If you’re looking for business loans or other types of financing, you’ve probably wondered: What’s the best small business lender? What banks or other financial institutions are more likely to lend to small businesses? What banks or other lenders offer the best products?
Luckily, there are a variety of lenders—from big banks to online, alternative lenders—that offer financing products for small businesses. So, whether you’re interested in a traditional term loan or an SBA loan, you’ll have a number of options to choose from to find the right lender to work with your business.
Plus, we’re here to help you through the process.
In this guide, we’ll explore 11 of the top small business lenders—breaking them down based on the products they offer and discussing the details, pros, and cons of each. Here’s what you can expect:
Best Small Business Lenders of 2020
Before we dive into the details of the best small business lenders of 2020, let’s take a step back and review the basics of some of the products we’ll be discussing. This way, you’ll have a better sense of what product might be the right fit for your business financing needs and will be able to direct your search for the best lender accordingly.
As we mentioned, SBA loans are one of the most sought-after financing products for small business owners.
Because SBA loans are guaranteed by the government, they’re less risky for lenders, and therefore, you’ll often see the most desirable terms and lowest interest rates with these loans.
This being said, if you’re looking for a small business lender to get an SBA loan, you’ll have a few things to consider.
First, you’ll need to find a lender that offers SBA loans (not all banks do) and you’ll also need to find a lender that works within the particular SBA program you’re interested in. If you’re unsure of where to start, the SBA compiles a list of their 100 most active lenders within the 7(a) loan program. This is by far the most popular SBA loan program and loans can be used for almost any business purpose.
By starting with the financial institutions on this list, you’ll find small business lenders who are Preferred Lenders, meaning they have the authority to approve loans without the SBA’s input. These lenders will have the most experience with SBA loans, the application, and the process, and therefore, will be your top options for getting an SBA loan for your business.
Let’s learn more about the top small business lenders for SBA loans:
Wells Fargo consistently tops the list of the most active SBA lenders. Although Wells Fargo offers traditional loan products as well, their SBA lending program is a great option if you’re interested in SBA loans.
You can apply for Wells Fargo SBA loans within the 7(a) program, Express loan program, and 504/CDC loan program. On the whole, regardless of which program you apply for, you’ll find that Wells Fargo SBA loans offer the low rates, long repayment terms, and large loan amounts that are consistent with most SBA loans.
This being said, however, SBA loans through Wells Fargo are going to be difficult to qualify for and will require an extensive application process. In this way, the pros and cons of working with Wells Fargo as a small business lender for an SBA loan are going to be similar to working with any bank lender for an SBA loan:
Huntington National Bank is a regional midwestern bank that operates out of over 1,000 branches across eight states. This small business lender, like Wells Fargo, consistently makes the list of the top SBA lenders.
Huntington offers traditional bank loans, commercial real estate loans, business lines of credit, and of course, SBA loans. They participate in the SBA 7(a) program, the SBA Express loan program, as well as the 504/CDC loan program.
As with Wells Fargo, Huntington Bank SBA loans will have optimal terms, amounts, and interest rates. Plus, if you’re looking to expedite your SBA loan process, the SBA Express program through Huntington can give you access to up to $350,000 with a credit decision in as few as 36 hours.
Huntington is a Preferred Lender and will certainly be one of the best options for small business lenders for SBA loans.
Although JPMorgan Chase is one of the nation’s biggest banks, they’re also pretty active small business lenders. Like Wells Fargo and Huntington, Chase consistently tops the list of the most active SBA lenders.
Therefore, if you’re looking for an SBA loan, Chase is certainly a lender worth considering. Chase is a Preferred Lender, plus, unlike most SBA lenders, which require a minimum of two years in business to qualify for an SBA loan, they’ll consider businesses regardless of their time in business. This makes Chase SBA loans particularly noteworthy for startups and new businesses.
Additionally, Chase works within the 7(a) loan program, SBA Express program, and the 504/CDC program. Generally, terms for Chase SBA loans can range from seven to 25 years, depending on the program and how you’re planning to use the funds. Within their SBA programs, Chase offers both fixed and variable interest rates, and you can expect these to be some of the most competitive rates on the market.
Next, let’s break down the best small business lenders for medium-term loans. Unlike the best lenders for SBA loans, all of which are fairly large, traditional banks, the best lenders for medium-term loans are going to be online, alternative lenders.
Although working with a traditional bank will generally offer the loan with the most desirable terms, bank loans aren’t accessible for the majority of small business owners. Therefore, many business owners turn to alternative lenders, like those we’ll discuss below, for medium-term loans.
As we mentioned above, a medium-term loan typically refers to a loan with terms longer than one year. These loans usually have monthly payments, and although they may not be as affordable as bank loans, they’re often cheaper than short-term loans from online lenders.
Ultimately, medium-term loans are a top product if you’re looking for the traditional term loan you’re familiar with, but with more lenient qualifications, simpler applications, and faster funding times.
Let’s take a look at the best small business lenders for medium-term loans.
Funding Circle is an alternative lender known for their medium-term loans. Term loans from Funding Circle range from six months to five years, with amounts starting at $25,000 and extending to $500,000.
Interest rates for these term loans can start around 4.99%, but reach as high as 22.99%. To qualify for a medium-term loan from Funding Circle, you’ll need a minimum personal credit score of 620 and at least two years in business, but you won’t need a minimum annual revenue.
Additionally, Funding Circle loans will require that any owner of the business who owns more than 20% signs a personal guarantee on the loan. You can submit an application for a Funding Circle loan online fairly quickly and easily with limited documentation. Funding Circle can approve your loan in as little as 24 hours, or a few days, depending on how promptly you provide the necessary documentation.
With a balance between speed and affordability, Funding Circle is a great small business lender for medium-term loans—especially if you have good credit and are looking for working capital.
If you’re looking for one of the best small business lenders for medium-term loans, Fundation is going to be another one of your top options.
With Fundation, you can access term loans ranging from one to four years in length, in amounts from $20,000 to $500,000. Interest rates for Fundation’s term loans range from 8% to 30% APR.
To qualify for a medium-term loan with Fundation, you’ll need to have $100,000 in annual revenue, a 600 or higher personal credit score, and at least two years in business. You can submit your application for a Fundation loan online and Fundation can underwrite your application within 24 hours. Generally, Fundation funds loans in an average of three business days.
Similar to Funding Circle, Fundation is a great bank loan alternative for qualified borrowers who want access to a medium-term loan that’s fairly affordable and has a simple, online-based application process.
For access to fast capital, short-term loans will often be your best bet. The best small business lenders for these loans, like medium-term loans, will be online, alternative lenders, who have simpler application processes and more lenient requirements.
Although short-term business loans come in all shapes and sizes, generally speaking, they range from three months to 18 months in length and are repaid on a daily or weekly basis. Compared to the other financing products we’ve discussed thus far, short-term loans are likely to be more expensive—the faster you need capital, the more expensive it becomes.
Additionally, it’s important to note that many short-term loan lenders tend to quote their rate as a “factor rate.” You’ll want to convert any quoted factor rate to an APR using a short-term APR calculator so you really understand the true cost of the loan.
With this in mind, let’s explore some of the best small business lenders for short-term loans.
CAN Capital is one of the oldest alternative lenders in the industry.
Short-term loans from CAN Capital can range in amounts from $2,500 to $250,000 with terms from three to 24 months. The factor rates on these loans range from 1.15 to 1.48 and payments are made daily.
To qualify for a short-term loan from CAN Capital, you’ll need revenue of $4,500 per month, a personal credit score of 600 or higher, and they prefer a minimum of 12 months in business. This being said, however, if you have more than six years in business, CAN Capital will consider personal credit scores of 550 and higher, and although they prefer 12 months in business, they’ll consider as low as three months with consistent revenue.
You can apply for a short-term loan with this small business lender online and receive funding in as fast as two days.
With all of this in mind, CAN Capital is a great option for short-term loans if you’re looking for a trustworthy lender with a history in the business that can offer fast funding, especially if you can’t qualify for other financing products.
For a small business lender that offers short-term loans and funding in little as one business day, you might consider OnDeck as one of your best options. OnDeck offers short-term loans with terms ranging from three to 24 months in length and amounts starting at $5,000 and going all the way up to $500,000.
The APR for a short-term loan from OnDeck can start as low as 9%, but can also reach as high as 99%. Payments for an OnDeck loan will either be daily or weekly.
To qualify for this short-term loan, you’ll need at least $100,000 in annual revenue, a minimum personal credit score of 600, and at least one year in business. You can apply for an OnDeck loan in as little as 10 minutes online and receive an offer within the same day.
On the whole, OnDeck will offer one of the easiest short-term loan application processes and is a great option for businesses that need this type of financing to cover big, unexpected expenses.
Finally, the last small business lender within our discussion of short-term loans, Rapid Finance offers a balance between quickness and affordability.
Rapid Finance offers three different short-term loan products—a Select loan, Standard loan, and Preferred loan.
Between these three products, terms can range from four to 18 months, with amounts from $5,000 to $1 million. Factor rates for these loans start at 1.11 and go up as high as 1.31. Short-term loans with Rapid Finance are paid back daily or weekly and your application can be funded within the same day.
To qualify for a short-term loan from Rapid Finance, you should have $120,000 in annual revenue, a minimum of 550 for your personal credit score, and at least two years in business.
To actually apply for a loan through Rapid Finance, you simply have to submit your bank statements and sign the application, at which time Rapid Finance will send over an initial offer based on your cash flow that will tell you which product you qualify for. On average, Rapid Finance funds applications in two days.
On the whole, although Rapid Finance may be a pricier option, they’re a worthwhile option for business owners with lower credit scores who don’t qualify for other financing products.
Now that we’ve reviewed some of the best small business lenders for SBA loans, medium-term loans, and short-term loans, let’s break down the top options for a very different type of financing product, a business line of credit.
As we briefly mentioned above, a business line of credit is one of the most flexible financing options for small business owners, allowing you to withdraw from a set pool of funds as needed and only pay interest on the funds you use.
Although many banks offer lines of credit, many of the most accessible lenders, as we’ve seen with medium- and short-term loans, will be alternative, online lenders. Therefore, let’s learn more about two line of credit lenders that are worth considering.
Fundbox offers a flexible line of credit product with lenient qualifications to accommodate a variety of business owners. Plus, to streamline their application process, FundBox integrates with accounting software and business checking accounts to review your financial information—saving you the time of filling out forms and pulling the necessary information or documents.
With FundBox, you can access a line of credit ranging from $1,000 to $100,000 with terms of 12 or 24 weeks. The interest rate on their line of credit product starts at 4.66% of the amount you withdraw. To qualify for a line of credit from FundBox, you’ll need at least $25,000 in annual revenue, a minimum personal credit score of 500, and at least three months in business. Additionally, because of the way the FundBox application process works, you’ll need a business checking account or accounting software.
Through their process, FundBox reviews your financial information once you’ve connected your account and can approve your line of credit in just minutes. You can receive funds from a FundBox line of credit in as little as one day.
After you receive your funds, your payment schedule will start the first full week after you withdraw capital for the first time. You’ll be debited every week until you’ve paid off the debt, unless you repay in full early.
Ultimately, due to their simple application process, speed to funding, and flexibility in requirements, FundBox is a great option for business owners looking for a fast line of credit, especially if they’re a new business or can’t qualify for other products.
Similar to FundBox, BlueVine is not only one of the best small business lenders for a line of credit, but also for an online, automated application process.
With BlueVine, you can access a line of credit ranging from $5,000 to $250,000 with terms of six or 12 months. Interest rates for this line of credit start as low as 4.8% and can reach as high as 51%.
To qualify for a line of credit from BlueVine, you’ll need a minimum of $100,000 in annual revenue, a minimum personal credit score of 600, and at least six months in business.
Like FundBox, you can connect BlueVine to your business bank account so they can review your financial information after you’ve completed the basic online application. You can receive approval in as little as one business day for this line of credit, but BlueVine’s average time to funding is two to seven business days. If you accept a line of credit from this small business lender, your payments will be either weekly or monthly depending on the length of your terms.
All in all, with an accessible process and fairly lenient requirements, BlueVine is a great line of credit lender for businesses that need funding fast and who can’t qualify for other financing options.
Now that we’ve explored some of the best small business lenders across a variety of financing products—SBA loans, term loans, and business lines of credit—you might be wondering: How do I decide which is the right lender for my business?
Ultimately, there are a few things you can keep in mind as you compare different lenders and what they can offer your business.
First and foremost, you’ll want to ask yourself: Can I qualify for financing from a bank?
If you can qualify for bank financing, whether a loan, line of credit, or another type of financing, then that bank will very likely be your best small business lender. At the end of the day, banks still offer the most reasonable terms, rates, and amounts for small businesses. And—if you don’t qualify for financing from a big bank like Chase or Wells Fargo, you’ll want to consider applying at a local, community bank. Approval rates at community banks are 3x the ones at big banks.
However, it’s very possible that even if you have good qualifications, you won’t be able to get a bank loan. If this is the case, then you’ll want to start looking into other lenders, like the ones we’ve discussed here. In this case, you’ll want to think about the following factors as you search for the best small business lender for your company:
By asking these types of questions, you’ll be able to determine how any lender will or won’t work for your business. Ultimately, you’ll want to find a lender that offers the product you need, has requirements you can meet, and of course, is affordable.
There you have it—11 of the best small business lenders to accommodate your financing needs.
At the end of the day, the right lender for your business is going to come down to factors that are unique to your business and you’ll want to consider and compare all of your options to ensure that you’re getting the best financing product.
This being said, however, it’s important to remember a few points when looking at different business lenders.
First, if you can qualify for financing from a bank, then this will more than likely be the most affordable option for your business. If you can’t access a business loan from a bank, then you’ll want to consider SBA loans or online lenders—and you can start with the options on this list.
Next, it’s worth remembering to read reviews of online lenders and keep an eye out for red flags that suggest the lender is untrustworthy. With an influx of alternative lenders in the market, there are certainly those out there who are looking to take advantage of small business owners. Don’t be afraid to ask a lender any questions you have and turn down an offer if something doesn’t seem right.
Ultimately, working with a small business lender should be an opportunity to get the funding your business needs to succeed, so you shouldn’t be afraid to take the utmost care throughout the process.