Best Business Loans: Compare Loan Rates

National Funding

National Funding is an established provider of small business loans and equipment financing. It’s recognized for its quick application process and rapid funding, with the potential for businesses to receive funds within 24 hours of approval.

Potential borrowers should be mindful of the costs associated with National Funding’s loans, as interest rates and fees may be higher compared to traditional bank loans, and frequent repayments are typically required.

Offerings:

• Business Loans: Short-term loans ranging from $5,000 to $500,000 for a variety of business needs.
• Equipment Financing: Up to $150,000 available for purchasing or leasing business equipment.
• Repayment Terms: Flexible terms from 6 to 15 months for business loans, and 2 to 5 years for equipment financing.

Borrowing Requirements:

• Credit Score: A minimum credit score of 600 is generally required.
• Time in Business: At least 6 months for most funding options, making it accessible to relatively new businesses.
• Annual Revenue: Typically, a minimum of $250,000 annual revenue is necessary.
• Business Checking Account: Applicants need to have a U.S.-based business checking account.

Fora Financial

For small business owners exploring loan options, Fora Financial could be a standout choice. It specializes in quick, direct lending and offers a variety of financing solutions, including merchant cash advances and short-term loans, aimed at helping businesses grow.

Known for fast funding, clear fee structures, and an uncomplicated qualification process, Fora Financial makes securing necessary capital both accessible and flexible. With funding possible within just a few days and no strict collateral requirements, Fora Financial is well-suited for businesses looking for an efficient financial boost to meet their goals.

Offerings:

• Merchant Cash Advances (MCA): This product operates by purchasing a percentage of future credit card sales. The repayment is made through a daily holdback of a percentage of card sales, with the flexibility of weekly payment plans in addition to daily ones. Unlike traditional loans, MCAs use a one-time factor rate for repayment calculation.
• Short-Term Loans (STL): Offered with a term length typically less than a year, these loans also use a flat fee rather than an interest rate and require daily or weekly repayments. Fora Financial provides a discount for early repayment, which can lower the overall cost of the loan.

Rates and Fees:

• Borrowing Amount: Ranges from $5,000 to $1.5 million.
• Term Length: For STLs, it’s 4 to 15 months, whereas MCAs have no fixed term length due to their repayment mechanism.
• Interest Rates: Generally range from 15% to 40%, reflecting the short-term nature and higher risk associated with these loans. The actual cost can be high, but Fora Financial compensates with fast funding and ease of qualification.
• Borrowing Fee: A one-time fee ranging from 10% to 30% of the borrowing amount.
• Origination Fee: Between 1% and 4% of the borrowing amount.
• Collateral: Not required for either product type.

Borrowing Requirements:

• Minimum Time in Business: At least 6 months.
• Business Revenue: A minimum of $15,000 in monthly gross sales for general qualifications.
• Credit Score: A minimum credit score is not prominently advertised, but past information suggests a requirement as low as 500 for consideration.

OnDeck

OnDeck offers loan options primarily for small- to medium-sized businesses, with a focus on term loans and lines of credit.

OnDeck could be a viable option for businesses in need of quick funding and those who might not meet the stringent requirements of traditional banks. However, the high APRs and additional fees are important factors to consider before proceeding

Offerings:

Term Loans

• Loan Amounts: $5,000 to $250,000
• Estimated APR Range: 35.4% to 99.9%
• Fees: Origination fee of 0% to 4% of the loan amount
• Repayment Schedule: Daily or weekly
• Term Length: Up to 24 months
• Funding Speed: Same day for loans up to $100,000 under certain conditions

Lines of Credit

• Loan Amounts: $6,000 to $100,000
• Estimated APR Range: 39.9% to 77.9%
• Fees: $20 monthly maintenance fee (can be waived under certain conditions)
• Repayment Schedule: Weekly or monthly
• Draw Term Length: 12, 18, or 24 months
• Funding Speed: As fast as the same day, with instant funding available for withdrawals between $1,000 and $10,000

Borrower Requirements:

• Minimum Credit Score: 625 or higher
• Minimum Time in Business: 12 months
• Annual Revenue: $100,000 or more
• Other: Business checking account required

Other Considerations:

• OnDeck does not lend to businesses in certain industries and states, including Nevada, North Dakota, and South Dakota.
• They require a UCC-1 blanket lien and personal guarantee for term loans.
• OnDeck may be more suitable for established businesses rather than new startups, as the latter might not get favorable terms due to less robust financial histories.

Fundbox

Fundbox is an online lending platform that specializes in offering business lines of credit.

Fundbox is known for its fast application process and the ability to make quick funding decisions, often within minutes. Funds can typically be deposited as soon as the next business day after approval.

However, it’s important for potential borrowers to consider the higher APRs and frequent repayment schedule when deciding if Fundbox’s services align with their financing needs.

Offerings:

• Business Lines of Credit: Fundbox provides revolving lines of credit that function similarly to credit cards, allowing multiple draws up to a set credit limit.
• Loan Amounts: Credit lines range from $1,000 to $150,000, catering to various small business needs.
• Repayment Terms: Borrowers can choose between 12- and 24-week repayment periods, with weekly payments.
• Fundbox Plus: A subscription-based model offering lower-priced loans and the option for extended repayment terms of up to 52 weeks for a $99 monthly fee.

Borrowing Requirements:

• Credit Score: A minimum personal credit score of 600 is required, making it accessible to those with fair credit.
• Time in Business: Businesses must be operational for at least 6 months, which is favorable for newer businesses.
• Annual Revenue: A minimum of $100,000 in annual revenue is needed to qualify for a line of credit.
• Business Checking Account: Applicants must have a business checking account in the U.S.
• Industries: While Fundbox serves various industries, certain types are restricted, including adult entertainment, firearms sales, and gambling, among others.

Tips For Comparing Small Business Loans

Look Mainly at the APR When Comparing

The APR, or Annual Percentage Rate, is the most important thing to compare because it includes all the different costs associated with the loan.

Interest rates, service charges, origination fees and other costs are all taken into account when calculating the APR. That makes it possible to directly compare the loan in question to another loan.

Prequalify if Possible

Many lenders have a pre-qualification process, which allows you to share your business details, business plan, revenue, and other relevant information with the lender.

They then do a soft credit check, which does not affect your credit score, and you learn which loan amount, terms, and rates you qualify for.

If possible, always prequalify.

A Shorter Loan Term Usually Means a Cheaper Loan

The longer the loan term, the longer time the interest rate can compound, making your loan more expensive.

For that reason, your loan term should be as short as you can afford. So get clear on how much money you can put towards the monthly payment.

Make a Budget and Plan

You shouldn’t take out a business loan unless you really need it. You must have a clear idea and plan for what you are going to achieve with the money.

Doing so will allow you to know exactly how much money you need to borrow and use the money more effectively.

You can use our budgeting tool to account for your business expenses and income.

Different Types of Small Business Loans

Business Lines of Credit

A business line of credit (LOC) provides business owners with a revolving credit facility that can be used as needed. You repay what you owe, plus interest, which then becomes available to your business to borrow again.

💡 Tip: This is a great option if you need a constant flow of working capital without having to reapply for another loan.

SBA Loans

SBA loans are backed by the US Small Business Administration (SBA) and they come with longer terms, smaller down payments, and lower interest rates.

This may sound very attractive, but there are very specific requirements that you have to meet to qualify for an SBA loan.

Your business needs to fit the definition of a small business and had to be rejected for private funding, among others. Applying for an SBA loan can take some time, but it can be worthwhile.

There are different types of SBA loans and these include 7(a) loans, microloans, CSC/504 loans, and more. SBA 7(a) loans are the most popular for working capital of up to $5 million.

SBA microloans are loans for amounts up to $50,000 and they typically don’t require a down payment. What makes these loans tricky is that they are not guaranteed by the SBA and you’ll need to offer some collateral to secure funding.

Business lines of credit are a great option to handle short-term cash flow problems and they tend to come with lower interest rates than credit cards.

The drawback is that they may come with stricter credit history requirements and in some cases, they also require a personal guarantee, which leaves the business owner responsible for the debt.

Business Credit Cards

A business credit card is another form of revolving credit for businesses, as lenders let you use the funds you need, pay it back with interest (in most cases), and make it available to you again.

The benefit of a business credit card is that it is accepted almost everywhere and it gives you a quick solution to short-term cash flow.

Business credit cards are best used for smaller expenses that you can quickly repay. This will save you on interest and help you build a good credit history.

Equipment Financing

As the name implies, equipment financing gives you the finance you need to lease additional equipment for your business.

With this financing option, the term “equipment” is quite broad and it can cover anything from construction equipment to office furniture and software.

Because the equipment serves as collateral for the loan, even businesses with bad credit can qualify for equipment financing, although you’ll get much better interest rates with a good credit history.

Commercial Real Estate Loans

Commercial real estate loans allow businesses to buy real estate. There are different types of real estate loans but most of them come with long repayment terms (up to 30 years) and fixed interest rates.

When you take out a commercial real estate loan, the real estate itself will serve as collateral. That’s why aspects like the location of the property and its usability will affect the type of deal you will be offered.

Keep in mind that these loans have a long funding wait time and often have strict requirements.

Cash Flow Loans

Cash flow loans come in various types and they are designed to help out with short-term cash flow. An example is when you are waiting for a client to pay their invoice but you have bills that are due.

A cash flow loan can help you get quick cash to pay your bills while you wait for payments to come in.

Cash flow loans can come in the form of invoice financing, lines of credit, and merchant cash advances.

Microloans

A microloan is similar to a term loan but smaller. Microloans generally come in amounts of $50,000 or less ($13,000 is the average SBA microloan) and they are easier to obtain than large new business loans.

Microloans usually have higher interest rates and they offer a good opportunity to build your credit profile. The process is fairly quick and you can get a microloan approved in about two weeks.

Requirements by Loan Type

There are many different types of small business loans that are fit for different purposes and have different requirements.

Use the table below to figure out what type of loan is best for your business.

Note that the table shows the general requirements for each type of business loan. The exact requirements, loan amounts, and APR range will vary from lender to lender. 

Each Requirement Explained

• Business Insurance: Depending on the type of business and loan, proof of insurance may be necessary.
• Business Plan: Some loans, especially those from traditional banks or the SBA, might require a detailed business plan outlining the company’s strategy, financial projections, and market analysis.
• Business Revenue and Financials: Proof of stable and sufficient revenue is critical. Lenders often require financial statements, such as profit and loss statements, balance sheets, and cash flow statements.
• Bank Statements: Lenders often review several months of personal and business bank statements to assess cash flow and financial health.
• Cash Flow: A review of the inflow and outflow of cash to evaluate a business’s liquidity and its capacity to maintain operations and handle debts. Positive cash flow is crucial for loan approval.
• Collateral: Some loans, like equipment financing or commercial real estate loans, require collateral which serves as security for the loan.
• Credit Score: A strong personal credit score is often essential, with many lenders preferring scores in the high 600s or above. Business credit scores may also be evaluated for more established businesses.
• Debt-to-Income Ratio: This measures how much debt you have compared to your income, helping lenders assess your ability to manage and repay additional debt.
• Down Payment: For certain types of loans, such as commercial real estate, a down payment of up to 20-30% may be required.
• Existing Debt: Lenders will consider the amount of existing debt the business has and its repayment history.
• Fixed Charge Coverage Ratio (FCCR): This ratio determines a business’s ability to pay its fixed charges (like debt payments and leases) with its operating income.
• Guarantees: Personal guarantees from business owners may be necessary, especially for new or small businesses without substantial collateral.
• Industry Type: Certain industries may be considered higher risk than others, influencing eligibility and terms.
• Legal Documents: This may include business licenses, articles of incorporation, commercial leases, or franchise agreements.
• LTV Ratio: For loans like commercial real estate loans, the loan-to-value ratio is important as it dictates the maximum loan amount relative to the property’s value.
• Owner’s Equity: Lenders may require business owners to have invested a certain amount of their own money into the business.
• Tax Returns: Both personal and business tax returns for the previous two to three years may be required to verify income and tax compliance.
• Time in Business: Lenders usually require that a business has been operational for a certain period, often a minimum of one to two years.
• Use of Funds: Lenders may specify how the loan can be used, requiring a clear outline of how the funds will be deployed.
• Working Capital: Lenders assess if current assets exceed current liabilities to ensure the business can cover short-term obligations.

Getting a Business Loan Step by Step

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