Best business loans of April 2024
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
BLUEPRINT
Updated 2:34 p.m. UTC April 11, 2024
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Business loans can be a valuable source of working capital or a tool to help grow your business. In general, the best business loans of 2024 — including business installment loans and lines of credit — offer competitive interest rates, a wide range of loan amounts, reasonably long repayment terms, lenient credit score requirements and fast funding. They also have shorter minimum requirements for how much time your business has operated.
Best business loans
- OnDeck business loan: Best for customer experience.
- Credibly business loan: Best for poor credit.
- American Express® Business Line of Credit: Best for lower annual revenue amounts.
- Fora Financial business loan: Best for large loans.
- National Funding business loan: Best for fair credit.
- OnDeck business line of credit: Best for fast funding.
- Balboa Capital business loan: Best for short-term loans.
- Fundbox business line of credit: Best for startups.
- Kapitus business loan: Best for established businesses.
- PayPal business loan: Best for online loans.
Why trust our business loan experts
Our team of experts evaluated hundreds of business loan products and analyzed thousands of data points to help you find the best fit for your situation. We use a data-driven methodology to determine each rating. Advertisers do not influence our editorial content. You can read more about our methodology below.
- 24 business loan lenders reviewed.
- 336 data points analyzed.
- 6-stage fact-checking process.
Fundbox business line of credit
Compare the best business loans
| BUSINESS LOAN PRODUCT TYPE | LOAN AMOUNTS | REPAYMENT TERMS | MIN. CREDIT SCORE | TIME TO FUND (AFTER APPROVAL) | |
|---|---|---|---|---|---|
OnDeck
| Loan
| $5,000 to $250,000
| 18 months to 2 years
| 625 | As soon as the same day (for loans up to $100,000) or within 2 to 3 business days (for loans over $100,000 or if your state isn’t eligible for same-day funding)
|
Credibly
| Loan
| $5,000 to $400,000
| 3 months to 10 years (depending on term length)
| 501 | As soon as the same day
|
American Express
| Line of credit
| $2,000 to $250,000
| 6, 12, 18 and 24 months
| 660*
| Within 1 to 3 business days
|
Fora Financial
| Loan
| $5,000 to $1.5 million
| 4 to 15 months
| 500 | Within 1 to 3 business days
|
National Funding
| Loan
| $10,000 to $500,000
| 4 months to 5 years (depending on loan type)
| 600 | As soon as the next business day
|
OnDeck
| Line of credit
| $6,000 to $100,000
| 12, 18 and 24 months
| 625 | As soon as the same day
|
Balboa Capital
| Loan
| $20,000 to $250,000
| 3 months to 2 years
| 620 | As soon as the same day
|
Fundbox
| Line of credit
| Up to $150,000
| 12 or 24 weeks
| 600 | As soon as the next business day
|
Kapitus
| Loan
| $10,000 to $500,000
| Up to 5 years
| 625 (higher requirements for some loan types)
| As soon as the next business day
|
PayPal
| Loan
| $5,000 to $150,000 ($100,000 maximum for first-time borrowers)
| 17 weeks to 1 year
| Does not disclose
| As soon as the next business day
|
*The required FICO score may be higher based on your relationship with American Express, credit history, and other factors.
Methodology
Our expert writers and editors have reviewed and researched multiple lenders to help you find the best business loan. Out of all the lenders considered, the 10 that made our list excelled in areas across the following categories (with weightings): loan details (30%), loan cost (20%), eligibility and accessibility (20%), customer service (15%) and application process (15%).
Within each major category, we considered several characteristics, including APR ranges, late fees and prepayment penalties, loan amounts, maximum loan terms, minimum credit score requirements, time in operation requirements and funding time. We also evaluated each provider’s customer support options and customer reviews.
Why some lenders didn’t make the cut
Of the business loan lenders that we reviewed, less than half made the cut. The reasons for this varied by lender, with several not receiving high enough scores due to not publicly disclosing their rates or eligibility information like minimum credit score while others scored lower based on fees and a lack of discounts.
What is a business loan?
A business loan is a type of financing that’s reserved for qualified businesses seeking to improve upon their operations or grow their companies. These loans are offered by a variety of lenders, including online lenders as well as traditional banks and credit unions.
There are several types of business loans available, such as standard term loans (short and long term) and lines of credit as well as loans backed by the Small Business Administration (SBA). Certain kinds of business financing are also designated for specific purposes, like paying for new equipment or funding working capital.
How small business loans work
Like other types of loans, small business loans allow you to access the funds you need, which you’ll pay back to the lender along with interest and fees (if applicable). These loans can be term loans that are paid out as a lump sum and repaid in installments over time, or they can be revolving credit lines that you can repeatedly draw on and pay off.
In many cases, business loans come with shorter repayment terms compared to what you could get on a personal loan. While personal loan terms can range from one to 12 years (depending on the lender), terms on business loans are often limited to a maximum of a few years. One exception is SBA loans, which can sometimes come with terms as long as 25 years.
As with other loans, borrowers receive a lump-sum amount with business loans, and these loans typically have a fixed rate and a set repayment term. Repayment terms on business loans are often shorter than repayment terms on loans you’d get for personal purposes. It’s common to see business loans with 24- or 36-month terms, though the SBA does offer some loans with terms of up to 25 years.
Credibly business loan
Business loan rates forecast for 2024
Business loan interest rates have steadily increased since early 2022. The prime rate — which many business lenders use as a benchmark to determine loan rates — has more than doubled from 3.5% in March 2022 to 8.5% in July 2023. It has remained there as of December 2023. This rate is directly influenced by the federal funds rate, which the Federal Reserve manipulates to manage inflation. Since March 2022, the Fed has hiked this rate 11 times.
Rates on business loans are anticipated to remain high through 2024. However, economists generally expect interest rates to start to decline toward the latter half of the year, albeit slowly.
Small business loan requirements
Eligibility criteria for small business loans can vary based on the type of loan as well as the individual lender. Some common elements of a successful application include:
Personal and business credit history
Lenders might look at both your personal credit score as well as your business’s credit score to determine your creditworthiness. You’ll typically need a good personal credit score (usually considered to be 670 or higher) or excellent business credit to qualify. There are also some lenders that accept lower credit scores — for example, Fora Financial accepts scores as low as 500. However, bad credit business loans will likely also come with higher interest rates and fees.
Minimum time in business
How much time your business must have been in operation will vary by lender. Some lenders accept a minimum of six months while others require at least two years or more.
Minimum annual revenue
You’ll also need to show that your business is generating a minimum amount of revenue per year. Requirements usually range from $100,000 to $300,000, but some lenders accept lower revenue amounts than this — for example, the minimum amount for a PayPal business loan is only $33,300.
Collateral
While some business loans are unsecured, others could require collateral to secure the loan. In general, securing a loan with collateral lowers the risk for the lender and can result in better terms, but it also means you could lose your property if you fail to make your payments.
In many cases, collateral will be your business assets, such as inventory or equipment. A personal guarantee is also often required — this is your promise as a borrower that if your business defaults, you’ll repay the loan from your personal assets.
How to apply for a small business loan
If you’re ready to apply for a small business loan, follow these steps:
1. Check your credit
When you apply for a loan, the lender will review your credit — including your personal credit history and possibly your business’s credit history — to determine your creditworthiness. So it’s a good idea to review your credit beforehand to see where you stand.
You can visit a site like AnnualCreditReport.com to review your personal credit reports for free. Additionally, you can check your FICO credit score for free through Experian, a credit-monitoring service or possibly through your bank or credit card issuer.
There are also several third-party companies that allow you to review your business credit report, such as Dun & Bradstreet as well as the credit bureaus Experian and Equifax. Be sure to report any errors to the appropriate credit bureaus to potentially boost your scores.
2. Determine how you’ll use the funds
Business loans are available for a variety of purposes, including working capital and equipment purchases. Determine how you plan to use the funds so you can apply for the right type of loan for your needs.
3. Compare lenders and pick your loan option
Be sure to compare your options with as many lenders as possible to find the best business loan for your needs. Consider rates as well as loan amounts, terms, fees and eligibility requirements as you shop around. Several lenders allow you to prequalify with only a soft credit check that won’t hurt your credit, which can help you narrow your choices down.
After you’ve compared lenders, choose the option that works best for you.
4. Gather documentation and apply
You’ll need to provide both personal and business documentation when you apply for a business loan, including business licenses, financial statements, tax returns, debt schedules (if any) and information regarding any collateral you’re using to secure the loan. Some lenders might also ask for a business plan or proposal to see how you plan to use the loan and verify your ability to repay it.
Once you have your documentation ready, you’ll need to complete a full loan application. Many lenders offer an online application process, though you might still need to discuss your options with one of the company’s loan specialists to proceed.
5. Get your funds
If you’re approved, the lender will have you sign for the loan so the funds can be disbursed. While some traditional banks and credit unions can take weeks or even months to process and fund loans, online lenders can be a faster option — several offer funding as soon as the same or next business day after approval.
Alternatives to private business loans
If a private business term loan or line of credit doesn’t seem like the right solution for your needs, you could also explore other financing options. Here are some alternatives to consider:
Business credit cards
Like a business line of credit, a credit card gives you access to a revolving credit line that you can repeatedly draw on and pay off. You’ll also only pay interest on what you borrow.
Business credit cards generally can’t be used for some business expenses, such as payroll, leases, inventory or vendors’ bills. But a credit card could come in handy for covering smaller, routine expenses, such as purchasing supplies, paying for travel or buying a small piece of equipment.
SBA loans
SBA loans are less risky for lenders as the Small Business Administration will reimburse them for a percentage of the debt if a borrower defaults. This means you could have an easier time getting approved for this type of loan compared to a private business loan, and you might also get a better interest rate.
There are several kinds of SBA loans available depending on your needs and business profile, and they often provide a variety of loan amounts, lengthy repayment terms and capped interest rates.
Note that you’ll typically need to provide collateral as well as a down payment. The approval process for an SBA loan also tends to be slower compared to getting a private loan.
Invoice factoring
If your business is paid by invoices, another alternative to a traditional business loan could be invoice factoring. This type of short-term funding lets you give the responsibility for collecting payments over to an invoice-factoring company in return for a fee. You’ll then get 70% to 90% of the invoice amount from that company within just a few days, which you can use however you wish and can help improve your cash flow.
This can get you access to the funds from your invoices faster than waiting the typical 30 to 90 days to get paid. However, you’ll also lose some of the money to interest and fees, which can vary depending on the invoice-factoring company you work with. This can make invoice factoring a more costly option compared to other types of business financing.
Frequently asked questions (FAQs)
Most SBA loans have a long application process and could take several weeks to fund. However, some have looser requirements and faster timelines.
For instance, it’s usually easier to qualify for an SBA microloan compared to most SBA 7(a) loans because the loan amounts are much smaller. And the SBA Express loan features an accelerated approval timeline, longer terms and lower down payment requirements compared to conventional loans.
The minimum personal credit score you’ll need to get approved for a business loan varies with each lender. Other details — like a solid cash flow track record and your collateral — could also factor into the lender’s decision. But in general, lenders typically require a good personal credit score. You might also need excellent business credit.
There are also some lenders that permit lower scores — for example, Fora Financial accepts scores as low as 500. However, bad credit business loans typically come with higher interest rates to offset the lender’s risk.
You can get a small business loan from many brick-and-mortar banks and credit unions, but online lenders typically offer lower interest rates and sometimes offer more flexible eligibility criteria. In general, you should get a small business loan from a reputable lender that provides a good deal on a loan that suits your needs.
How much you’ll be able to borrow depends on the type of loan as well as the lender. SBA loans, for example, range from as little as $500 up to $5 million, depending on the kind of loan you get.
Non-SBA loans have different loan amounts that are set by the lender. These can start as low as $2,000 and go up to about $1.5 million.
To qualify for an SBA business loan, you’ll need to meet eligibility requirements. Your business must:
- Be located in the U.S.
- Fit SBA size requirements.
- Show that it can’t get financing elsewhere.
- Be creditworthy.
- Show a reasonable ability to repay the loan.
You might not qualify for an SBA loan if your business doesn’t also have collateral, a business plan and strong credit. Additionally, the SBA disqualifies specific industries, including:
- Nonprofits.
- Financial institutions, like banks and credit unions.
- Passive rental businesses owned by landlords or developers who don’t actively use or occupy the assets that the loan proceeds would help to acquire or improve.
- Foreign businesses.
- Government-owned organizations.
- Multi-level marketing companies.
- Businesses involved in gambling.
- Businesses involved in speculative or illegal activities.
- Businesses with key stakeholders incarcerated, on probation or on parole.
Editor’s note: This article contains updated information from previously published stories:
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
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