11 Best Small Business Loans of 2020

If you’re in the market for a small-business loan, you’re in the right place.

With all the financing options out there, trying to compare business loans can feel overwhelming. You can borrow from traditional lenders (banks or credit unions) to get the best deals, or you can borrow from online lenders for lower loan qualifications. You can choose from term loans, lines of credit, invoice financing, microloans, and more. It’s a lot.

Which is why we’ve taken all those financing options and narrowed them down to the best small-business loans out there. In this roundup, we’ll tell you what makes these lenders great and help you decide which is the best fit for your business.

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Lendio: Best overall for small business

Lendio is the best business loan company for most businesses. That’s because Lendio is more like a loan matchmaker than a lender—which is great news for you. All you have to do is fill out a 15-minute online application, then Lendio will use your application to match you with the right loans and lenders for your business. Within 72 hours, it gives you a list of loans you qualify for; you can choose the best loan and finalize things.

Lendio partners with over 75 lenders (including some on this list), which improves your odds—not to mention your efficiency. Those lenders offer everything from short-term business loans to merchant cash advances to equipment financing to real estate loans. (The table above shows just a small sampling of Lendio’s financing products.)

Given its many options and personalized loan matchmaking, Lendio should be a no-brainer for just about any business.

BlueVine: Best for larger cash flow loans

BlueVine has three different funding options available, including term loans, lines of credit, and invoice factoring. While all three are decent choices, it’s that last one that makes BlueVine stand out. In addition to having an easy-as-pie application, BlueVine offers invoice financing up to $5 million.

With invoice financing, your invoices act as collateral for your loan—and that collateral makes these loans easier to qualify for than other funding types (it also means that usually only B2B businesses qualify).

And sure enough, BlueVine has relatively lax application requirements—just $100,000 in annual revenue, three months in business, and a 530 credit score.

Of course, you probably won’t qualify for that full $5 million with just the bare minimum qualifications, but BlueVine makes large loans more attainable.

Fundbox: Best for low credit

Fundbox offers lines of credit. And rather than make you fill out a detailed application, Fundbox connects with your banking account or your accounting software. If the automated algorithm likes what it sees, you’ll get approved within minutes.

In addition to being fast and convenient, Fundbox’s loan application is great for businesses that have low credit because Fundbox has one of the lowest minimum credit scores out there.

Plus, Fundbox’s other borrower requirements are nice and low too. You can apply after just three months in business. And you can qualify with just $50,000 in annual revenue.

While Fundbox’s financing products aren’t the cheapest out there, its accessibility makes it a great option for businesses that can’t qualify for low-interest term loans.

Fundera: Best for personal loans

Fundera works a lot like Lendio, in that it’s a lending marketplace that lets you compare loan offers. The difference? Fundera’s marketplace includes personal lenders.

Some businesses (especially relatively new ones) will have an easier time qualifying for personal loans than business loans. After all, personal lenders don’t care about how long your business has been around. Likewise, they may have income requirements, but that income doesn’t necessarily need to come from business revenue.

With that said, most businesses are better off using business loans rather than personal loans, since business loans generally have lower rates and longer terms. Luckily, Fundera lets you apply for regular business financing too (more types than listed in the table above). The personal loans are just an added bonus.

So if you like the idea of a lending marketplace, and you think you might be interested in a personal loan, give Fundera a go.

Funding Circle: Best for peer-to-peer lending

Funding Circle is a peer-to-peer (P2P) lender, so it’s technically connecting you to investors rather than lending directly to you. You probably won’t notice much of a difference as a borrower, since you’ll still apply, get funded, and make monthly payments through Funding Circle. Mostly, Funding Circle’s P2P model means that it offers great rates on term loans—if you can qualify.

Funding Circle has some of the stiffest application requirements of the lenders on this list (it insists on a full two years in business, for example), but it also has some of the lowest rates. Plus, Funding Circle is one of the few alternative lenders that lets you make monthly payments (rather than daily or weekly).

All that makes Funding Circle a good deal, if you can get it.

(Note that Funding Circle has started offering SBA business loans too. These have even higher borrower requirements than Funding Circle’s usual loans. And at least right now, Smartbiz―reviewed below―remains our favorite source for SBA loans.)

Honorable mentions

Kabbage: Most convenient

Kabbage offers only lines of credit. Much like Fundbox, Kabbage has an automated application that just requires a connection with your bank account. That means you can get a response to your application in mere minutes, making Kabbage a fast, convenient way to apply for funding. But the application is just the beginning. Once you’re approved, Kabbage lets you access your line of credit through PayPal, your bank account, or a physical card. With PayPal, you can access funding in minutes.

So while Kabbage has high rates, its convenience makes it good for business owners that need fast, accessible working capital.

Kiva: Best for microloans

Kiva exclusively offers microloans—in this case, loans under $10,000. A lot of small businesses will want a larger loan, which is why Kiva isn’t in our top five. But if you’re in the market for a little loan, then it’s hard to go wrong with Kiva—it offers an unbeatable 0% interest rate. The catch? There’s a lengthy funding process that requires you to get your family and friends to contribute to your loan before you crowdfund the rest.

Still, that 0% interest rate makes Kiva a worthy crowdfunding platform for anyone who needs a smaller loan (and can wait a while to get it).

OnDeck: Best for repeat borrowing

If you think you’ll be taking out several long- or short-term loans over the next few years, then take a good look at OnDeck. This lender offers incentives like lower rates and reduced fees to its repeat customers, which means you can get better deals the more you borrow. Fortunately, the vast majority of OnDeck’s customers have great things to say about the company, so you’re likely to have a good experience as you borrow.

Just keep in mind that OnDeck has higher application requirements than some of the other lenders on this list, so brand-new businesses should apply elsewhere.

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Accion: Best for startup loans

Unlike most lenders, Accion wants to understand your business and what makes it unique. So while it definitely will look at your credit history and your annual revenue, Accion’s application process lets you make the case for why your business deserves funding. There are some caveats: Accion’s application takes longer than any of our top lending companies. And if you need a large loan, Accion might not be your best bet; while it offers loans up to $1 million, its loans tend to be closer to $15,000.

Still, if your startup needs a loan, Accion might be just the unique lender you want.

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StreetShares: Best balance of requirements and rates

StreetShares doesn’t have the best rates or lowest requirements out there, but it might have the best combination of the two. StreetShares’s requirements include a fair credit score and just $25,000 in revenue, but it gives you the chance to qualify for rates as low as 7%—almost as good as what you can get from some traditional banks. (Of course, the stronger your application, the better the rates you can expect to actually get.)

So if you want to try for lower rates, despite not having a 10-year-old, $1 million revenue business, give StreetShares a look.

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Lendr: Best for non-loan financing

Lendr only offers non-loan types of working capital―invoice factoring and merchant cash advances, to get specific. Those types of funding come with higher costs and shorter repayment terms than traditional loans. But they also come with low credit requirements, making them an important source for some businesses. And Lendr is a better working capital provider than most. It’s got excellent reviews and fair borrower requirements.

Put simply, Lendr’s types of funding aren’t our favorite. But if you need working capital financing, Lendr is one of the better providers we’ve found.

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SmartBiz: Best for SBA loans

If you’re interested only in SBA loans, then give SmartBiz a try. It claims to simplify the SBA application process with its loan marketplace. Much like Lendio, SmartBiz delivers your one application to multiple lenders, matching you with your best options. But unlike other lending marketplaces, SmartBiz deals exclusively in SBA loans. That makes its application requirements stiffer, but it also means you can get super low rates.

If your business meets the qualifications for SBA loans, use SmartBiz to streamline your application process.

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Other business loan companies

The list above represents our favorite lenders, but you have plenty more financing options where those came from. Here are more top small-business lenders you might want to consider.

FAQS about small-business loans

How do I choose the right business loan for my business?

To figure out which loan is best for you and your business, you need to compare things like types of loan, loan amounts, interest rates, fees, and repayment terms. You’ll want to figure out both what kind of loan you need as well as what kind of deals you can qualify for.

For example, if you’re making a big commercial real estate purchase, you’ll want a big real estate loan rather than a small line of credit—but the qualifications on the real estate loan might be stricter.

We’ve done a lot of the legwork for you with our rankings, but remember that lenders may not offer you the lowest rates or the biggest loan amounts. So before you accept a loan offer, make sure you understand the details of your offer. (This is one of the reasons we like Lendio: it lets you compare loan offers for your specific business.)

Want more help narrowing things down? We’ve got a guide to choosing a business loan.

What’s the difference between peer-to-peer and direct lending?

Direct lending means that you get your business loan directly from a financial institution, like banks or alternative lenders. With peer-to-peer lenders, on the other hand, your “lender” is really a platform that connects you with investors—and those are the people actually giving you money.

For more nitty-gritty details, you can take a look at our explanation of peer-to-peer lending.

Are there specific loans for women-owned businesses?

Not exactly; the same anti-discrimination laws that keep lenders from denying someone because she’s a woman also keep companies from approving someone because she’s a woman. That being said, there are small-business lending companies that have programs to help women access loans or that have loans that might work well for women business owners.

You can find out more in our guide to business loans for women.

Are there loans for veteran-owned businesses?

There used to be several loans specifically for veterans, but most of those programs have expired. But it’s not all bad news; there’s still several grants, franchising opportunities, and business programs for veterans—all of which we round up in our article on financing for veteran-owned businesses.

Can I apply for a personal loan to fund my business?

Sure, you can. In fact, some personal loan companies (like Prosper) advertise their personal loans for business use. But is it a good idea? Maybe. A personal loan won’t build business credit, which could make it harder to get business financing in the future. But if you can’t qualify for a business loan yet, you might find that a personal loan is better than nothing.

We can’t tell you what’s right for your business; we trust you to figure it out though.

Small-Business Funding Growth in 2019

Small-business financing is about more than just funding a new project or covering a cost—every dollar an entrepreneur gets is an opportunity to help their business grow and succeed. And success for small businesses means success for the nation’s economy and growth in your local economy.

Since we at zhulitouzi.com are all about businesses succeeding, we decided to look into the state of funding in 2019. We examined how the average loan size and number of funded loans changed in each state from 2018 to 2019.

The state of small-business financing

The numbers painted a sometimes surprising picture of small business in the United States.

We learned, for example, that Alaska and North Dakota had the highest average loan size in 2019 ($31,643 and $30,838, respectively), while South Dakota had the smallest (just $5,199). Some loan applicants will find those numbers surprising, given that lenders often offer business loans up into the millions of dollars. But 71% of businesses borrow $50,000 or less from alternative lenders,⁴ and most small businesses need only a few thousand dollars to grow.

We were also surprised by where businesses are getting approved for capital. The District of Columbia saw huge increases in the number of businesses funded, as did Wyoming and Vermont. So if you’re looking for the next economic powerhouse, those might be states to watch.

On the other hand, New Mexico, Oregon, and Nebraska were the only three states that took out fewer loans in 2019 than in 2018. We’ll be interested to see if the trend continues in 2020.

Methodology

We got our small-business lending data from Lendio. We drew on key indicators from Lendio’s SMB Economic Insights quarterly reports, including loan application data and loan funded data. All our data comes from Q3 2018 and Q3 2019.

Small-business funding by state

You can find out what small-business financing looks like in your state with the table below—whether funding is growing or shrinking and how much businesses are getting. And while you’ll need to apply for financing to find out what you personally qualify for, we hope these numbers give you a good starting point for setting your expectations.

For more details on the stats in your state, you can view Lendio’s quarterly reports by state.

The takeaway

We recommend Lendio as the best small-business loan company for most businesses, thanks to its plentiful options and personalized matchmaking. But ultimately, you know your company best. With our ranking of the best small-business loans, you can find the lender and loan that fits your unique needs—and use that newfound working capital to grow your business.

Ready to apply? Check out our guides to understanding loan rates and avoiding common business loan mistakes.

Disclaimer

At zhulitouzi.com, our research is meant to offer general product and service recommendations. We don’t guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.

Sources

1. 1. U.S. Small Business Administration, “Dissecting Access to Capital”
   2. Trustpilot, “CAN Capital“
   3. Better Business Bureau, “CAN Capital, Inc.“
   4. NDP Analytics, “The Economic Benefits of Online Lending to Small Businesses and the U.S. Economy”