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One of the main challenges of business owners is keeping a steady cash flow that is enough to effectively run their business. Cash flow fluctuations can be problematic, and sometimes, business solutions are needed to bridge the gap between invoicing and collecting accounts receivables.
This is where business loans come in handy. A business loan is obtained from a financial institution and can either be secured or unsecured. Used solely for business purposes, it is seen as access to emergency funds when your business is in a bind.
Financial institutions and Fintech companies offer business loans. When looking for small business loans, it is important to have a full understanding of the terms and fees that each financial institution charges. It is very common for financial institutions to require businesses to be established for a specific number of years, but some banks can offer startup loans for brand new businesses.
Here is the list of the top 10 best business loans:
Pros: One of the best online business banks is Kabbage, and it also translates to their small business loan offering. They have a variety of repayment options and flexible terms that can accommodate any business’ needs. They have industry-specific loans, and the whole process can be done online. Loan amounts can vary from $500 to $150,000.
Cons: Businesses who are looking to qualify for a business loan with Kabbage require an online checking account or Paypal account to verify cash flow. They also have a complex monthly fee structure that can make it confusing, and businesses cannot use this product to build credit.
Rates: Kabbage does not have a traditional interest rate; rather, you pay a fee every month, which is a percentage of the loan. It can range from 0.25% to 3.50% in fees.
Pros: Another Fintech company, FundBox enables businesses to get lines of credit without placing a hard inquiry on your credit report. The decision-making process is quick, and it takes a few minutes, and funding usually takes place the next day.
Cons: The interest rates are much higher compared to traditional banks, and weekly repayments are required for loans that have less than 24 months in term.
Rates: Rates can vary from 10.10% to 79.80%
Kiva – Best Business Loans
Pros: If you are looking for the cheapest option to borrow a small amount of money for your business, Kiva has 0% loan options up to $15,000. The repayment term is 36 months or three years. Kiva specializes in startup loans, and if you get a loan through them, you will be able to advertise your company in their marketplace within 30 days to attract more investors.
Cons: Kiva loan amounts are relatively smaller, with the maximum loan amount of $15,000. Since they use the crowdfunding process, it can take up to a month to find funding.
Rates: Rates are 0%.
Pros: What sets Fundera apart is that they specialize in government loans, specifically SBA loans. SBA loans are backed by the government, and there are many types that you can choose from depending on what your business needs. Since it is a government loan, the interest rates are lower and are geared towards businesses who are looking for higher loan amounts up to $5 million. Fundera takes your application and shops around for the best SBA lender for you, which is a convenient way of finding the right fit for your needs.
Cons: The rates can be high with Fuundera, and they also charge additional fees.
Rates: Rates can be as low as 7%.
Pros: Lendio is another marketplace site that you can go to and figure out the best lender and loan that is available for your business needs. Your loan application can get approved and get funding within 24 hours, which is a convenient option for cash-strapped businesses who need the money ASAP.
Cons: Lendio does not work with all lenders, and there is not a lot of information about the different business loans that they offer.
Rates: Rates can vary from 5% to 17%.
Pros: SmartBiz specializes in government small business loans, including SBA loans. It is an online marketplace that matches businesses with SBA lenders. The funding process for SBA loans can be long, but SmartBiz can shorten it as quickly as a week. The usual terms for government loans are up to 25 years with lower interest rates.
Cons: Since SmartBiz works with the SBA, the proceeds of their loans have to strictly go to the loan purpose. To qualify, businesses should have a strong financial history and be supported by three years of strong financials.
Rates: Rates can vary from 5.04% to 10.29%
OnDeck – Best Business Loans
Pros: If you are looking for a shorter-term business loan, OnDeck is the right fit for you. With repayment terms of up to 3 years, OnDeck can work with business owners who have a less than stellar credit rating. The only downside to this is that the interest rate can be quite high.
Cons: OnDeck has a fixed fee structure which means that early repayment will not save you on interest. They also require daily or weekly repayments.
Rates: Rates can vary from 9% to 99%
Pros: With Funding Circle, you can get business loans up to $500,000, and there are no prepayment penalties if you pay the loan off before its maturity date. These longer-term business loans are a perfect fit for businesses that are financing a larger purchase, equipment, or acquiring a business.
Cons: The minimum loan amount is $25,000, and the estimated funding timeframe can take up to 10 business days.
Rates: Rates can vary from 9% to 30.12%
Pros: The main advantage that Credibly has with other lenders is that they can lend to business owners who have a credit score as low as 500. With loans amounts up to $400,000, they offer numerous repayment terms and specialize in shorter-term business loans with quick funding options.
Cons: Rates can be higher compared to traditional banks and charge additional fees. Businesses who obtain a loan through Credibly are required to put a blanket lien on their business.
Rates: Rates vary from 9.99% to 36%
Lending Tree – Best Business Loans
Pros: Lending Tree offers different types of business loans, and they specialize in business loans for women. To boost women-owned businesses, Lending Tree offers competitive rates and terms with quick funding options for a quick cash injection. Lending Tree also gives access to small business grants geared towards women.
Cons: With Lending Tree, the customer service can be testy, and the information on their website is not informative.
Rates: Rates can vary from 3% to 44%.