4 Best Small Business Loans In 2023
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When your small business needs funding, where do you turn? Whether you’re looking to expand your business, cover expenses during hard times, or simply gain more financial flexibility, there are all sorts of circumstances in which getting a small business loan could give your business an advantage.
If your particular small business is in need of additional funds, here are four of the best small business loans you can find in 2023.
Idea Financial is a company that offers two types of products — business lines of credit and term loans. What makes Idea Financial unique is that the company boasts same-day approvals. While loan requirements are a little higher than the other options on our list, customers enjoy very competitive interest rates and low fees overall.
Loan amount: Up to $250,000
Loan terms: 12 or 18 months
Monthly revenue: $180,000 annually
Minimum credit score: 650
Why we like it: Quick online application with same-day approval, no origination or annual fees.
Additional features: Access to a dedicated business advisor, no prepayment penalties.
National Funding offers specialized loan products businesses across all types of industries, from medical to construction to agriculture and everything in between. In total, the company has helped more than 50,000 businesses get access to over $3 billion in total funding. Apply for a small business loan with National Funding and you’ll be promptly connected with a loan specialist and receive a decision in as few as 24 hours.
Loan amount: $5,000 – $500,000
Loan terms: 6 – 15 months
Monthly revenue: $100,000 annually
Minimum credit score: 500
Why we like it: Funding in as little as 24 hours, low credit score requirements.
Additional features: Access to a personalized loan specialist, discounts for early repayment.
Fundera is a marketplace that has helped more than 85,000 small businesses secure more than $2.5 billion in total funding to date. Fundera offers a wide range of loan products, from SBA loans to lines of credit to term loans and everything in between, and allows businesses to compare top loan options through one simple online application.
Loan amount: $5,000 – $5 million
Loan terms: Varies by lender
Monthly revenue: Varies by lender
Minimum credit score: 550
Why we like it: Plenty of small business loan options, funding in as soon as one business day, no borrowing or origination fees.
Additional features: Advice and comparison technology, single online application form.
Kabbage is a company that provides businesses with small business loans — most notably, lines of credit up $250,000 that give small businesses quick access to funds as needed. Kabbage is perhaps the most convenient lending option on our list, as it is accessible to many businesses that have bad credit.
Loan amount: Up to $250,000
Loan terms: 6, 12, or 18 months
Monthly revenue: $4,200
Minimum credit score: No minimum requirement
Why we like it: Fast funding for businesses with bad or average credit, no draw fees.
Additional features: Speedy, straightforward online application process.
What Are Small Business Loans?
A small business loan is exactly that — a loan designed for small businesses to get immediate funding that can be paid back over a specific term.
Although small business loan terms vary from lender to lender, most lenders require that you make routine payments until the full amount of the loan has been completely paid off.
Types of Small Business Loans
When looking for the right small business loan, there are multiple types of loans for you to consider:
- Installment loans: These loans are paid back with equal monthly payments that cover both principal and interest over a specific term.
- Short-term loans: These are installment loans that, as the name suggests, are required to be paid off over a shorter term — typically, 1 – 3 years.
- Long-term loans: These are installment loans that are required to be paid off over a longer term — generally, 3 years or more.
- Microloans: These installment loans typically have much lower dollar amounts and shorter payoff terms.
- Secured loans: These loans are backed by collateral—assets you own that may be used as payment if you aren’t able to pay back your loan.
- Unsecured loans: These loans are not protected by any kind of collateral, and instead, are approved solely on creditworthiness.
- SBA loans: These loans are government-backed, meaning the lender is either fully or partially guaranteed repayment of funds. This often allows lenders to offer better terms and interest rates.
- Line-of-credit loans: These short-term loans provide businesses with financial flexibility, allowing them to pull funds as needed and pay them back quickly.
- Balloon loans: These loans require that only the interest is paid during the life of the loan, with the principal due on the last day of the term.
- Equipment loans: These loans are designed to help small businesses purchase expensive equipment.
- Commercial real estate loans: These loans are designed to help small businesses purchase new real estate or improve their current real estate.
- Construction loans: These loans are designed to help small businesses finance the construction of a building or home.
- Working capital loans: These short-term loans allow businesses to cover everyday line items such as operating expenses, payroll, and rent.
- Accounts receivable loans: These short-term loans allow businesses to receive funds that are relative to their outstanding payments.
- Merchant cash advances: While not exactly a loan, a merchant cash advance allows a business to get cash upfront in exchange for future revenue.
Common Reasons for Applying for a Small Business Loan
There are a few different reasons why your business might consider applying for a small business loan:
- Expanding your business
- Improving cash flow
- Making new hires
- Buying equipment or inventory
- Covering operating expenses
- Refinancing a previous loan
- Expanding/purchasing real estate
How to Apply for a Small Business Loan
First, you’ll need to visit your potential lender’s website and check out of your loan options. This will involve answering a few questions about your small business. After completing this step, you’ll be presented with all of your small business loan options in one place.
From there, you’ll need to fill out the lender’s application form and wait for a response. Typically, this occurs within 48 hours of applying. If you’re approved for your small business loan, you shouldn’t have to wait very long at all for your funds to be deposited!
Why Online Lenders?
Online lenders present a handful of advantages for borrowers. First, the use of online tools and applications reduces the time needed to apply for, review, and offer a loan.
The use of these tools also results in fewer overhead costs on the lender’s part, and typically, this also means lower fees on the borrower’s end.
Questions to Ask About Small Business Loans
If you’re strongly considering a small business loan, you should be aware of the financial responsibility you’re about to take on. You’ll want to give your loan plenty of thought before signing the dotted line and this process involves asking a handful of important questions.
Ask yourself the following questions:
- What do I need the money for?
- How much money do I need?
- How quickly do I need it?
Then, ask your lender some of the following questions:
- Do you lend to business like mine?
- What is the interest rate and total cost of the loan?
- What does my payment schedule look like?
- When would my first payment be due?
- How should payments made?
- Do you report payment history to all credit bureaus?
What Is the Average Interest Rate on a Small Business Loan?
A small business loan allows businesses to get quick funding with reasonably fair repayment terms and fees. The average small business loan interest rate varies by lender, but generally speaking, a loan’s interest rate is relative to the amount of risk that the lender is taking on.
What Is the Average Term for a Small Business Loan?
Different types of loans tend to offer different terms. An SBA loan, for example, may have terms as short as three years or as long as 25 years, whereas loans from non-bank lenders typically have terms between one and five years.
Is Now a Good Time to Get a Small Business Loan?
If your business is facing hardship during these turbulent times, you may have no option than to take out a small business in order to keep your business alive.
But even if your business isn’t desperate need of immediate funding, you may still want to take advantage of low interest rates if you sense that you may need funding down the road.
Get the Funds You Need with a Small Business Loan
With some information about the different types of small business loans that are offered and a handful of the best small business loans currently available, the ball is now in your court.
Thanks to online lenders and quick application processes, you can apply for a loan online today and get much-needed funds for your business in no time!