Compare Small Business Loans

From loan types and loan requirements to loan specifics and company reputation, we research everything you need to compare small business loans and make a decision. Learn how our editors compare the different factors of small business loans below.
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Small business loans consist of funds paid out to small businesses, to be repaid with interest over a set period of time. Taking out a small business loan can be a very convenient way to obtain start-up funds. It can also help established businesses manage day-to-day expenses or receive an influx of capital to meet short-term obligations.

Some of the small business loan options available are guaranteed by the government, via the Small Business Administration (SBA), whereas others are private. Other financing options include microlenders—generally small non-profit organizations geared to helping disadvantaged communities—, and alternative lenders, like the online lending community. Regardless of the type of loan, lenders will invariably look at time in business, business plan, personal credit score, gross annual revenues, net annual profits, and what collateral is available to back the loan.

Debt financing for a business has the advantage that the lending institution has no say over how the borrower runs their company, the interest is deductible as a business expense, and since the monthly payments are a known amount, they’re easy to factor into forecasting models. However, taking out a loan does add a monthly debt payment to the company’s expenses, and depending on the collateral provided, can put your home or business at risk if you default.

Borrowers choosing between lenders should evaluate and compare the purpose of the loan, its size, interest and APR rates, terms and costs, including prepayment penalties and origination fees. Every single lender is going to look very carefully at your cash flow, your debt ratio and the rest of your financials. Companies with a sound fiscal situation are going to have higher chances of obtaining favorable rates, no matter the type of loan or lending institution.


How we Compare Small Business Loans

Loan Types - 20%
Loan Requirements - 25%
Loan Specifics - 30%
Company Reputation - 25%

Loan Types

SBA loans - Contrary to popular belief, the SBA itself does not issue loans. Banks, credit unions, community development organizations and other partners do. What the SBA does is provide a guarantee of up to 85% for loans under $150,000 and 75% for loans over $150,000. This reduces the risk for lenders and raises borrowers’ chances of getting approved, as well as receive lower interest rates and longer repayment terms than they might otherwise qualify for.

  • SBA 7(a) Loans - The most common type of these SBA loans is called the Advantage. The up to $5 million dollars can be used for capital, to refinance debt, buy a business, real estate, equipment, etc. There’s also a second type of 7(a) loan called the SBA Express, which guarantees a response to any application within 36 hours. It follows the same guidelines as the Advantage, but has a $350,000 limit, and the SBA only guarantees 50%, which can make the interest rates a little higher.

  • CDC / SBA 504 Loans - These combine loans from a nonprofit CDC and a bank, to create a long term, low interest rate loan for up to $20 million. This should be used for the purchase of owner-occupied commercial real estate and heavy equipment.

  • SBA CAPLines Lines of Credit - CAPLines are SBA lines of credit for small businesses that need to meet short-term and seasonal working capital needs. The SBA offers five types of these lines, which must meet the SBA 7(a) rules. They can be fixed or revolving and have a maximum term of five years.

  • SBA Export Loans - These are designed to help small businesses fund new exporting operations and offer cashflow solutions, so they can be more flexible with the terms they can offer to their international customers.

  • SBA Microloan Program - These loans are issued through nonprofit, community-based organizations, and can be for up to $50k, and up to six years. However, the interest rates tend to be higher, between 8-13%. They cannot be used for the purpose of refinancing debt, or for purchasing real estate.

  • SBA Disaster Loans - If your small business or organization is located in a declared disaster zone, and suffered property damage, economic losses, or lost a key employee who is a military member called to active duty, this is the loan for you.


Private Lenders - Traditionally, the most common way for businesses to obtain a loan was through a commercial bank, but due to the perceived risk of investing in small companies, many banks have been getting out of the market for small business loans. Online lending platforms, such as broker agencies or peer-to-peer lenders, have stepped in to remedy the situation. If you don’t qualify for an SBA loan or you think they might take too much time, maybe a private loan is the solution for your needs. Here are the five most common types:

  • Loans Against Accounts Receivable - Many lenders will give you a loan against the balance of your outstanding invoices, which basically means they’re advancing you the funds against your accounts receivable.

  • MicroLoans - When your company is too small to get financing through traditional channels, there’s still an option for you. Both online lenders, banks, credit unions and nonprofit organizations offer loans of less than $50,000. Generally speaking, there are no limitations on the money’s use, whether it be for a start-up, buying equipment, or inventory capital, for example.

  • Commercial Real Estate Financing - These loans base their size and rates on the value of the real estate being offered as collateral. They can be used to pull out cash, refinance your mortgage, remodel your existing property, or purchase a new one.

  • Merchant Cash Advance - Typically marketed towards businesses whose revenue comes mainly from credit and debit card sales, providers say this is technically not a loan. They give you an amount of cash upfront in exchange for some of your future sales, which can be structured in two ways: either through fixed daily or weekly debits, plus fees, from your bank account --Automated Clearing House withdrawals-- or the repayment structure can be tied to a percentage of your credit/debit transactions.

  • Short-Term Loans - Though all businesses go through ups and downs, these fluctuations can hit small companies harder than larger, more established concerns. Short-term loans generally have a one-year term, but are often repaid much more quickly than that, within 90-120 days. To qualify, most lending institutions will ask for payment and cash flow histories for the past 3-5 years, income statements for the same period and possibly collateral. In a normal economy, interest rates for short-term loans will be higher than long-term ones, but in a recessionary economy, this can be flipped on its head. For this reason, it’s very important to be aware of the primer interest rate and make sure to do comparison shopping.

  • Long-Term Loans - These generally have a fixed maturity of 3-10 years, though some can be extended up to 20, depending on their use. They start around $25,000 and can go up to $200,000. The approval process is more rigorous in direct proportion to the amount of the loan. The principle behind every loan should be to tie up its term according to the life of the asset being purchased, and always measured against the cost of said asset’s lease. So, if you’re buying a piece of equipment that will last ten years, then a long-term loan is the logical solution, (this would also apply to any other long-term project, such as construction projects or purchasing buildings or other businesses). The interest rates on these types of loans should be a little lower than for short-term ones, but as previously mentioned, this can vary greatly, and you should be aware of the prime interest rate in order to negotiate with your loan officer.

  • Line of Credit - This can give owners a sense of calm, as it guarantees cash on hand whenever necessary, to be used for anything from repairs to the purchase of new equipment. If you have time gaps between capital needs and revenue realization, a line of credit can help you ride out the cycle until accounts payable have been received. Obtaining one depends on factors such as the owner’s personal assets, consistent earnings, excellent capital position, cash flow statements, and multiple sources of repayment. Generally, lenders will put a cap on the amount of funds you can draw on, and you’ll only have to pay interest on the outstanding principal.

  • Start-up Loans - Finding financing for an untested business can be very difficult, as it has the highest risk of any type of loan. Therefore, the qualifying factors will be stricter than with a well-established company. Some lenders offer different types of start-up loans for different purposes, such as equipment financing, business credit cards, and credit line building. Interest rates tend to be higher, and you’ll almost always have to put up a personal guarantee and/or collateral.

Small Business Loans with the Best Loan Types:

OnDeckLendingTreeTorroKabbageGo Fast PayRapid AdvanceLendzaFunderaFundia
SBA LoanYesYesYesYesYesYesYesYesYes
Loans Against Accounts ReceivableNoNoNoNoYesNoNoNoNo
Commercial Real Estate FinancingYesYesYesYesNoYesYesYesNo
Merchant Cash AdvanceYesYesYesYesYesYesYesYesNo
Short Term LoanYesYesYesYesYesYesYesYesYes
Long Term LoanYesYesYesYesYesYesYesYesYes
Line of CreditYesYesYesYesYesYesYesYesYes
Start-Up LoanYesYesYesYesYesYesYesYesYes

Loan Requirements

SBA Loans - It’s important to understand that as a federal institution, the SBA promotes specific policy agendas. Therefore, they are very specific about what the loans can be used for, and have strict qualification requirements:

  • Be in business for at least two years

  • Personal credit above 680 and good credit history

  • Must personally guarantee the loan, and in some cases, provide collateral

  • Must have a business plan and detailed financial data on the business

  • Must be a profitable business

  • May require a down payment, especially if its purpose is a real estate purchase

Standard Bank Loans / Lines of Credit - Perhaps your bank doesn’t participate in the SBA loan program, or you are more immediately in need of the money. If this is the case, a standard loan may be more convenient for you. These requirements are generally very similar to the SBA ones, although slightly less stringent:

  • Be in business for at least two years

  • Personal credit above 600, and good credit history

  • Most lenders will require a 30% down payment and some form of pledged collateral

  • Must personally guarantee the loan

  • Must provide a solid business plan and sound financials

Peer2Peer Business Loans - This type of loan connects investors with lenders in an online marketplace. Their requirements are quite strict because they usually don’t require collateral:

  • At least two years in business

  • Must have a credit score of at least 650, and excellent credit history

  • Annual business revenues should be above $75k

Short-Term Loans / Lines of Credit - Short-term loans are generally given by non-bank lenders and paid back within 3-24 months. These loans are available for borrowers with lower credit scores and need cash quickly.

  • Personal credit score above 500

  • At least 1 year in business

  • Monthly business revenues above $2,500

For a list of some of the terms on this page, check out our Small Business Loans Terminology article.

Small Business Loans with the Best Loan Requirements:

OnDeckLendingTreeTorroKabbageGo Fast PayRapid AdvanceLendzaFunderaFundia
Time in BusinessAt least 1 yearAt least 1 yearVaries on the lenderAt least 1 yearNot StatedAt least 1 year3 monthsVaries on the lenderAt least 1 year
Minimum Credit Score500Varies on the lenderVaries on the lenderNot StatedNot Stated600Varies on the lenderVaries on the lenderNot Stated
Personal GuaranteeYesYesVaries on the lenderNoNoNoYesYesNot Stated
CollateralNoVaries on the lenderNoNoNot StatedNoYesNoNo
Annual Revenue Minimum$100,000$100,000Varies on the lender$50,000Not Stated$120,000$100,000$100,000Not Stated
Business PlanYesVaries on the lenderVaries on the lenderNoNoNoNoNoNo

Loan Specifics

As you’ve seen in the previous sections, the specifics of each loan vary wildly, dependent on a number of factors, from loan type and amount to the borrower’s qualifications, and even the lending institution itself. Loan amounts can start at $1,000 and rise all the way up to $20 million.

Likewise, loan terms can be anywhere from 3 months to 20 years, but be aware of any prepayment penalties. We always remind you to read the fine print, and ask questions! By far the most common thread in every negative review of any financial company has to do with not truly understanding the terms of your contract.. Small things have a way of adding up, and catching you unawares. We divided loan terms into the following categories, but bear in mind that these aren’t set in stone, and that we only evaluated the most common types of loans.

Minimum-Maximum Loan Amount

Loan Term

Interest Rate


Time to Funds

Prepayment Penalty

Origination Fee

Small Business Loans with the Best Loan Specifics:

OnDeckLendingTreeTorroKabbageGo Fast PayRapid AdvanceLendzaFunderaFundia
Minimum to Maximum Loan Amount$5,000-$500,000Up to $250,000 depending on the lender$10,000-$500,000$2,000-$100,000$5,000-$100,000$15,000-$500,000$5,000-$350,000$2,500-$5,000,000`$25,000-$250,000
Loan Term3 to 36 months1 to 10 years12 to 48 months6 to 12 months30 to 120 days9 to 18 monthsUp to 25 yearsUp to 120 monthsNot Stated
Interest Rates1.20%Varies on the lenderVaries on the lender1%-12%Not StatedNot Stated6%-13%Starts at 5%Not Stated
APR9% to 99%Varies on the lenderVaries on the lender24% to 99%3% to 52%15% to 80%Not StatedVaries on the lenderNot Stated
Average Time to Funds24 hours48 hours48 hoursFew minutes to several days2 business days3 daysUp to 30 days3 weeksNot Stated
Prepayment PenaltyNoneVaries on the lenderVaries on the lenderNoneNoneNoneNoneNoneNone
Origination Fees1st loan: 2.5%-4% of loan amount, 2nd loan: 1.25%-3% of loan amount, 3rd+ loan: 0-3% of loan amount Varies on the lenderVaries on the lenderNoneNoneNoneNoneNot StatedNone

Company Reputation

When evaluating each company’s reputation, we looked at a series of different things. First of all, how do they stack up in relation to other similar lenders? The Better Business Bureau, as a non-profit organization focusing on market trust, is generally a good place to start looking at reviews. Their accreditation carries a lot of weight in consumer trust and legitimacy. Likewise TrustPilot, though much newer, has a large number of independent customer reviews.

It was important to us to evaluate the trajectory of each particular company as well. Though being in business twenty years doesn’t necessarily mean a lender is honest, it does establish a track record with which to evaluate said honesty.

Lastly, we wanted to make sure that each company was easy to get in contact with, as that is one of the complaints that always crops up, regardless of the type of service.

BBB Grade

BBB Reviews

TrustPilot TrustScore

Years in Operation

Free Consultation

Toll-Free Phone


Online Chat

Small Business Loans with the Best Company Reputation:

OnDeckLendingTreeTorroKabbageGo Fast PayRapid AdvanceLendzaFunderaFundia
BBB Reviews72%42%0%0%0%97%N/A0%100%
TrustPilot TrustScore9.
Years in Operation102048611N/A32
Free ConsultationYesNoNoYesNoNoNoYesNo
Toll-Free PhoneYesYesYesYesYesYesNoYesYes
Online ChatYesNoNoNoNoNoNoYesNo

Full Small Business Loans Comparison

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Do I need to have good credit to get a loan for my business?

Generally speaking, lending platforms will require a minimum personal credit score of 600, but most consider that on the low side and ask for a one upwards of 680. However, all is not lost if you have bad credit. Some lenders will have a more holistic approach, and take moren into account how long you’ve been in business and how much revenue you’re generating. Be aware, however, that no matter what, bad credit will result in higher interest rates or more in fees.

If my business is just starting, is a small business loan the best option for me? What other alternatives are there?

Though some companies offer loans specifically for startups, and there is an SBA-backed program specifically tailored to this purpose, most people initially fund their business themselves, or with help from family and friends. A similar source of funding is through angel investors, as mentioned in the second question. This consists of attracting investors to fund your company and giving them equity in return. Other than funding yourself or getting help from friends and family, the following are other options to pursue:
SBA Loan - This generally won’t happen unless you have good credit history and/or collateral you’re willing to put up
Trade equity or services - This means just that- you trade either equity or services in exchange for startup help, like legal and accounting support.
Incubator/Accelerator - Major universities, community organizations and even large companies can provide resources for startups, from seed money and office space to consulting and helping you get investors.
Venture-capital Investors - These professional investors, like Accel or First Round, put institutional money into startups that are typically expected to make big money and a proven business model.
Angel Investor groups - Angel investing can also be achieved through one of these groups, such as Gust or SV Angel, which join together high-net-worth individuals.
Crowdfunding - Since the JOBs act of 2012, which eased many of the regulations regarding the funding of small businesses, crowdfunding has been a growing industry. You put your proposal up on one of the many online platforms, and individuals pledge money to your campaign in exchange for rewards, pre-buying your product, or simply to donate. However, most websites won’t give you the money unless you reach your stated goal.

Do I need a guarantor?

Well, it depends. Banks are traditionally very conservative in their loan practices, and may require that you secure your loan with an outside investor. This means, however, that they’re putting their assets on the line for you, and if at some point you can’t make your debt payment, then your guarantor becomes liable. If a guarantor wants equity in your company instead of repayment, they’re then called an angel investor.

What type of loan is best for me?

This is a complicated question without a simple answer. It depends. The traditional thing to do would be to shop around amongst local and national banks, credit unions, etc, whether it be for an SBA loan or a private one. With the rise of the online lending market, the options available to you have expanded considerably, especially considering that banks are making less and less small loans —only one in five—, preferring to concentrate on higher amounts, due to their higher rate of return.

SBA loan: Though there are many types of loans that are guaranteed by the SBA, only apply for them if you have excellent personal credit, strong finances, and the time to wait out approval, as these loans generally take longer. Best for expansion and long-term investments.

Short or Long Term loan: Online lenders generally offer up to $500K, with repayment periods of between 6 months to ten years. Best for a large, one-time expense.

Business Line of Credit: This provides you with access to flexible cash, which you don’t make payments or get charged interest on until you actually access the funds. The credit line can range anywhere from $2,000-$500,000. This can be a lifeline to manage cash flow, handle any unexpected expenses and finance any short-term needs. Best for handling ongoing capital needs.

Invoice Factoring: This type of financing is best for companies with outstanding invoices and cash flow needs. This lets your business turn your invoices —from $500 to $500,000— into immediate cash, by selling them to a factoring company, and they get paid when they collect from your customers. Best for fixing a cash-flow issue.

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