You’ve got an excellent business idea, you know there’s demand based on your market research, and you have a plan to bring that idea to this market....
We help businesses of all types and sizes find the right source of financing for them. Browse the business loan providers and markets below to learn more about business financing for your specific need, whether it's new equipment, cash flow, lines of credit, and more.
Whether it’s to help with cash flow, pay for new equipment, or fund some other business-related expenses, business loans and startup business loans are designed to provide financial assistance for businesses as needed. Similar to other loan types, such as personal loans, business loans involve creating debt and then repaying it with interest.
Luckily, finding the right financing for your business’s needs has never been easier. The scope for borrowing has extended far beyond traditional banks to include a wealth of online lenders— providing businesses with a wider range of business loan options and, in some cases, looser requirements and more flexible terms.
Let’s take a look at a few of the most popular business loan types, important requirements that will get you qualified, and some of our favorite online lenders that can help get you started.
“Business loan” is something of an umbrella term and encompasses a whole range of financing types, such as SBA loans, cash advance loans, lines of credit, invoice financing, and more to cater to a borrower’s specific needs.
Keep in mind that the below business loan amounts, terms, and requirements can all vary depending on the lender and your business’s financial profile.
Before diving into the various business loan types, what is a small business loan, anyway, and how does it work?
A small business loan, also referred to as a commercial loan, is a powerful financial tool that can help businesses improve their cash flow, replenish inventory, update equipment, and so much more to keep a business constantly growing and thriving.
Getting a business loan is similar to how you would get a personal loan—find and compare lenders to secure the best small business loan, pay attention to terms and APR, and submit an application. One key difference when applying is the requirements and qualifications needed for a small business loan, which we’ll review for each type.
A Small Business Administration (SBA) loan is a type of small business loan that is less of a risk to the lender since it’s partially guaranteed by the government, meaning better terms for the borrower. While the SBA used to only work primarily with traditional banks, they now work with a large network of approved lenders who will lend that money to small businesses.
Also known as merchant cash advance loans, this type of business loan is actually not quite a loan. How it works is a lending institution will give you a cash advance in exchange for a piece of your future sales.
As a result of this setup, it’s common to see lower payments when sales are low and higher payments when sales are high. Typically, the lender will determine a factor rate based on a few different risk factors (such as credit score and business performance). This will be the fees you pay on a cash advance loan.
A line of credit is another popular and flexible method for businesses to receive financing. It allows you the ability to borrow up to a certain limit and pay interest only on the money you actually borrow. It works very similarly to a credit card, which lets you draw money and repay it as you go with interest.
The difference between the two is that lines of credit often come with much higher credit limits and lower rates than credit cards. Additionally, credit cards are always unsecured whereas with a line of credit, it can be secured or unsecured.
A business term loan is a lump sum a lender will provide you which will be paid back monthly and with a fixed interest rate. The “term” in business term loans refers to the repayment term length and typically ranges from one to five years.
This loan type works the same way a personal loan does, but it’s designed specifically for businesses in that it allows a borrower to limit their personal liability in the case of default or business hardship. It also helps a company build financial credibility.
With that said, business term loans are harder to qualify for than a traditional personal loan. They will sometimes require collateral, a minimum number of years in business, and a minimum annual revenue.
Also known as business factoring loans, invoice factoring is a means by which businesses can improve their cash flow by borrowing money against the amounts due by clients. Instead of having to wait idly by for money to come in from client invoices, businesses can be proactive, continue reinvesting in their operations and move forward through invoice financing.
This form of short-term borrowing works most commonly through factoring. This is where a business will sell their unpaid invoices to an invoice factoring company who will then pay them anywhere between 70% – 85% of the amount up front. Once the factoring company receives the invoice money from a client, they will remit the difference to the business who will have to pay a fee or interest for the service.
A construction loan is a short-term loan designed for funding renovations and homebuilding. It works a bit differently from a traditional loan in that the lender sends the money directly to a contractor rather than the borrower. Another difference is that the funding is sent in installments–rather than as a bulk amount–as construction milestones are reached. Once renovations and building are complete, the loan can be paid in full or transformed into a permanent mortgage.
If you’re considering taking out a construction loan, be aware that there are a few different types available:
This loan types cover a few things, such as land, labor, materials, plans, permits, fees, closing costs, contingency reserves, and interest reserves.
Kabbage has been around for over a decade providing qualifying businesses with lines of credit loans of up to $250,000. Instead of worrying about interest, businesses will pay a flat monthly fee rate—an amount that is pre-established and based on your business’s performance.
This is a great option for borrowers looking for fast cash and who may have poor credit and need a bad credit business loan. There is no minimum credit score, but minimum qualifications include being in business for 1 year or more and having an annual revenue of $50,000.
Lendio is a business financing platform that matches borrowers with their large network of reputable lenders. This makes searching for a business loan quick and easy, with a variety of loan types available, including business line of credit, SBA loans, short-term loans, merchant cash advance, and more.
Borrowers can apply for free and without harming their credit score. The preliminary application only takes 10-15 minutes and will immediately show you what you qualify for.
OnDeck is an online lender since 2007 that has served over $12 billion to businesses. They provide two business loan types for borrowers: term loans and lines of credit. Their term loan is a great option if you need fast cash. It requires a 600+ credit score, in business for 1 year or more, and at least $100,000 in annual revenue.
Their lines of credit loan has the same requirements but is a better option for businesses with unreliable cash flow and who need something more flexible.
If you’re new to shopping around for business loans, you should be aware that what it takes to qualify isn’t quite the same as other loan types, such as personal loans. Business loans often come with their own set of requirements, such as:
Business loans and all the different types can be tricky to navigate for new borrowers, but the variety of options available make it easier than ever for business owners to get what they need. Instead of staying tethered to the limited products available from traditional banks, venture out and see what kind of financing and rates you can get with online lenders to ensure you get the best business loan.