The Best Business Loan and Financing Options of 2024

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’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

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.

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.

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.

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.

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

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.

To choose the best business loan and financing providers, our team of business experts and financial analysts evaluated an initial list of 38 companies. After narrowing down our list to 19 lenders for a deep dive, we selected five as our top recommendations. Our experts and analysts studied each loan and evaluated all financial products on 17 factors.

To reach our final conclusion, we considered various factors categorized by importance. These categories reflect what business owners typically prioritize when looking for financing.

• Rates and Fees: (30%): Our team meticulously compared interest rates, loan duration, origination fees, and other associated charges to identify the most budget-friendly lenders. We read the fine print and looked for hidden fees that often surprise small business owners.
• Loan Types (25%): We prioritized the variety and flexibility of loan products offered. This includes analyzing loan types (term loans, lines of credit, equipment loans), loan amounts available, and repayment terms. We ensured a diverse range of options exist to meet the specific needs of your business, whether you’re launching a startup or fueling growth.
• Ease of Application (20%): We evaluated the eligibility requirements and application process for each lender. This analysis considers factors like minimum credit score, time in business, and revenue requirements. Additionally, we assessed the application process itself, ensuring it’s streamlined and efficient to save you valuable time.
• Customer service: (15%): To ensure you’re well-supported, we assessed the range of customer service options offered by each vendor. This included evaluating phone support availability across different plans and customer testimonials posted on third-party review websites.
• Expert analysis (10%): Our recommendations are further bolstered by the insights of our in-house finance experts. Their years of experience and analysis ensure we only recommend solutions that make good financial and business sense.

By putting these factors under the microscope, we were able to identify not only reputable lenders, but also those that excel in specific areas. This analysis is reflected in the “Best For” categories on this page. Now you can effortlessly find the business loan that perfectly aligns with your unique financial goals.

To learn more about our methodology, see our full editorial process.

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.