Best Small Business Loans of December 2024

Lender	Best for	Max loan amount▼	Min. credit score▼	APR range	Max term length▼
U.S. Small Business Administration	Businesses that can’t qualify for bank loans	$5,000,000	650	10.75-14.25%	25 years
Bank of America 5.0/5.0	Well-established businesses	See review	700	See review	5 years
Wells Fargo 5.0/5.0	Businesses that want flexible financing	$150,000	680	9.50-17.50%	See review
Fora Financial 4.7/5.0	Business owners with bad credit	$1,500,000	570	See review	1 year and 6 months
Bluevine 5.0/5.0	Businesses that need fast funding	$250,000	625	18.00-48.00%	6 months
iBusiness Funding 4.2/5.0	Businesses that want a long repayment period	$500,000	660	15.22-45.00%	7 years
OnDeck 4.8/5.0	Businesses that need to cover short-term expenses	$250,000	625	27.20-99.90%	2 years
Fundbox 5.0/5.0	Startup businesses	$150,000	600	36.00-99.00%	6 months
American Express Business Blueprint™ 5.0/5.0	Low-revenue businesses	$250,000	660	See review	2 years
National Funding 4.6/5.0	Businesses that need to purchase equipment	$150,000	600	See review	5 years
AltLINE 4.7/5.0	Business-to-business companies	$5,000,000	300	See review	3 months
Accion 4.9/5.0	Women and minority-owned businesses	$250,000	600	8.49-24.99%	5 years

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Table of contents

What is a business loan?
Types of small business loans
Additional business funding options
How do I qualify for a business loan?
How do I get a loan for my small business?
Where to get a small business loan
Frequently asked questions

What is a business loan?

A business loan is a loan designed specifically for business purposes. With a small business loan, you borrow money from a lender and pay it back over time, with interest.

Business loans can be used to cover startup costs, purchase inventory or equipment, manage cash flow and expand your operations, among other uses.

» MORE: Learn more business loan basics

Types of small business loans

Small business loan options can include SBA loans, bank loans, term loans, business lines of credit and equipment financing. The best business loan for you will depend on a variety of factors such as:

Why you need funding.
How fast you need access to capital.
How much capital you need.
Your business’s qualifications.
Total cost of debt.

SBA loans

SBA loans are small business loans partially guaranteed by the U.S. Small Business Administration, a government agency, and issued by participating lenders, such as banks and credit unions. SBA loans offer low interest rates and long repayment terms.

Although there are multiple types of business funding within the SBA loan program, the SBA 7(a) loan is the most popular. These loans are available in amounts up to $5 million, with terms up to 25 years.

Loan amounts: $30,000 to $5 million.
Approximate APR range:
10.75
% to
14.25
%.
Best for: Large one-time and longer-term investments, purchasing real estate or equipment, buying existing businesses and refinancing debt.

Business term loans

A business term loan is a lump sum of capital that’s repaid over a specific period of time, with interest. For short-term loans, the repayment period tends to range from three to 24 months, while repayment for long-term loans can extend up to 10 years or longer in some cases.

Loan amounts: Up to $1 million.
Approximate APR range: 6% to 99%.
Best for: Working capital, large one-time investments, expanding your business.

Business lines of credit

A business line of credit provides access to flexible cash. Similar to a credit card, lenders give you access to a specific amount of credit (say, $100,000), but you don’t make payments or get charged interest until you tap into the funds.

Credit line range: $1,000 to $250,000.
Approximate APR range: 10% to 99%.
Best for: Managing cash flow, handling unexpected expenses and financing short-term business needs.

Compare financing and apply

We’ll start with a brief questionnaire to better understand the unique needs of your business. Once we uncover your personalized matches, our team will consult you on the process moving forward.

See Your Loan Options

Equipment financing

Equipment financing is a form of asset-based financing where the equipment itself serves as collateral for the loan. You can get an equipment loan equal to up to 100% of the value of the equipment you’re looking to purchase — depending on the lender and your business’s qualifications — which you then pay back over time, with interest.

Loan amounts: Up to 100% of the value of the equipment, plus soft costs (e.g. installation, delivery, warranties).
Approximate APR range: 4% to 45%.
Best for: Purchasing machinery and equipment.

Microloans

Microloans are small-dollar loans that typically offer up to $50,000 in business funding. These loans are designed for traditionally underserved entrepreneurs, such as startup founders, people with limited credit histories, minority groups and those located in low-income communities.

Loan amounts: Up to $50,000.
Approximate APR range: 8% to 30%.
Best for: Smaller business investments, covering day-to-day expenses, working capital needs.

Additional business funding options

If you don’t think you can qualify for a traditional loan — or simply want to explore all of your options — you might consider one of these products to finance your business. Many of these business funding options have flexible requirements and can be a good choice for newer companies.

Invoice factoring and invoice financing

Invoice factoring turns business owners’ unpaid invoices into immediate cash. You sell the invoices to a factoring company, which is paid when it collects from your customers.
If you prefer to maintain control over your invoices, invoice financing is an alternative to factoring.

Personal loans

A personal loan for business allows you to get funding based on your personal credit score and income instead of your business history.
These loans are usually available in smaller amounts, but they can be used for a variety of purposes and fund within days.

Business credit cards

A business credit card offers revolving credit, making it a solid option for short-term expenses.
Although credit card limits tend to be smaller than a line of credit, a business credit card may offer rewards, such as cash back or travel points.

Merchant cash advances

With a merchant cash advance (MCA), a financing company gives you an upfront sum of capital that you repay using a percentage of your debit and credit card sales, plus a fee.
MCAs are typically fast to fund and easy to qualify for, but they’re one of the most expensive types of business funding, carrying APRs that can reach triple digits. You should generally consider all other business financing options before turning to a merchant cash advance.

Small-business grants

Small-business grants provide a free alternative to debt funding — offering access to capital that doesn’t need to be repaid.
Business grants are available from a variety of sources, including federal, state and local governments, private companies and nonprofit organizations.

Friends and family loans

A friend and family business loan is when you borrow money for your business from a close friend or family member.
These loans are typically informal; they don’t require an application process or credit check. Creating a written loan agreement, however, can help preserve your personal relationship — just in case things don’t go as planned.

How do I qualify for a business loan?

Lenders have different underwriting guidelines, but they generally consider similar factors, including your personal credit score, time in business and business finances.

Personal credit scoreBusiness lenders use your personal credit score to assess your ability to manage and pay your debts. You can get your credit score online or check your credit score on NerdWallet for free. In general, the higher your personal credit score, the more likely you are to qualify for business funding. A strong personal credit score can also help you qualify for lower interest rates and longer repayment terms.

Time in businessLenders use your time in business as a quick measure of success. The longer you’ve been operating, the more likely you are to have money to repay your debts. Most traditional lenders will want you to have at least two years in business. Online lenders, on the other hand, may only require a minimum of six months in operation.

Business financesLenders want to see evidence of stable cash flow to ensure that you can repay a loan. When applying for a loan, you’ll likely need to provide business bank statements, tax returns and financial statements. If you haven’t been operating for very long, it can be helpful to provide sales forecasts that illustrate the potential revenue your business will generate.

How do I get a loan for my small business?

Getting approved for a business loan doesn't have to be a painful process. You can increase your chances of success by understanding your business's qualifications and then finding the financing option that fits your needs. Here are the steps you can follow:

Decide which loan option is right for your needs. If you want to finance a large purchase or business expansion, for example, you might consider a traditional term loan, whereas if you need funds for day-to-day expenses, you might prefer a business line of credit.

Check your qualifications. Consider factors such as your personal credit score, time in business and annual revenue. Bank and SBA lenders likely have the strictest eligibility criteria. Online lenders, on the other hand, may be more flexible.

Estimate what payments you can afford. Look carefully at your business’s financials — especially cash flow — and evaluate how much you can afford to apply toward loan repayments each month. Your total income should be at least 1.25 times your total expenses, including your new repayment amount.

Determine whether and how you want to collateralize the loan. Business loans can be secured or unsecured. A secured business loan requires collateral, such as property or equipment, that the lender can seize if you fail to repay the loan. Putting up collateral is risky, but it can increase the amount lenders let you borrow and get you a lower interest rate. Keep in mind, however, that although some lenders don’t require physical collateral, they may still take out a UCC filing on your business assets. This official document allows a lender to claim your assets in the case of default.

Compare small-business lenders. The best loan for your small business is typically the one that offers you the best terms. But other factors, like funding speed or customer service, may matter to your business and different financing sources may be better in certain instances than others.

Apply for a business loan. Of the loans you qualify for, choose the one with the lowest APR and best terms for you — as long as you’re able to handle the loan’s regular payments — and submit your business loan application.

📋 Business loan application checklist

The documentation that you need to provide for your loan application can vary from lender to lender. Banks and SBA lenders often require more paperwork compared to online lenders. In any case, you may need to submit:

✅ Information about your business (e.g. name, address, employer identification number).

✅ Personal and business bank statements.

✅ Personal and business income tax returns.

✅ Business financial documents, such as profit and loss statements, balance sheets and cash flow statements.

✅ A photo of your driver’s license (or other official identification).

✅ Business licenses.

✅ Legal business formation document (e.g. articles of incorporation, articles of organization).

✅ Description of collateral.

✅ A business plan for a loan.

✅ Existing debt schedule, if applicable.

✅ Legal contracts and agreements.

As you complete your application, double check all requirements and ensure everything is accurate. Providing incorrect or outdated information can slow down the underwriting process. It may be helpful, therefore, to have a business advisor or mentor review your application before submitting.

💬 From our experts: Is this the right time to get a business loan?

"Current economic conditions continue to bring challenges for small-business owners. Inflation has led to high interest rates and business lenders have tightened their credit standards. At its last two meetings, however, the Federal Reserve actually lowered interest rates.

When these rate cuts occur, rates on business loans tend to decrease as well. As a result, business owners may soon be in a better position to consider financing than they have been in the last year. To get the best rate on a business loan, you can build your credit, offer collateral, improve your cash flow and compare multiple financing options.”

— Randa Kriss, lead writer covering small business

Where to get a small business loan

Business loans are available from banks, credit unions, online lenders, nonprofit organizations and community lenders.

Banks and credit unions, sometimes called “traditional lenders,” can provide a variety of loan types — and are often a source for SBA loans. These lenders tend to offer the most competitive interest rates and repayment terms on business loans. Currently, the average interest rates on business bank loans range from 6.42% to 12.41% , according to data from the Federal Reserve.

To qualify for a bank loan, you’ll need to meet strict eligibility criteria. You’ll likely need multiple years in business, good credit and strong revenue. You may also need to provide collateral.

Like traditional lenders, online lenders can finance a variety of business loan options. Some of these lenders even specialize in certain types of funding, such as equipment financing, invoice factoring or commercial real estate loans.

Online lenders tend to offer faster funding times and more flexible qualification requirements compared to traditional lenders. As a result, however, online loans typically have higher interest rates and shorter repayment terms.

Nonprofit and community organizations typically focus their lending efforts on traditionally underserved businesses, such as those located in rural areas and those owned by women, veterans and minority groups. These lenders often have flexible qualification requirements and are willing to work with startups or borrowers with poor or no credit.

Nonprofit lenders tend to issue smaller loan amounts, but can still provide competitive interest rates. In addition to business loans, these organizations usually offer educational resources and support, such as business coaching, training and networking.

Online lending marketplaces can help you compare multiple business loan options and find the right fit for your needs. You usually submit a simple application to the company, providing basic information about your business. You then receive a list of lender matches, based on the available partners in the marketplace’s network.

The marketplace may offer dedicated advisors to walk you through your options and help you make the best choice. Once you’ve made a decision, the marketplace may pass you off directly to the lender — or, in some cases, they’ll support you through the application process.

🤓 Nerdy Tip: Protect your business from predatory lenders and loan scams

Predatory lenders may target small-business owners looking for funding, especially those who are having trouble qualifying for traditional loan options. You can protect yourself by watching out for red flags, such as promises of guaranteed approval, aggressive sales tactics and loan features that seem “too good to be true.”

Frequently asked questions about small business loans

With most small business loans, you borrow capital from a lender and repay it, plus interest, over a predetermined period. Maximum loan amounts, interest rates and repayment terms will vary based on the type of business loan, the lender you’re working with and your business’s qualifications. Learn more about how business loans work.

The stronger your qualifications, the easier it is to get a business loan. Although requirements vary by lender, it’s helpful to have good credit, strong finances and multiple years in business to access a variety of financing options. Startups and borrowers with bad credit may have a more difficult time getting a business loan.

A private business loan is any type of small-business financing issued by a non-bank lender. Private business lenders include online lenders, factoring companies and merchant cash advance companies.

Compared to bank loans, private business loans tend to offer more flexible qualification requirements and streamlined application processes.

If you have good personal credit, strong finances and at least one year in operation, you should turn to a bank to get a new business loan. Traditional lenders will offer the most competitive rates and terms. Banks don’t typically give loans to start a business, however.

If you can’t meet those qualifications, you can work with an online lender, as they tend to have more flexible requirements. Additionally, if you’re a very new business (less than six months in operation), you can consider alternatives like business credit cards or personal loans. See our list of startup funding options.

It may be more difficult for startups to qualify for traditional small business loans. Banks and credit unions often require that you have at least two years in business to access financing.

If you have at least six months in business, however, you may be able to qualify for certain online loans. The SBA microloan program caters specifically to startups as well. Alternative financing options, like business credit cards, personal loans and grants, are also available if you can’t get a startup business loan.

Credit score requirements vary by loan and lender. Banks often require a credit score in the 700s for a small business loan. But some online lenders will fund loans for borrowers with credit scores in the low- to mid-600s.

To qualify for an SBA loan, you typically need a good personal credit score (690 or higher), though some SBA loan programs are available to business owners with bad credit.

Many lenders require a minimum annual revenue, which can range anywhere from $50,000 to $250,000, for business loans and lines of credit. If your revenue isn't high enough to qualify for those loan products, consider looking into business credit cards or SBA microloans.

Annual percentage rates (APRs), loan term and monthly payments are estimated based on analysis of information provided by lenders and publicly available information. All loan information is presented without warranty, and the estimated APR and other terms are not binding in any way. Lenders provide loans with a range of APRs depending on borrowers' credit and other factors. Keep in mind that only borrowers with excellent credit will qualify for the lowest rate available. Your actual APR will depend on factors like credit score, requested loan amount, loan term and credit history. All loans are subject to credit review and approval.

🏦 Curious about SBA loans?

Here’s an overview of how SBA loans work, the types of SBA loans that are available, what each loan type can be used for and how to get SBA financing for your small business.

Last updated on December 10, 2024

How Fundera by NerdWallet works

Getting a business loan can be challenging, and several factors — cost, speed, repayment schedule — can play a role in deciding which product is right for you. Let us help you through the process.

1. Fill out one simple application

Answer a few questions about your business to get personalized lending options. It’s free and won’t impact your credit score.

2. See your business loan options

It takes about three minutes to get options from our network of vetted small-business lenders. Compare interest rates and repayment terms to choose the best product for your needs.

3. Get your loan

If the lender approves you, you’ll sign closing documents in order to receive funds. Some lenders can approve and fund loans within one business day.

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Methodology

NerdWallet’s review process evaluates and rates small business loan products from traditional banks and online lenders. We collect over 30 data points on each lender using company websites and public documents. We may also go through a lender’s initial application flow and reach out to company representatives. NerdWallet writers and editors conduct a full fact check and update annually, but also make updates throughout the year as necessary.

Our star ratings award points to lenders that offer small business friendly features, including:

- Transparency of rates and terms. - Flexible payment options. - Fast funding times. - Accessible customer service. - Reporting of payments to business credit bureaus. - Responsible lending practices.

We weigh these factors based on our assessment of which are the most important to small-business owners and how meaningfully they impact borrowers’ experiences.

NerdWallet does not receive compensation for our star ratings. Read more about our ratings methodology for small business loans and our editorial guidelines.

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