Best small business loans of June 2024
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
“Verified by an expert” means that this article has been thoroughly reviewed and evaluated for accuracy.
BLUEPRINT
Updated 1:49 a.m. UTC May 6, 2024
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You can use a business loan to cover most business expenses, including expanding your operations, buying new equipment or consolidating debt.
But running a business is already stressful — you don’t want to worry about financing on top of it. So we researched the best business loans of 2024 and put together resources to help you make the right financial decisions for your business.
OnDeck
Best business loans
- Credibly business loan: Best for poor credit.
- OnDeck business loan: Best for customer experience.
- American Express® Business Line of Credit: Best for lower annual revenue amounts.
- Fora Financial business loan: Best for large loans.
- National Funding business loan: Best for fair credit.
- OnDeck business line of credit: Best for fast funding.
- Balboa Capital business loan: Best for short-term loans.
- Fundbox business line of credit: Best for startups.
- Kapitus business loan: Best for established businesses.
- PayPal business loan: Best for online loans.
Why trust our business loan experts
Our team of experts evaluated hundreds of business loan products and analyzed thousands of data points to help you find the best fit for your situation. We use a data-driven methodology to determine each rating. Advertisers do not influence our editorial content. You can read more about our methodology below.
- 24 business loan lenders reviewed.
- 336 data points analyzed.
- 6-stage fact-checking process.
Our top picks for business loans in 2024
Fundbox business line of credit
Compare the best business loans
| BUSINESS LOAN PRODUCT TYPE | LOAN AMOUNTS | REPAYMENT TERMS | MIN. CREDIT SCORE | TIME TO FUND (AFTER APPROVAL) | |
|---|---|---|---|---|---|
Credibly business loan
| Loan
| $5,000 to $600,000
| 3 months to 2 years (for short-term loans) or 18 or 24 months (for long-term loans)
| 501
| As soon as the same day (for loans up to $100,000) or within 2 to 3 business days (for loans over $100,000 or if your state isn’t eligible for same-day funding)
|
OnDeck business loan
| Loan
| $5,000 to $250,000
| 3 months to 24 months (depending on term length)
| 625
| As soon as the same day (for loans up to $100,000) or within 2 to 3 business days (for loans over $100,000)
|
American Express® Business Line of Credit
| Line of credit
| $2,000 to $250,000
| 6, 12, 18 and 24 months
| 660*
| Within 1 to 3 business days after approval
|
Fora Financial business loan
| Loan
| $5,000 to $1.5 million
| 4 to 15 months
| 500
| Within 1 to 3 business days
|
National Funding business loan
| Loan
| $10,000 to $500,000
| 4 months to 5 years (depending on loan type)
| 600
| As soon as the next business day
|
OnDeck business line of credit
| Line of credit
| $6,000 to $100,000
| 12, 18 and 24 months
| 625
| As soon as the same day after approval
|
Balboa Capital business loan
| Loan
| $20,000 to $250,000
| 3 months to 2 years
| 620
| As soon as the same day
|
Fundbox business line of credit
| Line of credit
| Up to $150,000
| 12 or 24 weeks
| 600
| As soon as the next business day after approval
|
Kapitus business loan
| Loan
| $10,000 to $500,000
| Up to 5 years
| 625 (higher requirements for some loan types)
| As soon as the next business day
|
PayPal business loan
| Loan
| $5,000 to $150,000 ($100,000 maximum for first-time borrowers)
| 17 weeks to 1 year
| Does not disclose
| As soon as the next business day
|
*The required FICO score may be higher based on your relationship with American Express, credit history, and other factors.
Methodology
Our expert writers and editors have reviewed and researched multiple lenders to help you find the best business loan. Out of all the lenders considered, those that made our list excelled in areas across the following categories (with weightings):
- Loan cost: 20%
- Loan details: 30%
- Eligibility and accessibility: 20%
- Customer experience: 15%
- Application process: 15%
Within each major category, we considered several characteristics, including APR ranges, late fees and prepayment penalties, loan amounts, maximum loan terms, minimum credit score requirements, time in operation requirements and funding time. We also evaluated each provider’s customer support options and customer reviews.
What is a business loan?
A business loan — including either a term loan or line of credit — is a type of financing that’s reserved for qualified businesses seeking to improve upon their operations or grow their companies. These loans are offered by a variety of lenders, including online lenders as well as traditional banks and credit unions.
There are several types of business loans available, such as standard term loans (short and long term) and lines of credit as well as loans backed by the SBA. Certain kinds of business financing are also designated for specific purposes, like paying for new equipment or funding working capital.
Have a new business? Compare the best small business loan lenders for startups
How small business loans work
Like other types of loans, small business loans allow you to access the funds you need, which you’ll pay back to the lender along with interest and fees (if applicable). These loans can be term loans that are paid out as a lump sum and repaid in installments over time, or they can be revolving credit lines that you can repeatedly draw on and pay off.
In many cases, business loans come with shorter repayment terms compared to what you could get on a personal loan. While personal loan terms can range from one to 12 years (depending on the lender), terms on business loans are often limited to a maximum of a few years. One exception is SBA loans, which can sometimes come with terms as long as 25 years.
As with other loans, borrowers receive a lump-sum amount with business loans, and these loans typically have a fixed rate and a set repayment term. Repayment terms on business loans are often shorter than repayment terms on loans you’d get for personal purposes. It’s common to see business loans with 24- or 36-month terms, though the SBA does offer some loans with terms of up to 25 years.
Credibly business loan
Business loan rates forecast for 2024
Business loan interest rates have steadily increased since early 2022. The prime rate — which many business lenders use as a benchmark to determine loan rates — has more than doubled from 3.5% in March 2022 to 8.5% in July 2023. It has remained there as of May 2024. This rate is directly influenced by the federal funds rate, which the Federal Reserve manipulates to manage inflation.
Rates on business loans are anticipated to remain high through 2024. However, economists generally expect interest rates to start to decline toward the latter half of the year, albeit slowly.
Small business loan requirements
Eligibility criteria for small business loans can vary based on the type of loan as well as the individual lender. Some common elements of a successful application include:
- Personal and business credit history: You’ll typically need a good personal credit score (usually considered to be 670 or higher) or excellent business credit to qualify. Some of the best small business lenders also accept lower credit scores — for example, Fora Financial accepts scores as low as 500. However, bad credit business loans will likely also come with higher interest rates and fees.
- Minimum time in business: How much time your business must have been in operation will vary by lender. Some lenders accept a minimum of six months while others require at least two years or more.
- Minimum annual revenue: You’ll also need to show that your business is generating a minimum amount of revenue per year. Requirements usually range from $100,000 to $300,000, but some lenders accept lower revenue amounts than this — for example, the minimum amount for a PayPal business loan is only $33,300.
- Collateral: Some of the best small business loans are unsecured while others require collateral to secure the loan. In many cases, collateral will be your business assets, such as inventory or equipment. A personal guarantee is also often required — this is your promise as a borrower that if your business defaults, you’ll repay the loan from your personal assets.
How to apply for a small business loan
If you’re ready to apply for a small business loan, follow these steps:
- Check your credit. When you apply for a loan, the lender will check your credit to determine your creditworthiness. So it’s a good idea to review your credit reports and check your credit score beforehand to see where you stand. Several third-party companies also allow you to review your business credit report, such as Dun & Bradstreet as well as the credit bureaus Experian and Equifax.
- Determine how you’ll use the funds. Business loans are available for a variety of purposes, including working capital and equipment purchases. Determine how you plan to use the funds so you can apply for the right type of loan for your needs.
- Compare lenders and pick your loan option. Be sure to compare your options with as many lenders as possible to find the best business loan for your needs. Consider rates as well as loan amounts, terms, fees and eligibility requirements as you shop around. Several lenders allow you to prequalify with only a soft credit check that won’t hurt your credit, which can help you narrow your choices down. After you’ve compared lenders, choose the option that works best for you.
- Gather documentation. You’ll need to provide both personal and business documentation when you apply for a business loan, including business licenses, financial statements, tax returns, debt schedules (if any) and information regarding any collateral you’re using to secure the loan. Some lenders might also ask for a business plan or proposal to see how you plan to use the loan and verify your ability to repay it.
- Apply for the loan. Once you have your documentation ready, you’ll need to complete a full loan application. Many lenders offer an online application process, though you might still need to discuss your options with one of the company’s loan specialists to proceed.
- Get your funds. If you’re approved, the lender will have you sign for the loan so the funds can be disbursed. While some traditional banks and credit unions can take weeks or even months to process and fund loans, online lenders can be a faster option. Several of the best loans for small businesses from online lenders can be funded as soon as the same or next business day after approval.
Alternatives to private business loans
If a private business term loan or line of credit doesn’t seem like the right solution for your needs, you could also explore other financing options. Here are some alternatives to consider:
- Business credit cards: With a business credit card, you’ll have access to a revolving credit line that you can repeatedly draw on and pay off. Note that credit cards can’t be used for some business expenses, such as payroll, leases, inventory or vendors’ bills. But a credit card could come in handy for covering smaller, routine expenses, like purchasing supplies, paying for travel or buying a small piece of equipment.
- SBA loans: SBA loans are less risky for lenders as the Small Business Administration will reimburse them for a percentage of the debt if a borrower defaults. This means you could have an easier time getting approved, and you might also get a better interest rate. Keep in mind that you’ll typically need to provide collateral as well as a down payment, and the approval process for an SBA loan can be slower compared to getting a private loan.
- Invoice factoring: If your business is paid by invoices, this type of short-term funding lets you put an invoice-factoring company in charge of collecting payments in return for a fee. You’ll get 70% to 90% of the invoice amount from that company within just a few days — faster than waiting the typical 30 to 90 days to get paid. But you’ll also lose some of the money to interest and fees.
Frequently asked questions (FAQs)
Most SBA loans have a long application process and could take several weeks to fund. However, some have looser requirements and faster timelines.
For instance, it’s usually easier to qualify for an SBA microloan compared to most SBA 7(a) loans because the loan amounts are much smaller. And the SBA Express loan features an accelerated approval timeline, longer terms and lower down payment requirements compared to conventional loans.
The minimum personal credit score you’ll need to get approved for a business loan varies with each lender. Other details — like a solid cash flow track record and your collateral — could also factor into the lender’s decision. But in general, lenders typically require a good personal credit score. You might also need excellent business credit.
There are also some lenders that permit lower scores — for example, Fora Financial accepts scores as low as 500. However, bad credit business loans typically come with higher interest rates to offset the lender’s risk.
You can get a small business loan from many brick-and-mortar banks and credit unions, but online lenders typically offer lower interest rates and sometimes offer more flexible eligibility criteria. In general, when looking for the best loans for business, make sure to work with a reputable lender that provides a good deal on a loan that suits your needs.
How much you’ll be able to borrow depends on the type of loan as well as the lender. SBA loans, for example, range from as little as $500 up to $5 million, depending on the kind of loan you get.
Non-SBA loans have different loan amounts that are set by the lender. These can start as low as $2,000 and go up to about $1.5 million.
To qualify for an SBA business loan, you’ll need to meet eligibility requirements. Your business must:
- Be located in the U.S.
- Fit SBA size requirements.
- Show that it can’t get financing elsewhere.
- Be creditworthy.
- Show a reasonable ability to repay the loan.
You might not qualify for an SBA loan if your business doesn’t also have collateral, a business plan and strong credit. Additionally, the SBA disqualifies specific industries, including:
- Nonprofits.
- Financial institutions, like banks and credit unions.
- Passive rental businesses owned by landlords or developers who don’t actively use or occupy the assets that the loan proceeds would help to acquire or improve.
- Foreign businesses.
- Government-owned organizations.
- Multi-level marketing companies.
- Businesses involved in gambling.
- Businesses involved in speculative or illegal activities.
- Businesses with key stakeholders incarcerated, on probation or on parole.
Editor’s note: This article contains updated information from previously published stories:
Blueprint is an independent publisher and comparison service, not an investment advisor. The information provided is for educational purposes only and we encourage you to seek personalized advice from qualified professionals regarding specific financial decisions. Past performance is not indicative of future results.
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