Small business loans can help you access cash for starting, expanding or keeping your business up and running. With so many choices and types of businesses out there, there's no one-size-fits-all answer to the best financing option. To help you find the best loan for your needs, CNBC Select reviewed different types of business loans and evaluated them on a range of features, including minimum and maximum loan amounts, time to repay the loan, personal credit score needed, Better Business Bureau® rating and business requirements to apply. (Read more about our methodology below.)
Offers in this section are from affiliate partners and selected based on a combination of engagement, product relevance, compensation, and consistent availability.
$5,000 to $250,000
Up to 24 months
625
In business at least 1 year, $100,000 annual revenue, business bank account
Up to $250,000
6 or 12 months
625
Starting at 7.80% APR
Best for multiple types of loans
Biz2Credit
Types of loans
SBA loan, business line of credit, equipment financing, merchant cash advance, unsecured business loans, business acquisition loans
Better Business Bureau (BBB) rating
A-
Loan amounts
Up to $6 million, depending on the type of loan
Terms
Up to 25 years, depending on the type of loan
Minimum credit score needed
580
Minimum requirements
Typical borrowers: in business at least 12 months and $10,000 in average monthly revenues
Terms apply.
Pros
- Variety of loan types for different business needs
- Low credit score requirement for working capital loans
- Flexible daily, weekly, bi-monthly or monthly payments, depending on loan type
- Working capital and commercial real estate loans may let you take out a large amount of money
Cons
- The minimum loan amount is relatively high
Who's this for? Biz2Credit offers a few different types of financing options for your business: term loans, revenue-based financing and commercial real estate loans.
Standout benefits: This lender provides a variety of fixed-payment schedules, including daily, weekly and bi-monthly.
Best for same-day funding
OnDeck
Types of loans
Term loan
Better Business Bureau (BBB) rating
A+
Loan amounts
$5,000 to $250,000
Terms
Up to 24 months
Minimum credit score needed
625
Minimum requirements
In business at least 1 year, $100,000 annual revenue, business bank account
Terms apply.
Pros
- Potential for same-day cash disbursement (only available in certain states, for term loans up to $100,000)
- Top-tier A+ rating with the BBB
- Low minimum credit score
- Fixed monthly payments
- 100% Prepayment Benefit option, so you can pay your loan off early without any penalty or fee
Cons
- Doesn't lend to businesses in Nevada, North Dakota or South Dakota
- Early prepayment fee if you don't qualify for the 100% Prepayment Benefit
Who's this for? OnDeck offers same-day funding for borrowers applying for a term loan as long as the funding amount is no greater than $100,000. Same-day funding eligibility can also depend on the state you're in.
Standout benefits: OnDeck's minimum credit score is 625 and generally requires you to be in business for only a year, making it fairly accessible for younger businesses.
Best for no prepayment fees
Funding Circle
Types of loans
Term loan
Better Business Bureau (BBB) rating
A+
Loan amounts
$25,000 to $500,000
Terms
3 months to 7 years
Minimum credit score needed
620
Minimum requirements
In business at least 2 years, no bankruptcies within the last 7 years
Terms apply.
Pros
- Top-tier A+ rating with the BBB
- No prepayment penalties
- Funding in as little as 48 hours
Cons
- You have to be in business at least 2 years to qualify
Who's this for? Borrowers who want to save on interest payments will like that FundingCircle doesn't charge a prepayment penalty, which means borrowers won't be penalized for paying back their loan early.
Standout benefits: This lender offers terms starting at just six months.
Best for microloans
Kiva
Types of loans
Peer-to-peer crowdfunded loan
Better Business Bureau (BBB) rating
N/A
Loan amounts
$1,000 to $15,000
Terms
Up to 3 years
Minimum credit score needed
No minimum credit score required
Minimum requirements
You must be 18, live in the U.S., use this loan for business purposes, not currently in foreclosure, bankruptcy or have any liens, and have a small number of your friends and family willing to make a loan to you (Nevada and North Dakota residents are not ineligible)
Terms apply.
Pros
- Ability to borrow with no interest
- Loans are geared toward borrowers who are unbanked and have trouble qualifying for financial products
- Ability to market your product to 1.6 million lenders on Kiva
Cons
- You need to prove your creditworthiness by inviting friends and family to lend to you
- It can take a while to receive your loan since investors need to raise money
- No BBB rating
Who's this for? Borrowers willing to take a chance on crowdfunding a small loan. Kiva offers small funding amounts of up to $15,000 gathered from a network of individuals and lending partners.
Standout benefits: Kiva is a nonprofit and offers 0% interest loans.
Best for low credit scores
Credibly
Types of loans
Long-term loans, working capital loans, business line of credit and merchant cash advance
Better Business Bureau (BBB) rating
A+
Loan amounts
$5,000 to $600,000
Terms
3–24 months
Minimum credit score needed
500+
Minimum requirements
Must have been in business for at least six months and have average monthly revenue of at least $15,000
Terms apply.
Pros
- Offers multiple options for small business financing
- Can get approved within four hours
- Low minimum credit score requirement
- Provides loan amounts of up to $600,000
- Funds deposited as soon as the same business day
- Considers overall business health as an approval criteria
Cons
- Requires an average monthly revenue of at least $15,000
Who's this for? Borrowers with poor credit will want to check out Credibly. The lender's minimum credit score requirement of 500 makes it accessible to those with less-than-stellar scores.
Standout benefits: Borrowers can prequalify for a loan in just a few minutes. Credibly also offers funding in under 24 hours.
Best for Square users
Square Loans
Types of loans
Small business loan
Better Business Bureau (BBB) rating
N/A
Loan amounts
$100 to $350,000
Terms
A percentage of sales is automatically deducted until the balance is paid off; full loan payment is required within 18 months
Minimum credit score needed
None
Minimum requirements
Must be a Square seller
Terms apply.
Pros
- Loan repayments are automatic and are deducted as a percentage of your daily sales
- Charges a flat fee
- No late fees
- Applying doesn't affect your credit score
Cons
- Must be a Square seller to be eligible
Who's this for? Business owners already using Square should consider the company's loans. Square lets you repay by deducting money from your daily sales, which you might find more convenient.
Standout benefits: You can apply for as little as $100. Low borrowing amounts make Square appealing to those who just need a few hundred dollars.
Best for borrowing high amounts
Fora Financial
Types of loans
Small business loan, revenue advance
Better Business Bureau (BBB) rating
A+
Loan amounts
$5,000 to $1.5 million
Terms
Up to 15 months
Minimum credit score needed
500
Minimum requirements
Be in business for at least six months; have $15,000 per month in revenue; no open bankruptcies
Terms apply.
Pros
- Offers higher funding amount compared to other lenders
- Considers lower credit scores
- Approval and funding in 24 to 48 hours, according to the lender's website
- Borrowers can increase loan amount after paying back at least 60% of the original loan amount
- Offers a prepayment discount
Cons
- Short loan term of just 15 months
Who's this for? Fora Financial lets borrowers apply for as much as $1.5 million, which is higher than any other lender on this list.
Standout benefits: Fora lets borrowers apply for additional funding as long as they've already paid off at least 60% of their original loan amount.
More on our picks for best small business loans
Biz2Credit
If you're applying for a term loan, Biz2Credit considers applicants with a credit score of 650 and above, businesses that have been active for at least 18 months and annual revenue of at least $250,000.
Loan amounts
$25,000 to $1,000,000 (term loan; borrowing limits can vary for other financing options)
Loan terms
12 to 36 months (term loan; loan terms can vary for other financing options)
OnDeck
OnDeck is an online lending platform that has so far provided around $15 billion in funding to U.S. businesses. It boasts an impressive A+ rating from the Better Business Bureau and reports payment activity to the credit bureaus, which helps borrowers build business credit.
Loan amounts
$5,000 to $250,000
Loan terms
Up to 24 months
FundingCircle
According to FundingCircle's website, the lender has provided funds to over 700 industries, however, there are some industries that it doesn't provide loans for: nonprofits, weapons manufacturers, speculative real estate and some others.
Loan amounts
$25,000 to $500,000
Loan terms
6 months to 7 years
Kiva
Kiva doesn't have traditional business requirements to qualify for a loan. According to the lender's website, over 2.5 million people have raised more than $1.6 billion through the platform.
Loan amounts
$1,000 to $15,000
Loan terms
Up to 3 years
Credibly
Credibly offers financing for small- and medium-sized businesses. In addition to traditional credit factors, Credibly considers the business' overall health when making a lending decision.
Loan amounts
$5,000 to $600,000
Loan terms
3 to 24 months
Square
Square is a fintech platform that enables businesses to collect payments and provide other transactions.
Loan amounts
$100 to $350,000
Loan terms
Full repayment is required within 18 months; at a minimum, you must pay 12.5% of your original loan balance every 60 days.
Fora Financial
Fora Financial offers loans that can be used for pretty much any business expense. They lend to a wide variety of industries including, but not limited to, construction, medical, retail and restaurants.
Loan amounts
$5,000 to $1.5 million
Loan terms
Up to 15 months
Types of small business loans
There are a variety of loan options that suit different business needs. Here's an overview of nine types of small business loans:
1. Term loans
Term loans are one of the most common types of small business loans and are a lump sum of cash that you repay over a fixed term. The monthly payments will typically be fixed and include interest on top of the principal balance. You have the flexibility to use a term loan for a variety of needs, such as everyday expenses and equipment.
2. SBA loans
Small Business Administration (SBA) loans are enticing for business owners who want a low-cost government-backed loan. However, SBA loans are notorious for a long application process that can delay when you will receive the funding. It can take up to three months to get approved and receive the loan. If you don't need money fast and want to benefit from lower interest rates and fees, SBA loans can be a good option.
3. Business lines of credit
Similar to a credit card, business lines of credit provide borrowers with a revolving credit limit that you can generally access through a checking account. You can spend up to the maximum credit limit, repay it, then withdraw more money. These options are great if you're not sure of the exact amount of money you'll need since you only incur interest charges on the amount you withdraw. That's compared to a term loan that requires you to pay interest on the entire loan — whether you use part or all of it. Many business lines of credit are unsecured, which means you don't need any collateral.
4. Equipment loans
If you need to finance large equipment purchases, but don't have the capital, an equipment loan is something to consider. These loans are designed to help you pay for expensive machinery, vehicles or equipment that retains value, such as computers or furniture. In most cases, the equipment you purchase will be used as collateral in case you can't repay the loan.
5. Invoice factoring and invoice financing
Business owners who struggle to receive on-time payments may want to choose invoice factoring or invoice financing (aka accounts receivable financing). Through invoice factoring, you can sell unpaid invoices to a lender and receive a percentage of the invoice value upfront. With invoice financing, you can use unpaid invoices as collateral to get an advance on the amount you're owed. The main difference between the two is that factoring gives the company buying your invoices control over collecting payments, while financing still requires you to collect payments so you can repay the amount borrowed.
6. Commercial real estate loans
Commercial real estate loans (aka commercial mortgages) can help you finance new or existing property, like an office, warehouse or retail space. These loans act like term loans and may allow you to purchase a new commercial property, expand a location or refinance an existing loan.
7. Microloans
Microloans are small loans that can provide you with $50,000 or less in funding. Since the loan amounts are relatively low, these loans can be a good option for new businesses or those that don't need a lot of cash. Many microloans are offered through nonprofits or the government, like the SBA, though you may need to put up collateral (like business equipment, real estate or personal assets) to qualify for these loans.
8. Merchant cash advances
Like traditional cash advances, merchant cash advances come at a high cost. This type of cash advance requires you to borrow against your future sales. In exchange for a lump sum of cash, you'll repay it with either a portion of your daily credit card sales or through weekly transfers from your bank account. While you can often quickly obtain a merchant cash advance, the high interest rates make this type of loan a big risk. Unlike invoice financing/factoring, merchant cash advances use credit card sales as collateral, instead of unpaid invoices.
9. Franchise loans
Becoming a franchisee can help you achieve your goal of business ownership quicker and easier than starting from the ground up, though you'll still need capital. Franchise loans can provide you with the money to pay the upfront fee for opening a franchise, so you can get up and running. While you're the one taking out the loan through a lender, some franchisors may offer funding to new franchisees.
What information do I need to apply for a small business loan?
When you go to apply for a small business loan, you'll need to have both personal and business information handy. Expect to enter some or all of the following information:
- Personal information (like your name and address)
- Tax identification number (which is either your employer identification number (EIN) or social security number (SSN), and sometimes both)
- Business name
- Business address and phone number
- Industry type and company structure
- Years in business
- Number of employees
- Annual business revenue
- Estimated monthly spend
During the application process, you may need to submit documentation, like your business plan, financial statements, bank statements and tax returns. There's also a good chance that your personal credit score will be pulled, so a lender can gauge your creditworthiness.
FAQs
What credit score is required for a small business loan?
You typically need at least a fair/average credit score (580 to 669) to qualify for a small business loan, but it will vary depending on the lenders.
If your personal credit score is good/very good (670 to 799) or excellent (800 to 850), you’ll have even better odds. As with most financial products, the higher your credit score, the better interest rates and fees you’ll receive.
Lenders focus on your personal credit score when setting minimum credit score requirements, however, they may also check your business credit score. But lenders don't state any requirements for business credit scores.
Am I personally liable for a small business loan?
In most cases, you, as the business owner, are personally liable for a business loan. When you take out a business loan, you’ll typically need to put up collateral, which can range from business property and vehicles to personal assets like your own car or home. In the unfortunate event that your business goes bankrupt and you can't repay your loan, you may also lose personal assets.
Why trust CNBC Select?
At CNBC Select, our mission is to provide our readers with high-quality service journalism and comprehensive consumer advice so they can make informed decisions with their money. Every small business loan review is based on rigorous reporting by our team of expert writers and editors with extensive knowledge of loan products. While CNBC Select earns a commission from affiliate partners on many offers and links, we create all our content without input from our commercial team or any outside third parties, and we pride ourselves on our journalistic standards and ethics. See our methodology for more information on how we choose the best small business loans.
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Our methodology
To determine which small business loans offer the best financing terms, CNBC Select analyzed a dozen U.S. loans offered by both online and brick-and-mortar lenders. We narrowed down our rankings by only considering traditional loans, including term loans, equipment loans, commercial real estate loans, microloans and franchise loans. We also considered CNBC Select audience data when available, such as general demographics and engagement with our content and tools.
For this roundup, we didn’t evaluate SBA loans, business lines of credit, invoice factoring/financing, merchant cash advances since they either have a long application process (like SBA loans) or act differently than a traditional term loan, which gives you a lump sum that you pay back over a fixed period.
We compared each small business loan on a range of features, including:
- Minimum and maximum loan amounts
- Length of term
- Credit score needed
- Application requirements
- Streamlined application process
- Fund disbursement
- Customer support
- Better Business Bureau rating
- Customer reviews, when available
After reviewing the above features, we organized our recommendations by best for overall financing needs, same-day funding, no prepayment fees, microloans, low credit scores, Square users and borrowing high amounts.
The rates and fee structures for small business loans are subject to change without notice, and they often fluctuate in accordance with the prime rate. However, once you accept your loan agreement, a fixed-rate APR will guarantee that the interest rate and monthly payment will remain consistent throughout the entire term of the loan. Your APR, monthly payment and loan amount depend on your credit history and creditworthiness.
To take out a small business loan, lenders will conduct a hard credit inquiry and request a full application, which could require both personal and business proof of income, identity verification, proof of address and more. You'll likely also need to put up collateral, which can include business equipment, real estate or personal assets.
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