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Find the Best Business Loan Companies

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by Barbara Friedberg Personal Finance Contributing Editor

A business loan from a reputable lender can be the difference between your company’s success and failure. Read our guide to learn about and find the best business loan company for you. We looked at the different types of available loans, the fees that are added to these loans and what you need to apply for one.

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    What to consider before applying for a business loan

    Fixed or variable interest rates

    When a customer takes out a business loan, an interest rate is established. With a fixed interest rate loan, the payment remains constant over the entire loan term. The interest rate on a variable rate loan may go up or down depending on pre-determined conditions.

    • Loan term: Whether a loan is a for a short time period or for a long one, the interest rate and payment amount remain constant with a fixed rate loan. In a rising interest rate environment, the borrower risks higher debt payments with a variable rate loan.
    • Current market rate: Interest is usually calculated at the current market rate, so the loans is competitive with similar loans from other institutions. The fixed interest rate won’t change, whereas if market interest rates go up or down, the variable interest rate and subsequently the loan payment will adjust.
    • Stability: With a fixed rate loan, the interest rate remains stable, even if the market changes. Fixed rate loans offer greater future debt payment certainty than variable rate loans.

    Set maturity date

    The maturity date, which is set at the time of the loan, is the date by which the loan must be repaid. Some loans have a set maturity date whereas others do not. For example, a line of credit may not have a pre-determined maturity date.

    • Loan is for a specific time period: The loan must be paid back within a specific time period or be refinanced; it is not open-ended.
    • Interest stops accruing on maturity date: Users may have to repay interest even after the principal amount is repaid, but after the maturity date, interest payments stop and the entire loan must be repaid.
    • Users can prepay: Loans can be paid off early without penalty, as long as they are paid in full by the maturity date.

    Collateral requirement

    Many business loans require customers to put up collateral, or property, that is used as security if the borrower defaults on his or her loan payments. If the user defaults on the loan, the bank can seize the property and sell it to recover its loss. For example, an equipment loan usually uses the piece of equipment as collateral.

    • Flexible requirement: The amount of collateral needed depends on the size of the loan. Smaller loans may not require collateral.
    • Requires assets: In general, larger loans require high-value assets to be used as collateral against the business loan.
    • Increases risk: Business owners should be certain that they can repay loans prior to putting up collateral, as they can lose the property if they default on the loan.

    Repayment schedule

    Most business debtors are not expected to repay the loan all at once. Instead, borrowers pay in installments until the loan, interest charges and financing fees are completely paid off.

    • Variety of plans: Daily, bi-monthly and monthly repayment plans are common. Some lenders offer flexible repayment schedules. The lender explains the repayment options at the time of borrowing. The repayment schedule depends on the amount of the loan, the customer’s credit rating, the type of loan and the customer’s financial circumstances.
    • May be renegotiated: Under special circumstances, if the borrower encounters financial difficulties, he or she may be able to refinance the loan in order to lower the payments.
    • Takes interest and fees into account: The loan documents explain how interest and fees are calculated and repaid.

    Limitations on additional debt

    Some lenders require that business borrowers agree not to take out additional loans for greater than a specific amount. This protects the debtor from securing more debt than he or she can realistically pay back.

    • Not required for all loans: This feature is used for larger loans, where the lender is risking a lot of money if the debtor defaults.
    • May need permission letter: In some cases, debtors may need to get a written letter from the lender giving him or her permission to take out an additional loan during the life of the debt.
    • Independent of credit rating: This limitation is set by the lender and may be unrelated to the user’s credit rating.

    Flexible terms

    Not all business loans are alike. Many lenders offer flexible terms, depending on the debtor’s credit rating, the strength of the business and other factors.

    • Short-term loans for less than three years: Short-term loans last for a few months through several years.
    • Flexible payment plans for loans of all sizes: Users can choose from several different payment plans with varying interest rates and loan lengths with a flexible term loan.
    • Various down payment requirements: Each lender has its own minimum requirements for down payments. The down payment may depend upon type of loan, borrower’s credit worthiness and company policy.

    What are different types of business loans?

    Government loans

    The Small Business Association (SBA) offers loan guarantees to small businesses, including startups, that need additional support and help securing financing. An SBA guarantee lets a bank or other lender know that the SBA believes the business is sound and will be able to pay back the full loan amount, even if the business does not have great credit. The SBA can guarantee between 75-85 percent of a loan, depending on the total loan amount.

    Short-term loans

    Short-term loans last for a maximum of three years. They often require monthly payments.

    Long-term loans

    Some lenders offer terms up to 20 or 30 years. These loans usually are for large amounts and may be used to buy equipment, construct facilities or make other large business investments.

    Business lines of credit

    A line of credit gives companies with ongoing financial need the opportunity to borrower on an as-needed basis.

    Equipment leasing

    Certain lenders specialize in equipment financing. These lenders may fund leasing or the purchase of business equipment.

    Who applies for business loans?

    Startups

    People who are just starting a business may need a loan to buy equipment, hire employees, advertise their business and/or obtain required licenses. In general, startup funding is more difficult to secure than loans for established businesses due to the greater risk of new-business failure.

    Small and local businesses

    Small, local and mid-sized businesses may need money to expand, acquire materials, cover bills and payroll, purchase equipment or fund inventory. All types of businesses for a variety of financing needs may benefit from a loan at some point.

    Expanding businesses

    Businesses that are poised to grow may need financing to help them reach more customers, open new locations, increase their marketing or support other expansion needs.

    Business loan questions

    What is the average loan amount for a small business?
    The average loan amount depends on the lender you’re working with and how much you qualify for. The 7(a) loan program offers federally guaranteed loan amounts of up to $5 million, depending on what the funds are for and the kind of enterprise you operate. These loans are generally low-interest and have flexible terms.
    How do you qualify for a small business loan?
    The U.S. Small Business Administration states that the basic criteria to apply for a small business loan includes:
    • Being registered as a for-profit business
    • Physically located in the U.S. or its territories
    • Having invested equity
    • Exhausted all other financing options

    Every lender has specific criteria for small business loans, so check their website to find out if you meet their eligibility requirements.

    Can you get a small business loan for an online business?
    The basic eligibility requirements for a physical business are the same for an online business:
    • Registered as a for-profit business
    • Located in the U.S. or its territories
    • Have invested equity
    • Exhausted all other financing options
    What credit score do I need to get a business loan?
    Every lender has a different minimum credit score requirement. Having a good credit score (700 or higher) can boost your loan application and get you access to higher loan amounts.

    If you have a less than perfect credit score, you might be able to get a business loan, but interest rates and fees tend to be higher for borrowers with poor credit.

    Is it a good idea to get a loan to start a business?
    Business loans give you the funds you need to get your business up and running. If you need money to cover startup costs and meet the eligibility requirements, a business loan could be the right option.
    Which business activities would necessitate short term financing?
    Short-term financing usually has a term that lasts less than a year. It’s a viable option for a few different reasons:
    • Seasonality. A loan can help your business make it through the off-season
    • Cover short-term costs. If you’re waiting for customers to pay their bills but need to pay your employees, a business loan is a practical option
    • Even out cash flow, especially if you have a cyclical business

    Author reviews for business loan companies

    Currency

    Currency Capital was founded in 2009 to save faltering businesses in the wake of the economic crisis. The company’s goal is to give business owners a range of financial options and to promote the health of the small business community. Currency Capital is a member of the National Equipment Finance Association (NEFA).

    Read more about Currency
    AUTHORIZED PARTNER
    National Business Capital & Services

    Founded in 2007, National Business Capital & Services is a Bohemia, New York-based business financier. It is known for providing loans to small businesses across the US, Peurto Rico and Canda in a quick and efficient manner. The company also offers business equipment financing and business lines of credit, in addition to small business loans.

    Read more about National Business Capital & Services
    Imperial Advance

    Imperial Advance is an online business loan marketplace that focuses on providing small businesses with access to the funds they need. After you apply for a quote, a financial consultant will contact you with loan offers from numerous lenders.

    Read more about Imperial Advance
    Headway Capital

    Headway Capital is a part of the publicly-traded lender Enova International. Headway Capital offers lines of credit up to $35,000 to many types of small businesses. It is headquartered in Chicago.

    Read more about Headway Capital
    Business Finance Advance

    Also known as BFAdvance LLC, Nationwide Business Advance Companies, Merchant Cash Advance Companies and Business Advance Companies. Business Finance Advance offers funding opportunities to small, mid-sized and large companies. BFA deals in alternatives to traditional bank loans as part of its mission to make funding more accessible to businesses.

    Read more about Business Finance Advance
    LendVantage

    LendVantage’s mission is to make it easier for small businesses to gain access to working capital. The company offers special financing to women-owned businesses and provides general business financing.

    • Products: Business loans and cash advances. LendVantage offers 4 types of financing; business term loans, revenue-based financing, merchant cash advance and business line of credit.
    • Interest rates: Rates and terms vary based upon type of loan product selected. There are no application fees.
    • Service: LendVantage offers funding through a variety of lending partners.
    • Borrower qualifications: Borrowers must provide four months of business bank account records. No collateral or credit score minimum is required.
    • Fast approval process: The online loan application takes only a few minutes. Pre-qualification can be secured within 24 hours. After speaking with a customer service representative, the business line of credit approval may be completed in minutes. Funds may be received from the funding partner within 72 hours after the underwriting and approval process is completed.
    • Large lender network: LendVantage partners with a large number of other lenders, making it more likely that users will find a lender that meets their needs.
    • Loan limits: Businesses can borrow up from $2,000 up to $250,000 through LendVantage.
    • Repayment option: Repayments vary based on type of funding. Types of loans and repayment terms are listed on the website compare page.
    Swift Capital

    Swift Capital believes that worthy businesses are often denied funding based on personal credit scores. Swift funds business needs based on the strength of the firm, not on personal credit scores. The firm uses data and technology to streamline the lending experience and connect business owners with funding sources.

    Read more about Swift Capital
    Biz2Credit

    Through their lending marketplace, Biz2Credit connects borrowers with their network of over 1,300 pre-screened lenders. Biz2Credit has been connecting businesses and lenders since 2007. The company processes more than $1.5 billion per year.

    Read more about Biz2Credit
    Kabbage

    Kabbage is a non-traditional small business lender that provides cash strapped businesses a line of credit. Kabbage uses a variety of data sources used by the borrowers’ business to quickly deliver funding.

    Read 199 Reviews
    Lendio

    Lendio is an online loan network facilitator. After a brief application, the company matches small and local businesses and appropriate lenders within the Lendio network.

    Read more about Lendio
    Wall Street Funding

    Wall Street Funding provides loans to businesses based on their expected future earnings. The company requires no collateral and offers cash advances to fund a variety of business expenses.

    • Products: Wall Street Funding’s products include cash advances or loans against future revenue with a fixed payback amount.
    • Interest rates: The company doesn’t charge upfront costs or application fees. Payback is calculated based on the borrower’s monthly revenue.
    • Service: Borrowers complete an online application and can receive a response within two hours. Telephone assistance is available.
    • Borrower qualifications: Business must have at least $10,000 in bank deposits per month and have been in business for at least 60 days.
    • Fast approval process: Loan approval is available within 24 hours. Funding may be received within 72 hours.
    • Loan limits: Funding depends upon company revenue and ranges from $3,000 to $750,000.
    • Repayment options: The fixed payback amount is based on borrower’s monthly revenue.
    American Capital Group

    Started in 1995, American Capital Group provides funding for businesses to obtain equipment. Additionally, American Capital serves as the middleman between vendors and equipment lessees for business owners seeking equipment to lease. Products: 100 percent financing for the cost of new or used equipment including tax and shipping. Personally tailored leasing programs. Offerings include application-only, start-up, 100 percent finance, FastTrack and Flex-Pay programs. This company also offers funding for inventory management and specialized customer projects.

    Read more about American Capital Group
    Can Capital

    Founded in 1998, Can Capital offers a wide range of loans as well as an online tool to help determine the best available funding options. Can Capital works to create an individualized experience for each client and their business' needs.

    • Products: Small business loans and merchant cash advances including inventory and equipment loans are available. Their Daily Remittance Platform TM and proprietary risk models yield higher funding approval rates and broader small business financing options than competitors products.
    • Interest rates: Dependent upon business’ strength and/or borrower’s creditworthiness.
    • Service: Online customer service representatives available.
    • Borrower qualifications: For merchant cash advances, borrower must have an established business and accept credit card payments. For merchant cash advances and business loans, company is assessed based upon various factors such as sales, time in business and performance.
    • Fast approval process: Rapid approval process and funding available in as little as 2 business days.
    • Loan limits: Business loans range from $2,500 to $150,000 and can vary in term from four to 24 months. Merchant cash advances range from $5,000 to $150,000 and don’t have a fixed term or maturity date.
    • Repayment options: Several repayment options are available depending on the type of loan. Cash advances are repaid with variable daily debits from the businesses credit card receipts and depend upon sales. Fixed business loan payments are automatically withdrawn from the business bank account daily.
    Funding Circle

    Funding Circle is an online loan marketplace specifically focused on small businesses. Funding Circle matches borrowers with accredited lenders from across the globe. Investors in Funding Circle loans receive higher interest rate returns than banks and CDs while helping small businesses fund their goals.

    • Products: Small business loans for various needs such as expansion, inventory, equipment, refinance debt or to hire additional staff.
    • Interest rates: As of April 12, 2016, fixed interest rates start at 5.49 percent and go up to 26.79 percent, depending on loan term, business and borrower qualifications. The firm promises a transparent fee structure and no prepayment penalties.
    • Service: Access to a dedicated loan specialist for assistance is available throughout the borrowing process.
    • Borrower qualifications: The application process requires two years of the most recent business tax returns, the most recent personal tax return, and six months’ recent business bank statements. For loans greater than $300,000, additional documentation includes six months’ recent bank statements, YTD balance sheet and income statement, and completion of the company’s ”outstanding business loans & credit worksheet.”
    • Approval process: The quick online application promises immediate response from the loan specialist. Borrowers may receive the loan qualification within 72 hours and funding may be secured within 10 business days.
    • Loan limits: From $25,000 to $500,000.
    • Repayment options: Monthly repayment is the norm and the term varies from 1 to 5 years.
    • Website: Excellent and transparent website with easy access to educational resources and borrower information.
    National Funding

    National Funding is one of the nation’s largest private providers of small business funding. Founded in 1999, the company provides a wide range of services to help small companies with their funding needs.

    • Products: Small business loans, equipment financing, merchant cash advances, credit card processing and other merchant services. National offers individually tailored lending solutions.
    • Interest rates: Interest rates are determined based on various business factors.
    • Service: Direct phone access to a loan services specialist is available.
    • Borrower qualifications: No collateral or down payment is required.
    • Fast approval process: Borrowers may receive funding within 24 hours.
    • Loan limits: Up to $500,000.
    • Repayment options: National has fixed repayment terms with specially tailored repayment frequency.
    • Business resource center: Useful educational tools, blog, white papers and more.
    Fundera

    Fundera is an online marketplace that helps small business owners connect with funding providers. The company simplifies the business loan application process by doing the groundwork to identify the industry lending leaders to expedite the borrowing process.

    Read more about Fundera
    Fundation

    Fundation is a small to mid-sized lender that utilizes technology to expedite the lending process. The company is a direct lender, which means they lend their own money.

    • Products: A range of small business loan products with fixed and simple interest rates are available. The types of loans include short-term business, bridge, expansion and acquisition, working capital, alternative, commercial, inventory, refinancing, and cash-flow loans.
    • Interest rates: The interest rates are risk-based and determined based upon estimated credit risk of the borrower. Including origination and closing fees the annual percentage interest rates range from 7.99 percent to 29.99 percent as of April, 2016. There are no prepayment fees.
    • Service: There is a 10-minute application process and access to a dedicated customer relationship manager. Online live chat also available.
    • Borrower qualifications: Minimum qualifications include two years in business, three employees and $100,000 in annual revenue. Good personal credit is required.
    • Fast approval process: After loan documents are signed the loan is eligible for approval.
    • Loan limits: General lending parameters range from $20,000 to $500,000. One million is available to qualified businesses.
    • Repayment options: Repayment terms vary based upon loan. For most loans the repayment period is one to four years. There are shorter term options for working capital, inventory turns and immediate cash flow needs. For business growth and expansion loans, longer terms are available. Payments are due twice per month.
    • Special features: Refinancing is available after nine months. Transparent and easily accessible website and online customer chat feature.
    RapidAdvanced

    RapidAdvance is a full-service small business lender that directly funds its loans. The company offers a range of lending options, from its Small Business Loan Program to cash advances, lines of credit and financing for SBA guaranteed loans. RapidAdvance is one business within a large family of companies.

    • Products: RapidAdvance offers a variety of financing options, including small business loans, merchant cash advances, lines of credit and SBA bridge loans, which help business financially bridge the gap between the time they apply for an SBA guaranteed loan and the time the loan is approved.
    • Interest rates: Available based upon credit-worthiness after completing an application. Rates start at 1.25 percent per month.
    • Service: RapidAdvance offers a dedicated account executive and online phone chat.
    • Borrower qualifications: There are lending solutions for all types of borrowers.
    • Fast approval process: Approval is available within 24 hours with funding in as little as three days.
    • Loan limits: Flexible lending limits depend upon the client’s business revenues and qualifications.
    • Repayment options: The repayment options are customized to fit the client.
    ForwardLine

    ForwardLine is a financing company that gives its clients access to loans, merchant cash advances and payment processing services. It was founded in 2003 by a group of business professionals that wanted to make it easier for companies in the United States to find the capital needed to expand operations and improve sales strategies. Today, ForwardLine has a financing volume over $250 million and a payment processing volume over $1 billion.

    Read more about ForwardLine
    Credibly

    Founded in 2010 as RetailCapital, this company gives small and medium-sized retail businesses access to working capital and business loans. In 2015 they adopted the new name, Credibly, to reflect their growth to markets other than retail. They now serve over 125 industries and have partnered with Flexpoint Ford, a private equity investment firm, WebBank, Alostar Bank of Commerce and CapitalSource to offer a wider variety of services.

    Read more about Credibly
    Celtic Bank

    Celtic Bank was founded in 2001 and is headquartered in Salt Lake City. They lend money to small and medium-sized for business acquisition, working capital, inventory and equipment. They also finance ground-up construction, offer debt refinancing, money marketing accounts (MMA) and certificates of deposits (CD).

    Read more about Celtic Bank
    Expansion Capital Group

    Expansion Capital Group (ECG) was founded in 2013 and offers financing options to small and medium-sized businesses. ECG has worked with more than 650 types of businesses and loaned those businesses more than $65 million.

    Read more about Expansion Capital Group
    The Business Backer

    The Business Backer was founded in 2007 and is headquartered in Blue Ash, Ohio. They have financed businesses with more than $4 million. The publically traded company offers several types of funding, including equipment loans, working capital, lines of credit and traditional loans.

    Read more about The Business Backer
    OnDeck

    OnDeck was founded in 2007 and is a publically traded company. It’s headquartered in New York City. Since it began, the company has provided over $4 billion in capital to small businesses. They base their application approval on both a business’ gross revenue and the owner’s credit history.

    Read more about OnDeck
    AUTHORIZED PARTNER
    SmartBiz Loans

    SmartBiz is headquartered in San Francisco. The company was founded in 2008 to help businesses secure small business loans.

    Read more about SmartBiz Loans
    The Interface Financial Group

    The Interface Financial Group (IFG) has provided financial services to small and medium-sized businesses for more than 40 years. They offer invoice financing, meaning they purchase unfilled invoices from a B2B client and then the customer pays IFG when the invoices are completed.

    Read more about The Interface Financial Group
    DealStruck

    Dealstruck is a financial services company headquartered in Carlsbad, Calif. They offer traditional business loans as well as alternative funding options for small and medium-sized businesses. They focus on providing flexible options so business owners can determine which financing option is best for them.

    Read more about DealStruck

    Compare Reviews for Top Business Loan Companies

    by Barbara Friedberg Personal Finance Contributing Editor

    Barbara Friedberg, MBA, MS is a former investment portfolio manager with decades of financial experience. Friedberg taught Finance and Investments at several universities. Her work has been featured in U.S. News & World Report, Investopedia, Yahoo!Finance and many more publications.

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