Now more than ever, a business owner has more loan options to choose. These loans allow you to start, grow or sustain your business until you have the positive cash flow you need.
Not all loans are packaged the same. Therefore, you can expect different loan fees, APR ranges and different maximum loan amounts, depending on the lender and the type of loan. Here's a breakdown estimate of loan fees, APR's and loan amounts from combined business loan lenders;
$1,000 to $2,000,000
Starting at 5.85% +
Loan origination fee:
0% to 4%– this is a one-time fee based on your loan amount
Typically 1 to 14 days
All of these business loan options can be confusing and overwhelming. So, let's break down the main thing you need to know when applying for a business loan. There are short term business loans and long term business loans. Ask yourself, “How long does my business need to repay a loan?” Meaning, if you were loaned the money today, what time frame do you think your business needs to pay off the entire loan? If, the answer is, one year or less, then a short term loan may be a good option for your business. If the answer is, “I need 5 years or more, or even 10 years,” then your business needs a long term loan.
Short term business loan
A short term loan is typically repaid within 3 to 24 months. Maybe a little more or less. Some businesses use short term loans for inconsistent cash flow or to cover financial gaps. For example, maybe a business needs new inventory for the holiday season and is expecting a surge at that time. Or, a business owner just needs to buy supplies until their accounts receivables come in.
Keep in mind, short term loans are for business that already have a steady cash flow because they have a proven track record of revenue that shows the short term loan can be repaid within a short period of time. This is not for a start up or brand new business because there isn't a proven cash flow yet.
Long term Business loan
A long term loan is typically repaid within 3 to 10 years. And with certain SBA loans used for land or building purchase, the term is 25 years. So, if your business is new and you need a large amount of inventory, consider a long term loan. If you're trying to grow your business over time consider a long term loan. This way you have a longer time to repay until you build strong financials as well as a customer or client base.
So, depending on what you need the loan for and how much time you project you need to repay the loan, this determines if you need a long term or short term business loan. Don't make the mistake in getting a short term loan when you need a long term financial solution.
Repay within 3 or 5 years, long term
If you're going to use a personal loan as a business loan then you should go with a loan that has a low interest rate so high loan fees aren't cutting into your business's bottom line. P2P lending would be a great way to for such as personal loan that can be used as a business loan. The main lender would be Prosper, as they allow their personal loans to be used a new or existing business.
P2P lending also know as peer-to-peer loans are funded from individual investors or private institutions. These loans can be applied for online and consist of fast approval decisions as well as funding (typically 7 days or less). Loan amounts can range from $5,000-$300,000. Credit requirements usually range from Fair to excellent, however, some platforms allow a minimum fico score of 600. It's a good idea to know your personal credit score ahead of time so you know which loans you should apply for vs. the ones that might be a waste of time.
Good for: A business that needs a long term loan, anywhere from 3 to 5 years. And, may not qualify for a traditional bank loan or SBA loan but wants lower fees than a merchant cash advance or business line of credit. This is also a good option to grow your business or use as working capital.
Repay within 3 to 6 months, short term
Factoring is a business cash advance for your unpaid invoices also known as invoice financing. This alternative lending comes in handy when you need an advance on your outstanding invoices. This cash advance can cover immediate business expenses you may need to complete certain jobs vs. waiting on payments from your customers or clients.
This type of loan can be repaid within 30 to 60 days but as long as six months (or longer depending on the lender). The advance can range from $5,000 to $500,000. This option should be used as a short-term loan option in between invoices or contracts.
Good For: If you have invoices that you need to fulfill but can't because you lack cash flow
Typically repay within 3 to 36 months, short term
(MCA), this is a short-term loan but can be described as an alternative business loan. Basically, think of it as a business cash advance that you repay with your future credit card sales. Just like with factoring loans, the business owner is advanced a lump sum of cash. The cash can be used for any business purpose. The business owner repays the loan along with a fee.
Unlike a factor loan, the repayment process is different. The merchant cash provider deducts a daily percentage of your credit card sales or will electronically debit your business checking account until the loan and loan fees are repaid in full as agreed. These loans are expensive when compared to traditional business loans as well as peer-to-peer loans. In exchange for higher fees you get quick funding, and the loan requirements are minimal compared to other business loans.
Good For: Business owners with bad credit, needs cash quickly and doesn't wish to put down a down-payment or collateral.
Repay within 10-25 years, long term
These are long-term loans with low interest rates and can be repaid over a 10-25 year period. They're federally backed by the U.S. government which motivates lenders to loan you money when they usually wouldn't. However, don't be fooled, these are some of the hardest loans to get because of all the requirements, paper work and lengthy underwriting process. Some preferred lenders have a shorter and easier process for getting a SBA loan like Smart Biz.
The loan can be used to expand an existing business, refinance current debt, or run daily business operations. Only a very few are able to obtain this loan.
The numbers are even less for those wanting to use the funds to start a business or purchase an existing business. At that point, the pre-qualification process gets difficult but not impossible. You just have to find the right lender, have all your SBA checklist documents ready including your business plan and proof that you have a considerable amount of experience in the industry you wish to operate your business in. In some cases, you may have to consider a different SBA loan to start a business such as Community Advantage Loan.
If a business owner qualifies for SBA 7a loan, they have a longer period of time to repay the loan. Also, the APR will be one of the lowest in the industry.
Note: If you only need about $10,000 to start or grow a business see SBA Micro Loans.
Good for: Existing business and new businesses If starting a new business, you need a business plan and projections if starting a new business), possible collateral on hand, willing to personally guarantee the loan, good business financials.
Repay within 3-5 years, long term
These are long-term loans from an actual bank. They're not SBA-guaranteed, so the business owner may be required to put up some collateral, general assets, or a certificate of deposit, and have descent credit. These loans have some of the most competitive rates which make them very good options to refinance existing business loans or expand your business. Your overall business relationship is considered. Loan terms are usually $10,000 and up, with a repayment period of 3 or 5 years.
Good for: A business that has been operating for at least two years, have healthy business financials, willing to secure the loan with a blanket lien or a certificate of deposit.
Meant for short term use to cover monthly gaps or earn rewards with your business purchases
If your personal credit score is good, you can apply for a business credit card to start or cover expenses for a small business. This is similar to getting a personal loan to start a business. Except, with a loan, you're loaned a lump sum and expected to pay in installments. With a credit card, there is no lump sum, just your revolving credit. This means, get what you need, repay-then repeat when you need something else. However, a business credit card may be actually easier to get than any personal or business loan.
Some credit cards are actually designed for startups and newly established businesses. Your social security number will be required since a personal credit check is done and you will be the personal guarantor of the card. So, if you have missed or late payments, your personal credit store will be hit.
You'll notice that while completing the application for the credit card, you're asked how much money your business made the past or current year. If your business is new or you intend to start a business, put what you anticipate your business to make, (be realistic and truthful for this part) .
The business credit card is almost identical to having a personal credit card, except the business credit card will have your name along with your business name. The good thing about this, you can separate your business expenses from your personal ones. And, if it's a rewards business card, you might get miles, points or cash back for every dollar you spend.
Good for: New businesses that offer services-don't heavily rely on inventory to resell (unless it's an existing business with a proven track record). Startups, newly established businesses, or existing businesses that can benefit from using a monthly credit card to cover business expenses and earn rewards.
Business loans can range from traditional business loans, business lines of credit, SBA loans all the way to a merchant cash advance. Know the different loan types so you'll know the exact type of loan your business needs. Otherwise, the wrong loan can cost you more in the long run-negatively impacting your bottom line.
Popular Loan Types:
PickALoan is an independent comparison site for loans and credit cards. We receive compensation for certain financial products. This may effect the order in which some products or placed within the pages. All loan/credit card amounts and APR's vary by state, credit and other underwriting factors. We do our best to maintain all information is accurate and up to date. However, we do not guarantee the accuracy of the information or that the loans and/or credit card information won't change, as they're constantly updated. So, check the terms, conditions, APR's and applicable descriptions of each loan/credit card product before applying. Please see Disclosures for further details.
Able combines peer to peer lending and traditional bank lending to get you a low-interest rate business loan. Two different types of loans are offered. The friends and family loan-mostly for start-ups, requiring backers (your friends, family and fans) to invest in your loan and they will be repaid with interest over a set period of time that you choose.More
Personal installment loans are available with OppLoans that are repaid over a 9 to 36 month period but usually repaid over a 18 month period. You start the application by checking your rate using your email address-which doesn't affect your credit score. A decision is made same and if approved, funds can be in your account as soon as the next business day. OppLoans are cheaper than payday loans, auto title loans and in some cases, overdraft bank fees.More
You can apply for a personal loan of up to $250. The application takes only a few minutes and the approval decisions are instant. You'll need to start the application with a valid email address. Depending on your state laws and LendUp requirements, you may qualify for a loan up to $1,000 that can be repaid over a one year period. Once your application is approved, you have the option to receive your funds within 15 minutes or next business day depending on you checking account and time of approval. If you qualify for an installment loan of $1,000 your APR will be less than 36% and on-time payments are reported to the major three credit bureaus which can increase your credit score.More
For homeowners: Applying for a home improvement loan with LendKey is very simple First, you start off by checking your rate. Select the option for home improvement. It takes less than two minutes to see if you qualify by completing the application. You'll be asked information about your primary residence. If you already have a contractor, you'll be asked their company name, address, etc. If you don't already have a contractor, Lendkey has a network of approved contractors you can work with.More
To apply for a loan, first complete a quick, online application. The first step of the application is to pre-qualify you. It takes only 2 minutes to see what SoFi can offer you. If pre-approved, select the loan offer that's best for you and complete the application by signing your documents electronically. The funds will then be wired to your account.More
This application process is simple and fast. First, you check your rate to see loan amount and term options. This is the pre-approval process. You'll be asked some background information such as name, address, date of birth, the highest level of education completed, and income type. Once you've complete this and click, “Agree And See Your Rate,” you will see if you're pre-approved. If approved, you can review and accept your loan. Funds should be deposited into your bank account the next day if application is approved and accepted before 5pm EST, Mon-Fri. If accepted after this time frame, you should receive the funds two business days later. Note: For loans being used for educational purposes, there's an additional three day waiting period.More
The application process is fairly simple and quick. If you've received an offer letter, you would start your application by inputting your email and your offer code. If, you haven't received an offer letter, just select “I do not have an offer code.” You will be asked for your email address and begin the pre-qualification process. This takes only a few minutes and does not affect your credit score. After completing the application, you'll select a loan that works best for you-typically, a 3 or 5 year term loan. If approved, and you accept the loan. The soft inquiry will transfer to a hard inquiry and the funds can be deposited into your bank account in as little as one day.More
Invoice factoring: The invoice factoring is for businesses who serves other businesses (B2B), or business who serve the government (B2G). Sign up for a free account with Bluevine. You can then upload your invoices to the dashboard (you may also be able to link up your Quick books account if you have one, but that's optional). You decide and select which customer invoices you want to get funded. You'll get a response within 24 hours, if approved, you can receive funding in as little as an hour.More
Complete a CAN Capital online application in minutes. You’ll get a decision if you qualify within 10 minutes, if so, you'll know how much it will cost you to take out a loan, customize your funding terms and submit documents. If approved, the funds can be receive in as little as 2 days. There are multiple loan products available. Depending on which one you choose and qualify for, you'll have the option to make fixed or flexible payments on a daily or weekly basis.More
The loans offered are, SBA 7(a) loans for commercial real estate, working capital and debt financing ranging from $30,000 to $5,000,000. Apply online using the Smartbiz automated application process. Basic information about your business is requested You'll be notified within minutes if you pre-qualify. The pre-qualification process does not impact your credit score. After the pre-qualification process, you'll provide financial information about your business and its owners. This is to see if you meet eligibility requirements.More
Apply online in less than 5 minutes using the OnDeck fast application. Your business is evaluated. The system will then determine which loan product is best suitable for your business. If approved, you'll be notified of a decision within minutes with no obligation. You can receive funds via direct deposit or wire depending on your product and location. Funding can be as fast as 1 business day. Paying the money back is simple, weekly-fixed payments are automatically deducted from your business account with a loan term anywhere from 3 to 36 months.More
Apply online by completing the one page application at no cost or obligation. Along with the application, you'll need 3 months of your business bank statements and the 1st page of your last business tax return. Decisions are made within 24-48 hours, and you can receive funding in 2-5 days. Depending on your qualifications, daily weekly or monthly payments plans can be offered. Fixed and flexible repayment options are also available. Your loan term could be anywhere from 6 months to 5 years. The average SunWise business owner grows their business by 25% in just six months.More
Apply online for a credit limit up to $35,000 and Headway Capital will evaluate your application. Not-so-perfect-credit won't block your approval because Headway looks at your overall business. If approved, you then borrow from your online account line of credit. You can borrow from your line of credit as often as you like up to your credit limit and receive funds by the next business day. You choose your repayment schedule of 12, 18 or 24 months. As you repay the principal balance, that money becomes available for you to draw again.More
Any business with a business checking account and/or a PayPal account can apply for a business line of credit at Kabbage. Your business must be at least one year old. First, sign up online to start the application. Once you sign up select the services on the screen you use to run your business (business checking account, PayPal, Intuit, Stripe, etc.). The more accounts you link can possibly increase your loan amount. You will sign into the accounts you use to the link them to Kabbage. Kabbage can’t see your usernames or password that you link to them. After you’re done linking accounts, you will be asked some additional questions. Your information will be processed and Kabbage will let you know how much you qualify for in minutes.More
1800FreshStart is a car dealership/loan matching service not a lender. They send your completed application to a nearby dealership willing to work with you based on your credit. The dealership may run your credit right away to see what you qualify for while other dealers will probably contact you first for confirmation.More
Complete the online application. You'll then receive a loan decision within 30 seconds. If approved, you'll receive multiple offers with competitive rates for a car loan. There's no obligation to accept. Keep in mind, the loan offers are valid for only 30 days. Once you accept the loan, you can download the loan documents and begin car shopping. The pre-approved voucher can be used at any franchised dealership, private seller or a Roadloans approved-network dealership. The voucher can also be used to refinance your existing loan. All of the approved-network dealerships can be viewed on the Roadloans website. However, based on feedback, a few buyers have successfully used these vouchers at Carmax. Note: loans may start at $10,000 in the state of Arizona.More
Complete the online application. Then MyAutoloan.com will match with up to 4 offers from their lending network, (this can take seconds or up to 24 hours). Once you accept the loan, you can receive an online certification or check within 24 hours. Use the check to purchase the car you want at any franchised dealership, private party sale (individual seller). The check can also be used to refinance your existing loan.More
can be used for personal or business needs. Their platform allows investors to loan money to qualified borrowers which keep the interest rates competitive. Their lending process is very simple. First, you fill out the online form with some personal information including your social security number to get a custom rate (a soft credit pull is used to determine this custom rate, it won't impact your credit score). You'll receive a rate instantly. This does not guarantee you're approved just yet. To proceed, you have the option of accepting the terms and conditions. If you do, you'll select your loan amount and create a loan listing on the Prosper website.More
Lending Club's entire loan process is done online. Start by filling out the online application. If you qualify, you’ll receive multiple loan offers in minutes. Lending Club uses a credit technology to assess the possible risks of your loan and assigns the appropriate interest rates. View the loan options with no impact to your credit score. Select the loan option that is right for you, and complete the application. Once the loan application is complete and under review, instructions will be sent on how to email required documents to Lending Club.More
You start by checking if you're pre-approved by completing the first page of the online application. This won’t impact your FICO score. You'll know if you're pre-approved within minutes, if so, and you decide to press continue, the soft inquiry will then transfer to a hard inquiry. When the loan itself is approved, Avant’s secure application will allow you to e-sign your contract online. Money can then be direct deposited into your bank account as soon as the next business day. Avant considers a lot of factors to receive a loan, including income, credit, repayment history along with state loan limits. Check your rate for true eligibility.More
You can now fill out a quick online form (My ScoreSaver), and instantly see what you may qualify for without affecting your credit score. Checking to see what you qualify for will only leave a soft inquiry on your credit report. Just apply online with NetCredit’s easy, secure application. After you submit the application, you will receive an instant decision, the decision comes after step 2 of the application. If pre-approved, you move on to step 3 and select the loan amount that’s right for you. Then you accept your loan agreement . Once the application is approved the money will be deposited into your bank account by the next business day.More
Quick explanation of application process: Complete the 3-step, online, secure application and get an instant response if you're pre-approved or denied from OneMain Financial. After you complete the online application, it will be sent to a branch near you. If approved, a qualified loan specialist will contact you to discuss your options as well as verify identity, income, etc.More
Complete a simple online application. Upload your most current LES (Leave and Earnings Statement). When applying by business hours, you’ll receive a same day approval. An email will be sent out for the completion of a simple loan contract explaining the loan details and directions for the next steps. Once your application has been completely verified, the funds will be deposited into the personal account you provided.More
The LightStream application process is supposed to be so easy and simple that they guarantee it, or you’ll receive $100 (after receiving your loan). Just apply online. You will then receive an email within minutes during their normal business hours regarding your loan application. If approved, go online and electronically sign your loan agreement. Provide your information and choose your monthly payment dates. You can get funded as early as today.More
Apply online, it only takes a few minutes. If approved, you can choose your own terms since rise has flexible payment scheduling options. Funds can show up in your account as soon as the next business day.More
Apply online by completing the CashNetUSA online application. You’ll receive an instant decision. If approved, you’ll sign your loan agreement online. After that, you may receive funds the next business day-excluding bank holidays. Loan amounts are usually due within 7-31 days although, some states may allow a loan extension.More
Complete Cash Central 3-step, online application. Find out instantly if you’re approved. If approved by 5pm, you can receive your funds by the next business day, deposited into your bank account. if you have an eligible Green dot prepaid card, you can receive your funds in minutes, including weekends. Loan amounts are usually due within 7-30 days or your next payday-which should fall within the 7-30 days.More
Complete the five-minute online application for Check into Cash. A representative will call you on the phone number you provided on your application as part of the underwriting process to verify some information and complete the loan request. If you're approved, you'll e-sign your application to confirm your funds. You funds are then deposited into your bank account by the next business day (if further verification isn't needed). Loan amounts are usually due within 7-31 days.More
Fill out the online application, you don’t have to fax anything. Get fast, online instant decision. Once approved your funds are deposited into your bank account. Another option is picking up your funds at the nearest Ace Cash Express location. Loan amounts are usually due within 7-31 days.More
Apply online by completing the pre-qualification application for Lending Club business. After completing the application, you can receive a quote in minutes. This doesn't impact your credit score. If you pre-qualify, you’ll instantly be presented with multiple loan offers. Select the offer that fits your needs and complete the application. Lending Club's underwriting team will review your completed application. Additional documents may be requested such as tax returns, bank statements, etc.More
We welcome and appreciate the comments from the community. Please keep the comments clean, civil, appropriate and spam-free. See our posting guidelines for further review. Please don't share any personal information such as bank info, address, credit card numbers, social security numbers, etc, for you own protection. Keep in mind anything you published may be published or re-used. The comments listed below are not provided, reviewed or approved by loan issuers, card issues or advertisers. All loan, credit card issuers and advertisers do not assume responsibility in getting any of the below questions answered. Additionally, any comments posted under PickALoan are not reviewed, endorsed or represented by any financial institution affiliated or not affiliated with this site.
* Banks, issuers, finance companies and credit card companies mentioned/displayed on PickALoan do not endorse, guarantee or is responsible for any content or articles on this website*
Disclaimer: PickALoan is an independent comparison website for loans and credit cards. We strive to provide the most accurate information as possible but we dot guarantee the accuracy of all information. Please read and check the terms, conditions and rates of all and any financial products you apply for from this website from the original issuer.
Ad Disclosure: We receive compensation for certain financial products (excluding government-based products). This compensation may affect the placement of certain products on this website. For example, this may impact the order of where the products appear. See Disclosures for further details.