Starting a business can be costly, especially if you require expensive equipment or need to do some hiring in your first year. Fortunately, some lenders offer small business loans that can help you get up and running.
Below, CNBC Select rounded up some of the best business loan lenders to help you get off the ground or maintain early operations. Whether you need a microloan or a secured loan, read on to find out which lender is right for you.
- Fast Funding: Get a decision as fast as 24 hours.
- Flexible Loans: Term, working capital, or real estate.
- Easy Apply: A simple, secure online application.
- 12 months in business
- $100,000 in annual revenue
- FICO 575
Terms apply.
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Best for microloans
Loans are geared toward borrowers, especially business owners, who are unbanked and have trouble qualifying for financial products.
- 0% interest and no fees
- No minimum time in business or annual revenue required
- No credit score requirement
- Can reach community of 1.6 million Kiva lenders
- Low lending limit
- Personal guarantee required
- Borrowers need to crowdfund from their network
Who's this for? Kiva offers microloans of up to $15,000, making this lender an accessible option for businesses that don't need to borrow a ton of money. To qualify, you must be over 18 years old and based in the United States. Your business can't be engaged in multi-level marketing, direct sales, illegal activities or financial investing. Your business also can't be in foreclosure, bankruptcy or under any liens.
Standout benefits: The microloans offered by Kiva come at a 0% interest rate, which is a big help to new businesses that want to save money. Kiva is a non-profit peer-to-peer lending platform, which is how they're able to offer 0% interest funding.
Best for fast approval
Offers many types of loans including long-term loans, working capital loans, business line of credit and merchant cash advance
- 500 credit score minimum
- Funds may be available within four hours
- User reviews praise customer service
- Prepayment discount available
- High monthly revenue required
- Potential for high factor rates
Who's this for? Credibly offers pre-qualification for a small business loan in just a few minutes, according to the lender's website. They also boast same-day funding in under 24 hours.
Standout benefits: This lender considers credit scores as low as 500. Credibly also typically requires six months in business and an average monthly revenue of at least $15,000, so while it may not be best for day one operations, it can still be useful in your first year of operating when you're still trying to tighten operations.
Best for large funding amounts
Offers many types of loans including small business loans and revenue advance
- Higher loan limits than many competitors
- Low minimum credit score
- Next-day funding available
- Prepayment discount
- Borrowers can increase their loan amount after repaying at least 60%
- Charges a factor rate rather than a traditional APR
- Daily/weekly repayment schedule
- 3% origination fee
Who's this for? Fora Financial offers term loans of up to $1.5 million, making it attractive to businesses that need a glut of capital.
Standout benefits: Fora Financial doesn't charge any fees or penalties for early repayment. Loans from Fora Financial can be used for almost any business expense across many industries, including retail, medical, hospitality, and construction.
Best for secured loan options
Greenbox Capital
Types of loans
Term loan, business line of credit, invoice factoring, merchant cash advance
Better Business Bureau (BBB) rating
A+
Loan amounts
$3,000 to $500,000
Terms
Not disclosed
Minimum credit score needed
Not disclosed
Minimum requirements
Must be in operation for at least five months
Terms apply.
Pros
- Funding amounts between $3,000 and $500,000
- Borrowers could get funded in as little as one business day
- Applicants get connected with a Funding Advisor to walk through funding options
- Options available for borrowers with lower credit scores
Cons
- Repayment terms for collateral loans may err on the shorter side
Who's this for? Greenbox Capital offers secured loan options, which can help applicants with less-than-ideal credit circumstances get funding and become a less risky borrower.
Standout benefits: Borrowers can get funded in as little as one business day. Greenbox Capital also offers different funding options including invoice factoring, a business line of credit and merchant cash advances.
What do I need to apply for a business loan?
You'll need some basic details, like your name, address, phone numbe, the industry you're in and the name of your business. Lenders commonly also require a business plan and bank statements.
Some lenders may have a more detailed requirements for documentation that may also include licenses and permits, personal and business tax returns and income statements.
Alternatives to startup business loans
If you can't qualify for a startup business loan (or don't think it's the right move), consider these alternative funding sources:
- Business grants: Grants provide you with funding that you don't have to pay back. The downside is that grants can be difficult to get since they require a robust application process and often take months to provide a decision. If you quickly need money, this isn't a good option.
- Business lines of credit: Lines of credit usually have lower funding limits and are revolving (similar to a credit card), but that also makes them easier to obtain than loans.
- Crowdfunding: A large number of people may provide you with small amounts of money to help you reach a fundraising goal. Keep in mind that many crowdfunding platforms charge a fee (such as a percentage of the total funds raised).
- Personal savings: Using your own money to bootstrap your business comes with risk, but it can help you avoid taking on debts that may be difficult to repay.
Small business loans FAQs
How long does it take to get a small business loan?
Funding time varies by lender. Most small business lenders can provide next-day funding or funding in just a few business days.
How do you apply for a small business loan?
To apply for a small business loan, you'll need to submit an online application to the lender of your choosing. Some lenders may allow you to submit an application at an in-person branch, if available.
Can I get a business loan with a 500 credit score?
It's possible to qualify and get approved for a business loan with a low credit score but you may be subjected to higher interest rates.
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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 and small business 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 startup business loans.
Our methodology
To determine which small business loans offer the best financing for business startup costs, CNBC Select analyzed a dozen U.S. loans offered by both online and brick-and-mortar lenders. For this roundup, we didn't evaluate 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 time 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
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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