5 Best Small Business Loans of 2023

Are you planning on building up your inventory? Do you need some extra cash to purchase new equipment? A small business loan might be just what you need to get the necessary funding to cover the expenses that arise from running your business.

Small business financing is available through online lenders, traditional banks, credit unions and even peer-to-peer lending platforms. There are also a few different types of business loans. With this in mind, we reviewed some of the best small business loan lenders of 2023 and prepared a guide where you can find more information on how to qualify so you can get the funding you need, when you need it.

Our Top Picks for Best Small Business Loans

• Bluevine - Best for Lines of Credit
• OnDeck - Best for Prepayment and Loyalty Benefits
• Fundbox - Best for Cash Flow Predictions
• Biz2credit - Best for Business Insights
• Lendio - Best for Startup Loans

Best Small Business Loans Reviews

Why we chose it: Bluevine’s quick funding time — between one and three business days — and a higher credit line limit make it our top loan provider for lines of credit. Bluevine customers can get up to $250,000 in revolving credit.

Bluevine offers business checking accounts and lines of credit. A line of credit can provide your small businesses with quick funding you can continue to draw from as you repay. That said, it is important to point out that the Bluevine line of credit comes with high annual percentage rates (an estimated 20% to 50% APR), and payments must be made weekly or monthly.

To qualify for a Bluevine line of credit (issued by Utah-based Celtic Bank), your business must be an LLC or corporation that’s been in operation for at least 24 months. The business must also make at least $40,000 in monthly revenue and have a personal credit score of at least 625.

Business owners interested in same-day funding should note that Bluevine charges a $15 fee for direct wire transfers. ACH transfers are free, but the funds may take up to three days to reflect in your account.

Why we chose it: OnDeck rewards its customers' loyalty and financial responsibility with prepayment and loyalty benefits. The company will waive the remaining interest on your existing loan if you renew your contract, take out a new loan or pay your loan off early.

Existing customers who take out a new small business loan with OnDeck may benefit from the lender’s loyalty perk, which waives the remaining interest of the previous loan (provided they’ve paid down at least 50% of their current balance).

OnDeck also offers an attractive prepayment benefit. If eligible, business owners could waive the remaining interest payments on a loan they’ve paid off before the end of its term. Business owners who pay off their loans early and do not qualify for the prepayment benefit would still be responsible for 75% of the remaining interest. Moreover, the prepayment benefit comes with a higher interest rate, so they could end up paying more for what they borrow.

Another important consideration is that OnDeck requires customers to sign a personal guarantee and agree to a blanket lien on their business assets. This means you would be liable to repay your business’ debts if your company defaults on the loan.

To qualify for a short-term loan with OnDeck, you must have a minimum FICO score of 625, make at least $100,000 in annual revenue and have been in business for at least one year — longer than other lenders require. However, the company claims their average customer has been in business for over three years, makes $300,000 in annual revenue and has a credit score of 650 or higher.

Applicants with less than stellar credit and lower annual revenue streams may want to look elsewhere, especially considering OnDeck’s high average rates (62.1% for term loans and 48.9% for lines of credit).

Why we chose it: Fundbox Insights provides cash flow predictions based on transaction history for qualifying businesses. This feature offers future revenue projections and sends alerts when cash flow drops below a predetermined threshold.

Fundbox offers free access to an Insights feature that lets you connect your compatible business accounts to see cash flow predictions based on historical data. You can also simulate business scenarios by adding potential future transactions and get alerts if your cash flow drops below the predetermined threshold. On the downside, the Insights feature is still in beta and may not be available to all companies.

Fundbox does not charge prepayment penalties or origination fees. It does, however, charge draw fees on its lines of credit but extends a three-day grace period for missed payments for this particular funding option.

To qualify for a loan or line of credit with Fundbox, your business must have been using a compatible business bank account for at least three months before applying for the loan. You also need to have been in business for at least six months, a minimum credit score of 600 and at least $100,000 in annual revenue.

Why we chose it: Biz2credit is an online business loan marketplace that stands out for its BizAnalyzer feature. This tool gives business owners a scorecard based on the business's creditworthiness and financial health while also providing personalized feedback and financial recommendations.

Biz2credit is an online marketplace that matches small business owners with a variety of funding options based on the profile of the business and its needs. The BizAnalyzer tool provides business owners with a financial scorecard based on how well their business performs against competitors and offers personalized financial recommendations to increase performance.

Biz2credit also offers a broad selection of financing options from banks and online lenders, including special lending programs for women, minorities and veterans. The lending platform states you can apply in as little as four minutes, get approval in just 24 hours and obtain funding in as fast as 72 hours. Of course, this will depend on the lender and loan type you select, as will specific qualification requirements.

To qualify for a working capital loan through Biz2credit, you will need a minimum credit score of 575, and your business must be at least six months old and have a minimum of $250,000 in annual revenue. For term loans, you’ll need the same minimum revenue but a credit score of at least 660 and to have been in business for at least 18 months.

Why we chose it: Lendio is among the few marketplaces that offer startup loans with competitive rates and terms of up to 25 years.

As a marketplace, Lendio offers a broad range of loan options to choose from. Chief among them are startup loans, which not all lenders offer and can be instrumental in building a new business from the ground up. You can obtain a startup loan through Lendio for amounts of up to $750,000, terms of up to 25 years and rates ranging from 0% to 17%.

Another advantage of working with Lendio is that the marketplace offers loans from over 75 different lenders, including Bank of America, American Express, On Deck Capital, Mulligan Funding, Funding Circle and Fundbox, to name a few. Borrowers can apply online in as little as 15 minutes and obtain funding within 24 hours, depending on the type of funding.

While qualification requirements will vary by lender and loan type, startup loans require a minimum credit score of 660. The company must also have been in business for at least six months. Depending on the lender, collateral in the form of business or personal assets may be required.

Other small business loan companies we considered

When researching small business lending, we found countless options, especially in the online lending sphere, and it wasn’t possible to include them all in our top picks. You’ll find short reviews of our “honorable mentions” below, as well as the pros and cons of each lender and why they didn’t make it to our top picks.

Businessloans.com

Using a proprietary algorithm, Businessloans.com matches business owners to the right lenders and funding, based on the type of business, loan amount and loan purpose. Funding options include loans for expansion, equipment purchasing, accounts receivable, inventory, marketing, payroll and working capital. Funding through Businessloans.com is capped at $3 million and funds may be available as soon as the next day.

Why it didn’t make the cut: Businessloans.com lacks information about its loan options and the borrower requirements of its partner lenders. The FAQ section was also sparse and didn’t offer additional information regarding the platform and what users can expect from the application and matching process.

National Funding

National Funding features a simple online application and fast access to funds. In addition, the lender uses alternative credit data to evaluate businesses with less than stellar credit and has an entire section with information on how to improve your chances of approval for a small business loan when you have bad credit. Finally, National Funding’s early payoff discount offers 6% off for equipment financing customers and 7% off for working capital borrowers who pay off their remaining balance within 100 days of signing their contract.

Why it didn’t make the cut: Business owners may find that the company’s website lacks information compared to other lenders. National Funding does not disclose average rates, fees or additional qualification requirements. The lender also has a very high annual revenue requirement.

Quickbridge

Quickbridge, owned by National Funding, offers business owners term loans and equipment financing. Applicants don’t have to put up collateral and don’t need a perfect credit score to apply — Quickbridge’s credit scoring model considers time in business and average monthly revenue in its credit decision. After receiving your online application, a loan specialist will work with you to find the right funding option. As with other online lenders, funds may be available within 24 hours after approval.

Why it didn’t make the cut: Quickbridge’s website has very little information about borrower requirements, loan terms and funding options. Business owners will need to apply for prequalification (which includes a soft credit pull) and get in touch with a loan specialist to see loan terms and rates.

Kabbage

Kabbage, an American Express company, offers business lines of credit as well as cash flow management services. Business owners can apply for up to $250,000 in credit and choose between three repayment terms (6, 12 or 18 months). That said, borrowers are encouraged to choose the shortest repayment term, since Kabbage’s monthly fee increases according to the term length. To qualify, business owners must have a minimum FICO score of 640 and a minimum monthly revenue of $3,000. The business must be at least a year old as well.

Why it didn’t make the cut: Kabbage didn't make it into our top picks because its sole funding option — a line of credit — requires businesses to be active for at least a year before applying, unlike Bluevine, which accepts businesses that have been open for at least six months.

Kiva

With Kiva, Loans are funded through a system similar to crowdfunding, where individuals choose to lend you a small amount of money (in increments of $25 or more) until you reach your funding goal. Once you reach the goal, the funds are disbursed, and you can begin repaying the loan over time, free of interest. After receiving their investment back, investors can reinvest in other businesses or withdraw their funds.

Why it didn’t make the cut: Despite being an excellent alternative for people with no credit score or access to capital, Kiva didn’t make it to our top picks because its loan options are limited to borrowers who are excluded from other financing options or have a significant social impact in their communities.

Funding Circle

Funding Circle is a peer-to-peer lending platform that matches small businesses in need of funding with individual investors. The platform offers funding in as little as 48 hours for term loans and same-day funding for lines of credit. Business owners who meet the lender’s eligibility requirements can borrow up to $500,000 and select a repayment plan of up to seven years. The business line of credit is capped at $250,000, and unlike other lenders, there are no monthly maintenance fees.

Why it didn’t make the cut: Funding Circle’s underwriting guidelines may be hard to meet. The lender has a high credit score requirement for all loan types (660) and applicants must have been in business for a minimum of two years (other lenders require six months to a year).

Small Business Loans Guide

There comes a point when a small business requires additional capital to continue growing. In the past, such funding would come from traditional banks or credit unions but new alternatives include online lenders and lending marketplaces.

In this guide, we walk you through the different types of small business loans, how they work and how to qualify for them. We also dedicate a section to business loans backed by the U.S. Small Business Administration (SBA). These loans have caps on interest rates, long repayment terms and more lenient credit requirements (compared to traditional bank loans).

How do small business loans work?

Small business loans provide funding to small business owners, whether they need capital to expand, cover payroll, purchase real estate, acquire new equipment or inventory or meet other day-to-day expenses.

The SBA defines small businesses as those with 500 employees or less. Other metrics, such as business revenue, will depend on the industry. Similar to personal loans, small business loans have minimum qualification requirements that vary by lender and loan type. In general, however, small business owners will need to have a good credit score and evidence of business revenue to qualify.

There are many different funding options available to small business owners, and these can come from several sources:

• Bank lenders – Traditional banks typically have lower rates but more stringent qualification requirements. Funding times may take longer as well.

• Non-bank online lenders – Online lenders offer quick funding times and have more flexible qualification requirements. However, rates tend to be much higher than those offered by bank lenders.

• Peer-to-peer lending – Lending platforms connect business owners to potential investors. This type of lending is riskier for investors since they may not recoup the money if the borrower defaults. Borrowers, on the other hand, may find lower interest rates and better loan terms.

Types of small business loans

Business loans is more like a catch-all term for a variety of business financing products. The term includes loans, lines of credit, merchant cash advances and invoice factoring. The best funding solution depends on the type of business, the purpose of the loan, the owner’s credit profile and the business's financial history.

Commercial real estate loans

Commercial real estate loans are used to purchase or renovate commercial property. Typically, lenders require business owners to occupy at least more than half of the property to qualify for this type of loan.

Invoice factoring

With invoice factoring, you sell your outstanding customer invoices to a factoring company at a discount. The company will give you a portion (say 90%) of the total outstanding amount and then collect payment directly from your customers. Once it has collected payment from your customers, the factoring company will release the rest of the funds to you, minus a factoring fee.

Equipment loans

Equipment loans are commercial loans that allow you to buy or lease the equipment you need without putting any money upfront. These loans use the equipment itself as collateral; if you can’t repay the loan, the lender will seize your equipment.

Business lines of credit

Business lines of credit are revolving loans, which means more funds become available to you as you repay what you borrow — similar to a credit card. Lines of credit are a good alternative for companies that need funds quickly to cover emergency expenses. You pay interest on what you borrow, and repayments are scheduled daily, weekly, or monthly.

Term loans

Term loans are disbursed as lump sums and paid over a predetermined period, also known as term. Term loans can have fixed or variable interest rates and repayment terms of up to five years.

Merchant cash advances

A merchant cash advance allows you to get a lump sum amount in exchange for a percentage of your future credit and debit card sales. You can get same-day funding with a merchant cash advance, which makes this a great option for emergencies. However, MCA rates can be extremely high, and repayments must be made daily or weekly.

Franchise loans

Franchise loans allow you to get upfront financing to cover franchise fees, legal fees, real estate costs and other day-to-day expenses related to becoming a franchise.

How to get a small business loan

When looking for small business funding, consider the following tips.

1. Compare interest rates

Shop around and compare funding options from different lenders to get the lowest rate. Keep in mind that revolving loans, business credit cards, accounts receivable financing and merchant cash advances can have higher interest rates than other funding options. Additionally, non-bank online lenders tend to offer much higher rates than banks.

2. Look into fees

Take into account any fees associated with the lender or the loan type. Most lenders will charge an origination fee, yet many will waive prepayment penalties and closing fees. Other fees may include funding, opening, closing, draw, maintenance and wire transfer fees.

3. Prepare to apply

To qualify for a small business loan, you will need a good business or personal credit score (rates of 660 or above are preferable) and a business checking account. You will also need to meet a minimum revenue requirement (most online lenders require at least $100,000) as well as business, legal and financial documentation:

• Loan application form
• Evidence of business history
• Business plan
• Business credit report
• Personal and business tax returns
• Bank statements
• Accounts receivable and accounts payable
• Collateral in the form of business or personal assets
• Legal documents such as articles of incorporation

Where to get a small business loan

You can get a small business loan through a bank (also known as a traditional lender), a non-bank online lender or a credit union.

Another form of lending that’s become popular for small businesses is peer-to-peer lending.

Traditional lenders

The term “traditional lender” typically refers to established brick-and-mortar banks. These institutions generally offer business loans with lower rates as well as access to a professional banker or loan officer at a local branch.

The downside to working with traditional lenders is that most require a good credit score and collateral. Borrowers will also have to go through more paperwork and a longer wait time before funds are disbursed.

Credit unions

Unlike banks or online lenders, credit unions are member-owned financial institutions. These generally provide the same services as banks and are known to offer financial products with lower interest rates and lower transaction costs.

Many credit unions are also certified as Community Development Financial Institutions (CDFI), a designation given to lenders that promote economic growth for individuals, organizations and businesses in underserved communities. In fact, credit unions are the second-largest group of CDFIs in the United States, according to the list of certified institutions published in 2021.

If working with a credit union interests you, know that you’ll have to meet membership requirements and they may have a smaller branch network.

Online lenders

Business owners may seek funding through online servicers (also known as non-bank lenders). These companies offer multiple financing options issued by a partner bank or financial institution. Business owners can complete the application and loan processing online and receive funds within a few days. Online lenders tend to have flexible eligibility requirements, which may work in favor of borrowers who won’t qualify for business loans elsewhere.

However, online lenders set higher interest rates than traditional banks or credit unions and lack in-person customer service. The latter may be a dealbreaker for business owners who prioritize building a relationship with their bank and getting personalized customer support.

P2P loans

Peer-to-peer loans are funded by individual investors as opposed to lending institutions. These loans are available through P2P lending platforms that act as intermediaries to match investors with qualifying borrowers.

SBA loans and how they work

The SBA backs small business loans provided by traditional banks by covering a portion of the loan if the borrower defaults. Since there is less risk for lenders, rates for SBA-backed loans are more competitive and may feature better terms.

For example, during the Covid-19 pandemic, the SBA extended a number of relief programs to help small business owners affected by the health crisis. In addition to deferring principal and interest payments for disaster loans, the SBA created the Economic Injury Disaster Loan (EIDL), the Shuttered Venues Grant and the Paycheck Protection Program (PPP). Although applications for these programs are now closed, eligible small business owners can still apply for PPP loan forgiveness.

It’s important to note that the SBA does not lend money directly to small businesses unless they are located in a declared disaster area. Instead, the SBA sets lending guidelines for the lenders it partners with, including banks, community organizations and microlenders.

Many SBA loan programs also require businesses to have the appropriate insurance policies in place. If you’re applying for an SBA loan and you’re missing insurance coverage, check out our list of the best small business insurance companies.

Types of SBA loans

The following are some common types of SBA loans:

SBA 7(a) loans: The most common type of small business loan. This loan is best suited for real estate acquisition, yet can also be used for short- and long-term working capital, furniture and supplies, acquisition and expansion.

Real Estate and Equipment loans (CDC/504): A loan that provides fixed-rate financing of up to $5 million to promote business growth and employment development. Borrowers can also use funds to purchase land, build facilities, obtain equipment and fund renovations. They may not be used as working capital, to pay or refinance debt, or for investments or rental properties.

Microloans: A loan designed to assist small businesses and specific non-profit childcare centers. There are microloans available for up to $50,000. This type of loan can be used as working capital and to acquire supplies, equipment, furniture and inventory.

Disaster loans: Low-interest loans offered to small businesses located in declared disaster areas. Disaster loans can be used to repair or replace real estate, personal property, machinery, equipment, inventory or business assets.

Difference between SBA loans and other small business loans

Small business loans guaranteed by the SBA have lower down payments, flexible requirements and, in some cases, do not require collateral. However, it may take up to three months for you to receive an SBA-backed loan.

The SBA guarantees loans for amounts between $30,000 and $5 million, with annual percentage rates typically ranging from 6%to 13%. The actual rate will depend on the loan program, loan amount and repayment term. SBA loans are best suited for long-term investments, buying real estate or equipment, purchasing other businesses and refinancing existing loans.

Business credit vs. Personal credit

When applying for a business loan, lenders will look at your business credit score as well as your personal credit score. While these scores are different, both measure creditworthiness and the ability to repay loans.

The table below shows a summarized comparison between the two:

Business credit	Personal credit
Measures the creditworthiness of your business	Measures your creditworthiness as an individual
Scored from zero to 100	Scoring ranges from 300 to 850, based on your personal credit history
Identifies the creditor by the Employer Identification Number (EIN) of the business	Identifies the creditor by their Social Security Number
Reported to commercial credit bureaus like Dun & Bradstreet, Experian and Equifax	Reported to the three major credit bureaus, Equifax, Experian and Transunion
Business credit errors or issues are harder to resolve and agencies aren’t obligated to respond	Consumer credit laws afford legal protections such as the right to refute incorrect entries

Since most business lenders require you to have solid personal credit to qualify, consider improving your credit score before applying for a loan.

You can improve your credit on your own at no cost or pay for help from the best credit repair companies.

If you need financial assistance now and don’t have time to work on credit repair, take a look at our selection of the best loans for bad credit.

How We Chose the Best Small Business Loans

To compile this list of the best business loans and lenders for 2023, we considered the following:

• Easy application process. We looked for lenders offering a quick and simple online application, especially those offering same-day approval.

• Fast funding times. Our top lenders provide funding in as little as 24 hours and as much as three days after approval.

• Flexible qualification requirements. We gave precedence to lenders accepting credit scores around 660 or below, between 6 and 12 months in business and annual revenue of less than $200,000.

• Variety of funding options and high loan amounts. With few exceptions, we favored lenders offering a variety of funding options and higher-than-average loan amounts.

Summary of Money’s Best Small Business Loans of 2023

• Bluevine - Best for Lines of Credit
• OnDeck - Best for Prepayment and Loyalty Benefits
• Fundbox - Best for Cash Flow Predictions
• Biz2credit - Best for Business Insights
• Lendio - Best for Startup Loans