Tom Thunstrom is a business loans expert and self-described “recovering banker” who currently serves Delaware’s small business community as center director at the Small Business Development Center in southern Delaware. He has over 15 years of experience in small business finance and advising businesses on how best to grow and navigate a complex financial world.
As the Delaware SBDC is part of the University of Delaware, Tom occasionally guides student cohorts through collaborative projects with small businesses to help businesses answer key questions or develop a plan for growth.
In his work at the center, Tom works with a diverse range of businesses from agriculture to manufacturing, from beach-based businesses (Delaware has very nice beaches, by the way!) to logistics. He enjoys working with financial institutions and his team of business advisors to find creative ways to get a financing deal done.
Prior to the SBDC, Tom worked in management roles for regional and community banks in his native Minnesota and in the mid-Atlantic. He also worked for two nonprofits, navigating one through Covid and another through the Great Recession.
Tom Thunstrom is a business loans expert and self-described “recovering banker” who currently serves Delaware’s small business community as center director at the Small Business Development Center in southern Delaware. He has over 15 years of experience in small business finance and advising businesses on how best to grow and navigate a complex financial world.
As the Delaware SBDC is part of the University of Delaware, Tom occasionally guides student cohorts through collaborative projects with small businesses to help businesses answer key questions or develop a plan for growth.
In his work at the center, Tom works with a diverse range of businesses from agriculture to manufacturing, from beach-based businesses (Delaware has very nice beaches, by the way!) to logistics. He enjoys working with financial institutions and his team of business advisors to find creative ways to get a financing deal done.
Prior to the SBDC, Tom worked in management roles for regional and community banks in his native Minnesota and in the mid-Atlantic. He also worked for two nonprofits, navigating one through Covid and another through the Great Recession.
Editorial Note: We earn a commission from partner links on Forbes Advisor. Commissions do not affect our editors’ opinions or evaluations.
Small business loans are a source of funding business owners can use to operate and expand their companies. They can apply for these loans through traditional banks, credit unions and online lenders. Funds are typically disbursed as a lump-sum payment and repaid monthly unless otherwise stated by specific lenders.
Best Business Loans Of May 2024
Best for Fast Business Loans
QuickBridge
APR range
Factor rates start at 1.11
Factor rates start at 1.11
Editor’s Take
QuickBridge provides small business loans and equipment financing to businesses in all 50 states.
Why We Like It
QuickBridge can fund loans within 24 hours for borrowers with fair to excellent credit and offers flexible repayment options.
What We Don’t Like
Maximum loan amounts are smaller than what other lenders offer, and the minimum annual revenue requirements can make a loan from QuickBridge difficult to qualify for.
Who It’s Best For
The lender is attractive to business owners who need short-term loans with a quick funding turnaround.
Pros & Cons
- Flexible repayment options
- Quick application and fast funding deposited to a bank account
- Early payoff discounts
- Loan interest may be high
- $250,000 minimum annual revenue requirement for small business loans
- Only short-term repayment terms are available
Details
Eligibility
- Minimum credit score: 600
- Time in business: Six months
- Minimum revenue: $250,000 per year
Turnaround time
You can apply and receive a decision from QuickBridge on the same day.
QuickBridge, which operates as an alternative lender, provides small businesses with funding within a matter of days. Its thorough approval process involves looking at your business as a whole, more than just your credit score. However, for approval, there’s a minimum credit score requirement of 600 and an annual revenue requirement of $250,000, which isn’t the lowest in the industry.
While the speedy lending process may seem attractive, QuickBridge charges interest as a factor rate starting at 1.10 plus an origination fee in the range of 1% to 5%, making the loans quite pricey.
— Abid Salahi, co-founder and CTO, FinlyWealth
Best for Short-Term Business Loans
OnDeck
Editor’s Take
OnDeck is an online lender that offers both lines of credit and loans to businesses in all states except North Dakota.
Why We Like It
OnDeck gives business owners the option between term loans and lines of credit with a range of repayment terms. Lines of credit are available with short repayment terms of 12, 18 or 24 months, and OnDeck’s term loan is available with repayment terms of up to 24 months.
What We Don’t Like
With small loan amounts and short repayment terms, financing from OnDeck may not be the best option for every business.
Who It’s Best For
OnDeck’s loans can be a great financing option for businesses that want short-term loans and to minimize interest costs.
Pros & Cons
- Term loans from $5,000 to $250,000
- Lines of credit from $6,000 to $100,000
- Same-day funding
- Low minimum credit score requirement
- $100,000 minimum annual revenue requirement
- Must have been operating for at least one year
- Does not lend to businesses in North Dakota
Details
Eligibility
- Minimum credit score: 625
- Time in business: One year
- Minimum revenue: $100,000 per year
Turnaround time
You can apply and receive a decision from OnDeck on the same day.
OnDeck has carved a niche in the realm of alternative lending, offering expedited access to capital for businesses that may not qualify for traditional bank loans. Its big advantage is the availability of funds on the same day or next while not being affected by a hard credit pull. However, this aggressive lending practice also comes at a steep price.
— Abid Salahi, co-founder and CTO, FinlyWealth
Best for Business Lines of Credit
American Express® Business Line of Credit
Minimum Credit Score
660 FICO at the time of application
660 FICO at the time of application
Editor’s Take
The American Express® Business Line of Credit gives business owners access to a range of line of credit options. Monthly fees vary depending on the financing term.
All businesses are unique and are subject to approval and review.
Why We Like It
The American Express® Business Line of Credit offers business owners lines of credit from $2,000 to $250,000 and repayment terms include six, 12, 18 and 24 months.
What We Don’t Like
American Express® Business Line of Credit can take up to three days to fund and has requirements that may be difficult for newly formed businesses to reach.
Who It’s Best For
With flexible repayment options, the American Express® Business Line of Credit is best for businesses looking for short-term business lines of credit with transparent costs.
Pros & Cons
- No prepayment penalty
- Four different repayment options
- Offers small to large lines of credit
- Monthly fees on unpaid balances
- Requires personal guarantee
- Lines of credit over $150,000 are only available to borrowers who meet additional criteria
Details
Eligibility
- Minimum credit score: 660 FICO at the time of application
- Time in business: One year
- Minimum revenue: At least $3,000 per month
All businesses are unique and are subject to approval and review.
Turnaround time
Funds can take up to three business days to appear in your account, depending on your bank.
The American Express® Business Line of Credit allows you to qualify at a credit score of 660 FICO at the time of application, so it’s not a great option for any business with a bad credit rating. Rather than a typical revolving line of credit, you must choose [from available terms] with varying fees. Every time you withdraw from your business line of credit, it’s treated as a separate installment loan rather than being added to existing loans.
One downside to the American Express® Business Line of Credit is the time it takes to receive your cash. You’ll need to wait [one to three] business days for your funds, while other lenders offer same-day options. If you need your cash fast, that delay becomes a problem.
— Jonathan Feniak, general counsel and head of finance, LLC Attorney
Best for Business Lines of Credit From a Bank
Wells Fargo Business Line of Credit
APR range
Prime + 1.75% to prime + 9.75%
Prime + 1.75% to prime + 9.75%
Editor’s Take
Wells Fargo, with physical branches across the country, offers business lines of credit and term loans. It offers $10,000 to $150,000 through its BusinessLine line of credit, which you can apply for in person or online.
Why We Like It
For borrowers who are looking for financing from an established bank with physical branches, Wells Fargo stands out. The lender has large lines of credit, and it also offers its Prime business line of credit for established businesses with a limit of up to $1 million.
What We Don’t Like
Wells Fargo has stringent qualification requirements for its line of credit and also requires a personal guarantee.
Who It’s Best For
Wells Fargo is best for businesses that are looking for a lender with physical branches and that operate in a state where the bank has locations.
Pros & Cons
- Offers physical branch locations
- Available in all 50 states
- Transparent loan costs
- Annual fee after first year
- Requires at least two years in business
- Requires personal guarantee
Details
Eligibility
- Minimum credit score: 680
- Time in business: Two years
- Minimum revenue: Does not disclose
Turnaround time
Wells Fargo does not disclose its approval and funding turnaround time.
Wells Fargo has a streamlined application process and fast approval. Most banks will take a couple of weeks and require deep financial reports and personal guarantee statements. The downside is Wells Fargo will initially give a relatively small line and require that you wait a minimum of six months before it can be increased, regardless of your speed of repayment, balance or revenue growth.
— Jill James, CEO, The Jill James
Best for Large Business Loans
Fora Financial Business Loans
Editor’s Take
Fora Financial is an online business loan lender that offers both term loans and revenue advances. Revenue advances are similar to merchant cash advances (MCAs) but use total sales revenue instead of credit card sales.
Why We Like It
Fora Financial offers large business loans of up to $1.5 million, which is over five times more than most lenders on our list. Not only does it offer high loan amounts, but it also gives you the opportunity to increase your loan amount after you pay at least 60% of the original loan.
What We Don’t Like
Although Fora Financial offers large business loans and revenue advance amounts, the term lengths of up to 18 months are shorter than what other lenders offer.
Who It’s Best For
Fora Financial is best for businesses that are looking to finance large sums or are looking for large revenue advances.
Pros & Cons
- Large loan amounts of up to $1.5 million
- Low minimum credit score requirement
- Offers prepay discounts
- Short repayment terms of up to 18 months
- Funding is slower than competitor lenders on our list
- Daily or weekly repayments
Details
Eligibility
- Minimum credit score: 570
- Time in business: Six months
- Minimum revenue: $20,000 per month
Turnaround time
Fora Financial offers approvals within 24 hours and funding within 72 hours.
As an alternative lender for small businesses, there is a lot to like about Fora [Financial]. The application is surprisingly short as is the approval process and the availability of funds. In the past, it made loans to companies with as little as two quarters of history. The one complaint I’ve heard is that Fora Financial uses factor rates to determine the cost of the loan. If you use merchant services, you’re familiar with the concept. If not, the loan is more expensive than you think it is.
— Herman Thompson, Jr., advisory board member
Best for Flexible Line of Credit Repayment Terms
Bluevine
APR range
Simple interest starts at 5.9% or 7.8%
Simple interest starts at 5.9% or 7.8%
Editor’s Take
Bluevine is an online lender that offers short-term business lines of credit. Bluevine’s financing can be funded as soon as the same day.
Why We Like It
We picked Bluevine for its line of credit which ranges from $5,000 to $250,000 and can be repaid with a weekly or monthly structure. Customers who repay weekly make payments each week over 26 weeks, while customers who repay monthly make payments each month over one year.
What We Don’t Like
Bluevine’s business line of credit requires a high minimum annual revenue and isn’t available in all 50 states.
Who It’s Best For
Bluevine is best for businesses that are looking for a short-term line of credit with flexible repayment options.
Pros & Cons
- Receive a decision within five minutes and instant funding with a Bluevine business checking account, or receive funds within 24 hours
- Lines of credit up to $250,000
- Low credit score requirement
- No mobile app for its line of credit
- Monthly revenue requirement
- Not available to businesses in Nevada, North Dakota, South Dakota, Puerto Rico and other U.S. territories
Details
Eligibility
Eligibility varies on the specific program a business owner chooses.
Weekly plan
- Minimum credit score: 625
- Time in business: Two years
- Minimum revenue: $40,000 monthly or $480,000 annually
- Business type: Corporation or LLC
- Bankruptcies: No past bankruptcies
Monthly plan
- Minimum credit score: 650
- Time in business: Three years
- Minimum revenue: $80,000 per month or $960,000 annually
- Business type: Corporation or LLC
Turnaround time
After you submit your application, you can receive a decision in as quickly as five minutes and instant funding with a Bluevine business checking account. Borrowers who don’t have a Bluevine business checking account can receive funds within 24 hours.
Bluevine appeared in a search we did for clients during the mini-banking crisis of 2023. Bluevine offers a bank sweep program that will provide FDIC insurance to their clients for up to $3 Million. FDIC insurance usually doesn’t matter, but when banks start failing, it really matters.
— Herman Thompson, Jr., advisory board member
Best for Long-Term Business Loans
Funding Circle
Editor’s Take
Funding Circle is a peer-to-peer marketplace lender that connects businesses with financing. The lender offers a simple application process and funding in as little as 48 hours.
Why We Like It
Funding Circle stands out for its long-term business loans with terms of up to seven years for established businesses. This is much longer than most other lenders.
What We Don’t Like
Funding Circle’s loans come with an origination fee of at least 3.49% and require at least two years in business.
Who It’s Best For
Funding Circle’s business financing is best for established businesses that need to spread loan payments over a long period.
Pros & Cons
- Loans from $25,000 to $500,000
- Funding in as little as 48 hours
- No minimum annual revenue requirement for most loans
- One-time origination fee between 3.49% to 6.99% of the approved loan amount
- Requires two years in business, so it’s not ideal for startups
- Not available to Nevada businesses
Details
Eligibility
- Minimum credit score: 660 for most loans; 650 for SBA loans
- Time in business: Two years
- Minimum revenue: None for most loans; $400,000 per year for SBA loans
Turnaround time
Depending on the loan type, you can receive your funds within two days. However, SBA loan funding may take up to two weeks.
Funding Circle provides long-term loans that are essential for businesses planning significant investments in growth or infrastructure. The clear terms and lower interest rates compared to short-term loans make this an excellent choice for businesses with a stable financial outlook and a strategic long-term development plan.
— Cache Merrill, founder and CTO, Zibtek
Best for Robust Financing Options
National Funding
Editor’s Take
National Funding offers short-term working capital loans and equipment financing. The loans are available in terms of four months to two years, paid daily or weekly.
Why We Like It
We picked National Funding because it offers robust financing options for small to midsized businesses. Working capital loans are available from $5,000 to $500,000 and also equipment financing up to $150,000.
What We Don’t Like
National Funding’s financing options require daily or weekly payments, and to qualify, businesses must have minimum gross annual sales of $250,000.
Who It’s Best For
National Funding is best for newly established businesses with high gross sales that are looking for various funding options to finance their business.
Pros & Cons
- Financing up to $500,000
- Early payoff discounts
- Most loans are funded within 24 hours of approval
- Requires daily or weekly payments
- Potentially high borrowing costs
- Requires minimum gross annual sales of $250,000
Details
Eligibility
- Minimum credit score: 600 (575 for equipment financing)
- Time in business: Six months
- Minimum sales: $250,000 per year
Turnaround time
Most loans are funded within 24 hours of approval, subject to receipt of required documentation, underwriting guidelines and processing time by your bank.
National Funding offers loans from $5,000 to $500,000, but two years is the maximum length for a large loan. I had a client that got excited by what he thought would be a lending source that could do $500k for five years, but the five-year loan was only offered at $100,000. A local banker made a collateralized loan for the large equipment purchase, and the client took a small short-term loan from National Funding to help with cash flow during a tough spot.
— Herman Thompson, Jr., advisory board member
Best for Startup Funding
Fundbox
APR range
Interest rates start at 4.66%
Interest rates start at 4.66%
Editor’s Take
Fundbox is an alternative lender that offers short-term lines of credit and business loans. Startups that need money in a pinch can also rely on Fundbox to provide business loan decisions in just three minutes and next-business-day funding.
Why We Like It
Fundbox offers flexible qualification requirements, including a minimum time in business of six months and an annual revenue requirement of $100,000.
What We Don’t Like
Loans from Fundbox range from , which may not be enough for some businesses.
Who It’s Best For
With a short time in business requirement, low minimum credit score and low annual revenue requirement, Fundbox is best for startups and other newly established businesses.
Pros & Cons
- No prepayment penalty
- Low minimum annual revenue requirement
- Next-business-day funding
- Only short-term repayment terms are available
- Does not disclose APRs
Details
Eligibility
- Minimum credit score: 600
- Time in business: Six months
- Minimum revenue: $100,000 per year
Turnaround time
With a business line of credit from Fundbox, you can receive your funds as soon as the next business day.
The approval process is quick and Fundbox is available for the credit-challenged business. Credit approvals are usually small, so this [typically] isn’t an option for larger purchases. I had a small business client that had Fundbox integrated with her Stripe dashboard, which made it convenient.
— Herman Thompson, Jr., advisory board member
Best for Merchant Cash Advances
Biz2Credit
Loan amounts
Up to $1M+
Revenue-based financing. Varies depending on product and qualifications
Minimum Credit Score
575 or 650*
*See website for details
Up to $1M+
Revenue-based financing. Varies depending on product and qualifications
575 or 650*
*See website for details
Editor’s Take
Biz2Credit is an online lender that offers revenue-based financing and term loans. The lender says its revenue-based financing is its most popular product, and the average funding amount in 2023 was over $92,000.
Why We Like It
Biz2Credit offers revenue-based financing to businesses with at least $10,000 in annual revenue.
What We Don’t Like
Biz2Credit doesn’t disclose financing costs or the turnaround time for revenue-based financing.
Who It’s Best For
With flexible qualification requirements, Biz2Credit’s revenue-based financing can be best for new businesses or businesses that may not qualify for financing elsewhere.
Pros & Cons
- Revenue-based financing has flexible qualification requirements
- Can pre-qualify for submitting an application
- Offers term loans with weekly or biweekly payments
- Does not disclose financing costs
- Does not disclose turnaround time
- High annual revenue requirement
Details
Eligibility
Eligibility varies based on the financing option you choose.
Term loan
- Minimum credit score: 650
- Time in business: 18 months
- Minimum revenue: $250,000 per year
Revenue-based financing
- Minimum credit score: 575
- Time in business: 6 months
- Minimum revenue: $10,000 per year
Turnaround time
Biz2Credit does not disclose the turnaround time for its financing options.
Similar to Funding Circle, Biz2Credit emerges as a more balanced alternative and functions as a platform to offer a wide range of loans. Due to the more thorough underwriting process, the qualification requirements are more restrictive than other business lenders and funding may not be as quick.
— Abid Salahi, co-founder and CTO, FinlyWealth
Summary: Best Small Business Loans Of May 2024
Tips for Comparing Small Business Loans
Consider these tips when comparing small business loans:
Where possible, prequalify.
Determine how you want to receive your funds.
Consider the repayment terms and flexibility.
Look out for additional fees.
Evaluate the lender’s customer support options.
Pro Tip
When deciding between the best business loan options, always compare monthly payments and long-term interest costs. A loan with a low monthly payment isn’t always the cheapest option if you choose a long repayment term. The longer the repayment term is, the more interest you could pay over time. Qualifying for a loan with a low-interest rate and shorter loan term could save you money and help you pay off your loan faster.
What should business owners consider when choosing a small business loan?
Tom Thunstrom
Advisory Board Member
Taylor Medine
Mortgages & Loans Writer
Colin Beresford
Mortgages & Loans Editor
When considering a small business loan, consider these factors:
- What do you need the funds for? If you need money for cash flow, a line of credit is probably your best bet. A line of credit provides a cash infusion that can be repaid once business conditions improve. If you need money for physical assets, whether it be new facilities or new equipment, a loan backed by those assets will provide a lower rate and reasonable terms.
- If your business is struggling or starting up, you may be able to qualify for an SBA-backed loan. Most lenders will require some form of a business plan and financial projections to help them understand what you need the funds for and how you’ll be able to repay the debt. If you are unsure where to begin on a business plan, you can reach out to SCORE, the Women’s Business Center, or the SBDC, all of whom can help you at no cost.
- Make sure you ask about prepayment penalties and whether your interest rate is adjustable. An adjustable rate can impact the amount of principal you pay on a loan and possibly the balloon payment, if any, at the end of a loan repayment period.
Neighborhood banks offer the best rates on business loans—but usually for borrowers with years in the business game and good credit. What if your business doesn’t yet fit into this category? All isn’t lost.
Check out online lenders. Some offer lenient credit and revenue requirements for startups and smaller operations.
To find the most affordable loan, take some time to prequalify for several loans. This way, you’re better positioned to compare interest rates, fees, monthly payments and long-term costs.
When you’re considering a business loan, it can be worthwhile to understand all of your options before going forward with financing. Business loan lenders offer a variety of products, so finding the financing that works for your business can put you in the best possible position to repay your debt.
Complete Guide to Small Business Loans
What Is a Small Business Loan?
A small business loan is a source of funding business owners can access to cover the costs associated with operation and growth. Like personal loans, business owners can get small business loans through traditional banks and credit unions as well as online lenders—including those backed by the U.S. Small Business Administration (SBA). Depending on the type of loan, you can use funds for everything from working capital and equipment acquisition to larger purchases like real estate.
How Do Small Business Loans Work?
Small business loans help companies make large purchases and cover the cost of doing business. Loans generally are issued as a lump sum that can be used to make a specific purchase or manage cash flow and then repaid with interest. However, there are other types of small business loans—like lines of credit, merchant cash advances and invoice financing—that can be used to access cash more quickly and on an as-needed basis.
The best loan for a business depends on a number of factors, including its creditworthiness, how much it needs to borrow, what the funds will be used for and how quickly it needs access to loan proceeds.
Read More: How Do Business Loans Work?
Common Types of Small Business Loans
In general, small business loans help businesses access the money they need to operate and grow. However, there are several types of small business loans, and it’s important to find the best fit for your needs.
SBA Loans
Term Loans
Lines of Credit
Invoice Factoring and Financing
Merchant Cash Advances
Equipment Financing
Commercial Real Estate Loans
Bank Loans
Find the Best Startup Business Loans of 2024
Pros and Cons of Small Business Loans
Pros of Small Business Loans
- Provides funds you can use to start, grow or expand your business
- Receive funding without losing equity
- Repayment terms extend up to 25 years
- Loan amounts up to $5 million
Cons of Small Business Loans
- Most lenders require a personal guarantee or collateral
- Lenders typically require a minimum credit score of 670
- Approval and funding may take up to several weeks
- May charge high interest rates and other processing fees
Best Place To Get a Business Loan
Small business loans are available from a variety of traditional banks and credit unions as well as online lenders. However, each lender is limited by its own financial products and lending requirements.
1. Banks & Credit Unions
2. Online Lenders
Related: Best Same-Day Business Loans
How To Get a Business Loan
How To Choose a Small Business Loan
Just as certain types of loans are more appropriate for certain businesses, some lenders may be better suited to your business than others. Consider these factors to choose a small business loan:
- Lender reputation. Check online reviews so you’re aware of any red flags or potential issues before you sign on the dotted line. If you plan to work with a local bank or credit union, check with other local business owners to see which institutions have the best reputation.
- Qualification requirements. Most small business loans are underwritten based on the business owner’s personal credit score and are personally guaranteed. The minimum credit score required to qualify for a small business loan depends on the lender and the type of loan. So, it’s generally a good idea to check your personal credit score and then research each lender to compare minimum credit score requirements.
- Available loan amounts. Loan amounts vary by lender and loan type. Before choosing a small business lender, evaluate your business’ borrowing needs and shop for a loan that fits those parameters.
- Underwriting and funding speed. The amount of time it takes to process an application and receive funds varies widely by lender and loan type. In general, it can take anywhere from a couple of days (in the case of a merchant cash advance) to several months (for an SBA loan) to receive funds after submitting an application. If you need a loan quickly, choose a loan type and lender that can meet those time constraints.
- Annual percentage rate. APRs also vary by loan type and lender, but generally range anywhere from 5% to 99%. The most creditworthy applicants qualify for the lowest rates, but some lenders are more competitive than others.
- Additional costs. Many lenders charge origination fees that cover the costs of processing applications and underwriting loans. Likewise, some lenders charge prepayment penalties for borrowers who opt to pay off their loans early, while others charge draw fees on lines of credit. However, borrowers should not be charged application fees, and any fees levied prior to loan approval are a red flag.
How To Qualify for a Business Loan
The requirements for small business loans can vary by lender. But in general, lenders may review the following information to approve you for a loan:
- Personal credit. You may be able to qualify for a business loan with a credit score as low as 500. However, a good score of at least 670 could give you a better shot at getting approved for a competitive rate.
- Time in business. Lenders typically require that you be in business for at least six months to two years to qualify for a loan.
- Business checking accounts. Lenders may require that you have a business checking account with several months of transactions to show cash flow.
- Business revenue. Most lenders require that you have between $100,000 to $250,000 annual business revenue to qualify.
Pro Tip
To approve you for a business loan, lenders may check your business and personal credit and ask for financial documents, like bank statements, income statements and your business plan to measure ability to repay the loan. Getting financial statements together, checking your credit and fine-tuning your business plan are good ways to prepare before applying since turning in supporting documents quickly could help expedite the application and approval process.
How To Get a Small Business Loan in 5 Steps
The business loan application and underwriting process varies by lender, but most banks and lenders follow the same general guidelines. To get a small business loan, expect to follow these general steps:
- Determine the type of loan you need. Some lenders limit what industries they’ll finance or how loan funds may be used, so determine how you’ll use the cash before applying for a loan. Also evaluate how much you need to borrow, as this may impact the type of loan you apply for and the best lenders to approach for funds.
- Familiarize yourself with your credit profile. Lenders typically look at a business owner’s personal credit score when evaluating a loan application. You should have a score of at least 680 to qualify for an SBA loan or a traditional bank loan, and 630 for equipment financing or business lines of credit. Short-term financing and merchant cash advances typically have less stringent requirements—averaging around 600 and 550, respectively.
- Research lenders. When shopping for a small business loan, determine whether your current bank offers small business loans that meet your needs. This can streamline the application process because the bank will already have your financial information on file. Next, research other banks, credit unions and online lenders to compare available loan amounts, repayment terms and rates.
- Gather required documentation. Required documentation varies by lender. However, most lending institutions require a business plan, at least 12 months of personal and business bank statements, tax returns for at least two years and details about any current and past business loans. Lenders also require copies of applicable business licenses and legal documents, details about available collateral and a description of how loan proceeds will be used.
- Submit a formal loan application. Once you research the best small business loans and prepare your business for due diligence, submit a formal loan application. The process varies by lender, so familiarize yourself with the application process and contact customer service with questions.
How To Get a Business Loan With Bad Credit
It can be tough to qualify for a business loan with bad or limited credit. If possible, giving your business time to become more established can make qualifying for a loan easier.
If you can’t wait, start by looking for online lenders as they can have more flexible qualification requirements. Nonprofits that focus on microloans can also be an option to fund a new business venture.
Lastly, business partners that are willing to invest in your business or co-sign on a loan can be another option to fund your business.
Alternatives to Small Business Loans
If a small business loan doesn’t seem right for your specific needs, consider other options to get the financing your business needs.
Business Line of Credit
Business Credit Card
Crowdfunding
Personal Loans for Business
Small Business Grants
Methodology
We reviewed 25 popular lenders based on 16 data points in the categories of loan details, loan costs, eligibility and accessibility, customer experience and the application process. We chose the nine best lenders based on the weighting assigned to each category:
- Loan cost. 35%
- Loan details. 25%
- Customer experience. 20%
- Eligibility and accessibility. 10%
- Application process. 10%
Within each major category, we also considered several characteristics, including available loan amounts, repayment terms and applicable fees. We also looked at minimum credit score and time in business requirements and the geographic availability of the lender. Finally, we evaluated each provider’s customer support tools, borrower perks and features that simplify the borrowing process—like online applications, prequalification options and mobile apps.
Where appropriate, we awarded partial points depending on how well a lender met each criterion.
To learn more about how Forbes Advisor rates lenders, and our editorial process, check out our Business Loans Rating Methodology.
Frequently Asked Questions (FAQs)
Can you get a small business loan with bad credit?
As with personal loans, it’s possible to get a small business loan with bad credit—scores as low as 580. However, you’ll have to demonstrate strong cash flow, and banks are more likely to require collateral to reduce the risk of lending.
Small business borrowers with bad credit also qualify for less competitive rates and pay more in interest over the life of the loan. If possible, giving your business time to become more established can make qualifying for an affordable loan easier.
What credit score is needed for a small business loan?
Traditional banks generally prefer a credit score of around 700 or higher for a small business loan. However, online lenders and credit unions might consider scores as low as 500. The specific requirements can vary significantly depending on the lender and your financial history.
What can you do if you’re denied a small business loan?
There are a number of steps you can take if you’re denied a small business loan. First, try to find out why your application was denied. If your SBA loan application is denied, you’re entitled to a notice of denial that details the reasons; you may receive this directly from the SBA or from your lender.
If, instead, you are denied a small business loan through an online lender or other financial institution, contact them to find out why you were not approved. They may be able to provide insight into how to improve your future approval odds.
Once you know why your loan application was rejected, take steps to rectify the underlying issues. For example, you may need to improve your credit score, establish more consistent sales or reassess the amount you need to borrow.
How hard is it to get a small business loan?
Getting a small business loan may prove more challenging than other financing options like business credit cards. Although qualification requirements vary by lender, most lenders typically look at the business owner’s personal credit score and the business’ annual revenue. Many lenders require a minimum personal credit score of 600 to 660 and annual revenue between $100,000 and $250,000.
We recommend confirming the qualification requirements with your preferred lender before applying.
What is the easiest way to get a small business loan?
The easiest way to get a small business loan may be through online lenders instead of traditional banks because borrower requirements may be more flexible. With an online lender, you may be able to quickly prequalify and get funding as soon as the same business day as long as you meet eligibility requirements.
How much income do you need to get a business loan?
Typically, lenders require businesses to have an annual revenue of between $100,000 and $250,000. If your business makes less than that, there are business loans for low-revenue companies that may offer funding options for your business.
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