictable nature of future interest rates, business owners should carefully consider the risks of variable interest rates that often accompany short-term loans. Higher interest rates increase financing costs, and businesses with floating interest rate debt may be on the hook for much higher monthly payments. It may also be prudent for business owners considering taking on a loan to lock in affordable fixed-rate payments while they have the chance.

Business owners who use online and alternative lenders in 2023 may be able to access lower interest rates. Technological advances may improve 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 credit worthiness. These changes could make it easier and faster for some businesses to receive financing.

In 2022, an SBA ruling adjusted its size standards in 16 of its sectors in response to changes in the North American Industry Classification System. The ruling, which took effect in October 2022, determines which businesses are eligible to apply for SBA loans and federal contracts. Overall, 59,000 more businesses are now classified as small businesses and eligible for SBA financing. More information is available on the SBA table of size standards.

Mike Berner
Mike Berner
Staff Writer
Mike Berner is a staff writer at and Business News Daily specializing in finance. Mike has a deep background in the financial world, having written hundreds of articles and blog posts on financial markets, business and investing. He holds a B.A. in economics and a B.B.A. in finance, both from the University of Massachusetts, Amherst. Prior to his writing career, he performed quantitative analysis and research as an economic analyst.
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