Find the Best Small Business Loans for You

Not sure where to start? Take a look at our guide.

SBA Loan

SBA loans are government-guaranteed term loans. The guarantee allows SBA lenders to offer low-interest rate loans to business owners who might not qualify for a bank loan.

Maximum Loan Amount

$5K - $5M

Loan Term

5 - 25 years

Interest Rates

Starting at 7.75%


As fast as 2 weeks

See if you qualify

Business Term Loan

Just like with a traditional bank loan, with a traditional-term business loan, you are lent a lump sum amount upfront, which you pay back (along with fees) over a set period of time.

Maximum Loan Amount

$25K to $500K

Loan Term

1 - 5 years

Interest Rates

7 - 30%


As fast as 2 days

See if you qualify

Business Line of Credit

With a business line of credit, you can borrow up to a maximum credit limit and only pay interest on the amount of capital that you borrow from your credit line.

Maximum Loan Amount

$10K to over $1M

Loan Term

6 months to 5 years

Interest Rates

7% - 25%


As fast as 1 day

See if you qualify

Invoice Financing

Invoice financing lets you sell invoices to a lender, who fronts you a portion of the invoice amount. The remaining percent (usually 20%) is held until the invoice is paid.

Maximum Advance Amount

Up to 100% of invoice value


Until the customer pays the invoice

Factor Fee

8 - 30%


As little as 1 day

See if you qualify

Startup Business Loan

Startup loans offer newer businesses capital to grow. Business credit cards, lines of credit, and equipment loans are great startup loans if you have strong personal credit.

Maximum Loan Amount


Loan Term

6 months to 4 years

Interest Rates

7.9 - 19.9%


As fast as 2 weeks

See if you qualify

Equipment Financing

With equipment financing, the lender will front you cash to help purchase the equipment outright. You then pay back the total amount lent, plus fees, for a set period of time.

Maximum Loan Amount

Up to 100% of equipment value

Loan Term

Expected life of equipment

Interest Rates

8 - 30%


As fast as 2 days

See if you qualify

Short-Term Business Loan

With a short-term small business loan, you are lent a set amount of capital upfront, which you quickly pay back (along with fees) over a short period of time.

Maximum Loan Amount

$2.5K - $250K

Loan Term

3 to 18 months

Interest Rates

Starting at 10%


As fast as 1 day

See if you qualify

Merchant Cash Advance

With merchant cash advances, a financing company fronts you a lump sum of capital, which you repay (plus their fee) with a set percentage of your daily credit card sales.

Maximum Advance Amount

$2.5K - $250K


Paid daily via your merchant account

Factor Fee

1.14 - 1.18

Time to Funding

As little as 2 days

See if you qualify

Personal Loan for Business

Personal loans can actually be helpful for newer businesses that don’t have any financial history. Plus, personal loans can have lower rates than business loans.

Maximum Loan Amount


Loan Term

3 to 5 years

Interest Rates

5.99 - 36% APR


As fast as 1 day

See if you qualify

How to Find and Qualify for the Best Business Loan

With so many small business loans available to you these days, where do you get started? What loan product is a good option for you, and how do you qualify for it? We’re here to walk you through the whole business loan process—from start to finish.

Want to read this later? Download the complete guide.

Identify What You Need

  • What are you planning on using the funds for?
  • What type of business loan could be best for you?
  • What can you actually afford?

What do you need a small business loan for?

The first step of any business loan search is to determine what you need the financing for.

From bank loans, to inventory financing, to merchant cash advances... There are a lot of different types of small business loans on the market. Each loan out there serves a different set of business goals.

From bank loans, to inventory financing, to MCAs… There are a lot of different types of small business loans on the market. Each loan out there serves a different set of business goals.

Need working capital to finance regular business expenses? A traditional business line of credit could be a good option. Need to finance past due invoices? Invoice financing is the perfect loan for your business.

Some common business financing needs are:

  • To start your business
  • To quickly take advantage of a new business opportunity
  • To expand your business
  • To keep a cushion on your cash flow
  • To manage your daily expenses
  • To finance some equipment or inventory purchases
  • To purchase commercial real estate
  • And more

Pinpoint why you need the capital, and filter your search for the best small business loans to fit that goal.

What type of business loan could be best for you?

A business owner’s access to small business loans has changed a lot in the last 10 years. Traditional banks and credit unions aren’t the only lenders in the small business lending industry anymore, and loan types have diversified beyond just term loans and lines of credit. From 2015 to 2017, online lenders funded nearly $10 billion in small business loans, and show no signs of slowing down.

These days, these online lenders offer are many different types of business financing methods. Here are some of the most common you’ll find:

Some common business financing needs are:

  • Business term loans
  • Business lines of credit
  • Short-term loans
  • SBA loans
  • Invoice financing and factoring
  • Equipment financing
  • Merchant cash advances
  • Purchase order financing
  • Inventory financing
  • Commercial real estate loans
  • Microloans
  • Personal loans for business
  • Business credit cards

It’s important to note that one loan type could better fit your business financing needs than another could. For instance, if you invoice your customers and find yourself frequently running into cash flow issues, bridging the gap between when you provide your services and when you get paid with invoice financing or factoring could be the perfect small business loan option for you.

On the other hand, if you’re making a fixed investment that you know will pay off for your business, a lump sum loan (like a business term loan or short-term loan) could be the best type of business financing for you.

In the end, it comes down to knowing what options are available. Bank loans often offer the most competitive business loan interest rates, but a different loan product from online lenders could be more conducive to your needs.


What can you actually afford?

Once you’ve determined why you need the small business loan and what types are available, the next step is to think through how much financing you need—and most importantly, how much small business loan you can realistically afford.

One of the first questions online lenders will ask you when you start your search for small business loans is “How much are you looking for?”

Yes, every business owner would love a cool $5 million. But instead of thinking of this question as how much you want or need, think along the lines of what you can actually afford. You don’t want to take on more debt than your business can handle. If you don’t know the answer to that question, follow these steps.

Step 1

Calculate Your Debt Service Coverage Ratio

Debt-Service Coverage Ratio Calculator

The best way to determine the small business loan payments you can afford is to calculate your debt service coverage ratio. This is the number lenders will use to see how much cash you have to service your debt. This is also a number you can use to make sure you are comfortable with any potential debt payment. Your debt service coverage ratio is simply:

Cash Flow / Loan Payment = DSCR

You can calculate this on a monthly or annual basis. Here’s how it works.

On average, how much cash flow (sales minus expenditures) do you have coming into your business each month? Let’s say it’s $3,000. And how much do you project your monthly loan payment will be (both principal and interest)? Let’s say $1,000. This means you would have a debt service coverage ratio of 3, which is healthy!

All lenders are going to want to see that you have a DSCR of at least 1. Anything lower than 1 shows that you don’t have the cash flow on hand to make your loan payments.

However, most lenders will require that you have a DSCR of at least 1.5 or greater. But, don’t forget, you should use this ratio for yourself too! What number are you comfortable with? Decide now. Let’s say it’s 2. Now, take your current monthly cash flow, divide it by 2, and use that number as you shop. Aim to find a loan that will allow your total monthly loan payment to be equivalent to that amount.

Step 2

Perform a Small Business Loan Performance Analysis

It is important to remember that the reason you are taking out a small business loan is to invest in your business.

Before taking on the debt, you need to make sure that you will in fact have a return on this investment. Even the best business loan on the market isn’t valuable to you if it doesn’t bring some sort of return to your business.

Can you safely say that this debt will grow your business?

It’s not an easy question to answer, so a great thing to do before committing to a loan is forecasting loan performance. By running a loan performance analysis, you can see how this small business loan will financially impact your business. It is also a great way to ensure you aren’t taking out too large (or too small!) of a loan.

Step 3

Write Down Your Ideal Loan Payment

Now that you’ve taken a look at how small business loans can financially impact your business, and how to calculate your debt coverage ratio, decide on a rough estimate of a total monthly loan payment you’d be comfortable with. Keep this number close as you start your search.

See if I qualify

How to Qualify for a Small Business Loan

  • What is your credit score?
  • How long have you been in business?
  • What is your annual revenue?

The role credit plays in small business loans

Believe it or not, your personal credit score is one of the most important parts of the financing application, and it has a huge impact in getting the best funding option for you. The way lenders see it is that they are lending money to the small business owner, so they want to ensure that you’ve got a strong history of acting wisely when someone has given you “credit.”

The better your credit score, the better your chances of your securing affordable small business loans.

A great thing to do before you apply for a small business loan is to pull your own report and check your credit score. You can do so for free at (Be wary of any other site that makes you pay!) By pulling your report, you now know exactly what lenders will be looking at.

What credit score will you need to qualify for a business loan? Well, it depends on the loan you’re applying to.

Generally speaking, the longer-term and lower-rate small business loans will require the highest personal credit score. These are products like SBA loans, medium-term loans, and some business lines of credit.

On the other hand, borrowers with poor credit will have an easier time qualifying for smaller, shorter-term products, like short-term loans, merchant cash advances, and some smaller business lines of credit.

In the end, lenders will want to see a credit score of over 550, but you will receive the best business loan offers if your personal credit score is higher, say over 620 or preferably 640.

How to Analyze Your Credit Report

Have your report in hand?

The first thing you need to do is check your report for errors. The chance that you have an error in your report is more likely than you might think: 1 in 5 Americans have an error in their personal credit report.

There could be things on your report that aren’t correct or even applicable to you that are bringing down your personal credit score—and hurting your chances of qualifying for personal and business credit. This could be things like:

  • Erroneous accounts or credit lines you never opened
  • Erroneous judgements or collections
  • Accounts, judgements or collections that were satisfied but are still showing as outstanding
  • Judgements or collections you never knew about

To get this information removed, you need to first verify that the information is in fact erroneous.

If it’s a collections matter, you could start by tracking down the collection agency and asking them to let the credit bureaus know you’ve satisfied the debt. Or, if it is an unknown outstanding debt, pay it off and then ask the agency to contact the bureaus. For other matters, contact the credit bureaus directly. Send a dispute letter along with the supporting documents needed to verify the claim. The credit bureaus are obligated to investigate these matters and will usually get back to you with a result in around 30 days.

If you don’t find errors on your report, but you think you can stand to improve your credit history, try to identify the areas where it needs the most work.

As you can see, your payment history has the biggest impact on your FICO score. The best place to start improving your credit score is to make sure you’re paying all your bills on time!

Here’s how to improve your credit score within the next year.

How is your FICO score calculated?
New credit
How much of your available credit is new?
Types of credit used
What’s your mix of credit cards, retail credit, student loans, mortgages, etc.?
Length of credit history
How long have you been using credit?
Amount owed
How much do you owe and how much of your available credit have you used?
Payment history
Have you paid your credit accounts on time?

How long have you been in business?

Another crucial factor in your qualification for a business loan is the amount of time you’ve been in business.

Why does this matter so much?

When it comes down to it, starting a business can be risky. Not all businesses will make it through their first year. According to the SBA, only about 80% of businesses will survive the first year.

For this reason, lenders might be hesitant to work with a new business owner who might not have their doors open to make their loan payments in the future.

Lending to a business that’s been around for 2 or more years is a much less risky endeavor.

That’s not to say you won’t have funding options if you’re a new business, though. Businesses 6 months to 1 year in business will have good options with online lenders. Business owners with at least 2 years under their belt will have even more options available with lenders, and might even qualify for a bank loan or a Small Business Administration loan—regarded as some of the best small business loans available to entrepreneurs.

If your business is younger than 6 months, check out business credit cards as a good option for obtaining startup capital.


How much money is coming into your business?

Lenders will also pay attention to your annual revenue when determining which small business loans you qualify for.

This could be looked at as annual revenue, or broken down a little more as average monthly sales.

Either way, looking at how much money is coming into your business will help the lender determine how large of a small business loan you might qualify for. A lender wouldn’t want to extend you a business loan with monthly repayments that exceed the amount you’re bringing in each month.

In most cases, a lender will qualify you for a small percentage of your annual revenue to be sure you’ll always have the cash on hand to make your loan repayments.

See if I qualify

How to Apply for a Small Business Loan

  • Gather the documents you need to apply
  • Carefully review your loan offers

What financial documents will lenders need for a small business loan application?

Small business loans can have pretty extensive applications, depending on the loan product you are applying for. Bank loans will require the most time-investment for their applications: On average, business owners spend 26 hours searching for credit from a bank. On the other hand, some line of credit lenders or merchant cash advance providers can provide same-day funds.

Generally speaking, the lower the cost of the loan and the longer the term of the loan, the more paperwork that will be involved.

But no one lender is alike and each will have their own set of loan requirements. Here’s an idea of some of the most popular documents needed for small business loan applications. Keep in mind—this is only a portion of what many lenders will ask for!

Business Bank Statements

Bank statements are a type of financial statement you will almost always be expected to provide. For some lenders, you may just need 3 months. Others may ask for 6 or 12 months. Some will even ask for 2 years. Be prepared to pull whatever history length the lender asks for.

Balance Sheet

Many lenders will want to see your balance sheets or “statements of financial position.” They will most likely want to see a balance sheet that has been updated within 60 days. This is to give the lender a “snapshot” of the company’s recent financial health.

Download Template
Profit and Loss Statement(s)

Many lenders will want to see your Profit and Loss Statements, also known as your Income Statements. They will most likely want to see your P&Ls from the last two fiscal years (also shown on business tax returns), as well as a company prepared Year-to-Date (YTD) version that has been updated within 60 days. This is primarily to determine the cash flow of the business and if it is able to meet existing and proposed debt obligations.

Download Template
Business Debt Schedule

Some lenders are going to want to know if you currently have business debt and if you do, the weekly or monthly payment details of that debt. To do this, they will ask for a debt schedule. This helps the lender determine your current debt obligations and if your cash flow is able to meet existing and proposed debt obligations.

What is a Business Debt Schedule?
Personal Tax Return

Most lenders will want to see your most recent personal tax return to verify your income. If you haven’t filed your taxes for this year, it might be best to do so before you apply, or at least have your extension paperwork readily available.

Business Tax Return

Most lenders will want to see your business tax returns from the last two fiscal years. If you haven’t filed your taxes for this year, it might be best to do so before you apply. Lenders will use your business tax return to verify revenue, among other things. If you are a sole prop or LLC who doesn’t file a separate business tax return then don’t fret! Lenders will just want to see the forms and paperwork tied to your business, like a Schedule C, on your personal tax returns.

What are Lenders Looking at on Your Tax Return?

What are the details of your business loan offer?

With so many funding options out there, it’s crucial that you shop around for your absolute best small business loan offer.

So when you have a few different loan options on the table, it’s important to think critically about which will be best for you—this means looking at each loan’s cost, term, and repayment structure.

But when you are shopping small business loans, it can be very difficult to compare the various products on an apples-to-apples basis.

Why? Many lenders advertise the cost in “interest rates” but, truth be told, this doesn’t offer a full representation of the price of the product. So, how can you compare products?

Ask Lenders for the APR

APR stands for Annual Percentage Rate. It is probably a term you are familiar with if you use a credit card. It represents the cost of a loan by including the interest rate AND any other fees you will incur to take on the loan. You may think you’re getting a killer interest rate from a lender, but if they have a ton of hidden fees, they may not be the most reasonable rates. That’s why APR is so important—it lets you compare loans across the board. APR can sometimes be difficult to calculate, so it is best to use an APR calculator.

Know What Loan Fees to Watch For

Now that you know fees affect APR, you’re probably wondering what type of small business loan fees we’re talking about. Here’s a cheat sheet of fees you need to watch for with small business loans:

Origination Fee

An origination fee directly reflects the cost lenders incur to make a loan (think administrative work, etc.) It is often quoted as a percent of the principal.

Application Fee

Since it costs money to run credit and background checks, as well invest the time to underwrite a loan, some lenders will charge you a processing/application fee to recoup that cost upfront, or wait until the loan is closed.

Guarantee Fee

If you’re considering an SBA loan, there is a chance you might have to pay a guarantee fee. Why? The SBA doesn’t directly make small business loans. Instead, they guarantee portions of loans, making it less risky for lenders to make loans to small business. But, to do this, lenders must pay a portion of the guaranteed amount to the government, so they often pass this fee directly on to the borrower.

Late Payment Fee

Probably not much of a surprise here, but with some lenders, if you’re late on a payment, they’ll charge you a fee. If they aren’t automatically drafting from your account, be sure you’ve got a good internal reminder system in place so you never forget a payment!

Pre-Payment Fee

Considering paying your loan off early? Better be sure the lender doesn’t have a pre-payment penalty! This fee is usually calculated as a percent of the outstanding principal at the time you decide to pay it off. Many lenders do this to ensure they recoup their costs from underwriting/servicing the loan.

Check Processing Fee

Many borrowers make their payments through ACH. If you prefer to send your payment in with a check, some lenders may charge you to process it. It is very important to discuss payment methods with lenders before signing on the dotted line.

Choosing Your Small Business Loan

You’ve done a lot of hard work to get this far! Hopefully at this stage of the decision-making process you’ve compared and received offers for the best small business loans available to you. Now it is time to make the call on which loan offers are right for you.

Ask yourself:

  • Can I repay this loan?
  • Am I comfortable with the payment, whether it has daily, weekly, or monthly payments?
  • Can I confidently say this is the lowest rate I will find?
  • Do I know all potential fees associated with the loan?

If you answer “yes” to all these questions, you should be ready to close your small business loan.

See if I qualify

Who Is Fundera?

Fundera exists to help small business owners find the best financial solutions for their business. We invest heavily in learning the ins and outs of every industry so you can get the concise yet comprehensive information you need to make better business decisions and focus your time on evaluating only the best options.

How Fundera’s Lending Education and Marketplace Work

Lending Education

Of all the financial solutions we help business owners explore, the lending industry happens to be the one we’ve worked in longest (and, admittedly, we’ve found to be the most complicated). There are so many pieces that make up this industry, and as a small business owner, you simply don’t have time to stay on top of all the different loan types available, which reputable lenders are offering them, and how to apply and get your best shot at qualifying.

That’s why our editorial team has spent years researching the business financing industry—so we can provide objective and independent insight into how to best navigate the space, taking the headache out of staying informed.

Our Lending Marketplace

At Fundera, we also take the headache out of actually getting that funding you need to grow your business.

With a single Fundera application, you can apply to dozens of the industry’s top lenders in one fell swoop. Our dedicated loan specialists will walk you through the best types of business loans for your needs and qualifications, helping you find the lenders that make the most sense for you. They’ll be there to help you compare offers, apples to apples, so you know you’re making the best decision for your business. Learn more about the process here .

It’s important to note that our marketplace is about quality, not quantity. We only work with the industry’s best lenders—everyone from traditional lenders offering SBA loans to online lenders offering short-term loans. We carefully vet the lenders on our marketplace, making sure they not only offer best-in-class loan products but also have your, the business owner’s, best interest in mind. We’ll never connect business owners to a lender that isn’t doing right by the borrower.

Fundera's Lending Partners

How We Make Money

Fundera only makes money when you get the financial product you need. We receive a referral fee from the financial provider once you’re approved and have taken the product.

We’re here to be a partner to your business and will work to get you the best offers available on our marketplace. We won’t hesitate to recommend you toward a better solution, even if we don’t have a relationship with the financial provider.

Learn more about Fundera’s editorial independence and how we make money here. If you have any questions about our editorial process, please don’t hesitate to contact me at

Editor's Note: Fundera exists to help you make better business decisions. That’s why we make sure our editorial integrity isn’t influenced by our own business. The opinions, analyses, reviews, or recommendations in this article are those of our editorial team alone. They haven’t been reviewed, approved, or otherwise endorsed by any of the companies mentioned above. Learn more about our editorial process and how we make money here.