Now is the best time to get online business loans, because the subprime mortgage crisis swept our country ten years ago. The economic conditions have improved and the competition among the lenders has increased.
However, it does not mean that all the banks will gladly cooperate with entrepreneurs. You can try and, if you qualify, the interest rate can be low. But, like the other small business owners, you probably won’t get anything as those banks do have strict requirements.
Online lending is an alternative option as today many web-based lenders are willing to cooperate with the businessmen.
According to the Small Business Credit Survey, 32% of applicants turned to online lenders in 2018, up from 24% in 2017, and 19% in 2016.
*The growth occurred despite lower applicant satisfaction with online lenders compared to satisfaction levels with large and small banks.
And yes, one has more chances to get approved for one of the best small business loans offered on the web, but it is necessary to remember in that case the APR will be higher.
Compare the Best Small Business Loans
If you are in search of the best business loans, we offer a review of a few online lenders.
We will profile all of them and describe the criteria for choosing the top lender. We will also cover the basic information on financing options, including tips for getting approval. Keep on reading, compare business loans online and you will discover why these lenders stand out among others.
Top Peer-to-Peer Small Business Loan Lenders
LendingClub started using the “peer-to-peer” model in 2014. It connects a borrower with an investor, who is eager to become a funder. This lender gives low-interest loans to borrowers with a high credit score.
- Amounts vary from $5,000 to $300,000.
- Fixed rates start from 5.99% and can reach 29.99%.
- The rate is fixed after the loan is issued.
- The origination fee is 1,99%-6,99%.
- Fixed monthly payments.
Lending Club business loans may be a profitable option if:
- Your credit score is good. The company informs that the borrower should have fair personal credit.
- Your credit history is long. The minimum credit history is 3 years. Borrowers with more than 16 years of credit history are appreciated.
- Your revenue is higher than the national household median of $55,775. The average borrower of LendingClub gets $76,135 yearly.
- Your debt-to-income ratio is low. The ratio of the average borrower is 18,32%, not including the mortgage. The maximum ratio may be as high as 40%.
- You don’t need fast business loans. In certain cases, LendingClub needs up to a week to check applications and connect a borrower with an investor.
Prosper is one more peer-to-peer online lender. It offers personal loans for small business purposes. The company assigns a borrower a grade, which determines the interest rate he receives and the origination fee.
- Amounts start from $2,000 and up to $35,000.
- Its typical APR is between 5.99% and 35.99%.
- After approval, the funding process lasts 1-3 days (in certain cases it takes 2 weeks to be funded).
- The origination fee is 1% – 5%.
Prosper business loans may be the best option for those who:
- have significant income
- have at least 2 years of credit history (the borrowers average of 11 years)
- want to get financed by the company that’s been operating for more than 10 years.
Best Business Loans from Direct Lenders
OnDeck offers easy business loans in the U.S. issuing over 8 billion dollars. This lender gives loans for new businesses, as it does not require the high credit score.
- Amount: from $5,000 to $500,000 for term loans; up to $100,000 for lines of credit.
- APR: from 9% up to 99% for term option and from 14% to 40% for lines of credit.
- Term loans are repaid daily or weekly (depending on the repayment period); lines of credit are repaid on a weekly basis;
- The stated funding time is 24 hours but typically it takes a couple of days.
OnDeck can give easy small business loans to people who:
- Need quick business loans. One can apply online or via the phone in 10 minutes and get money in 24 hours.
- Do not have a perfect credit score. The minimum credit score is 500 (for term options) and 600 (for the line of credit).
- Have unstable cash flow. A line of credit from OnDeck will help you get through the periods of low cash flow.
- Have the company operating for at least 1 year, while 7 years is the requirement for the median customer.
Keep in mind that the OnDeck small business loans have the following drawbacks:
- If you repay the term loans early, it won’t save your money because OnDeck requires paying a fixed amount of fees.
- Certain kinds of companies won’t get a quick small business loan, such as a pawn shop or a funeral service.
This is one of the small business lenders, that offers quick access to working capital. The company can approve up to $150,000 in minutes, as it can automatically obtain the data and verify your bank account. Funding over $150,000 requires a manual review and much more time.
- The amount is $2,000 to $250,000.
- APR starts from 24%.
- Two variants of the repayment term: 6 and 12 months.
- Funding time starts within the first few minutes but can last even several days.
Kabbage business loans are perfect for borrowers who:
- Do not have ideal personal credit.
- Need instant money.
- Prefer short term business loans.
However, Kabbage small business loans are one of the most expensive. An APR might be as high as 90% while the fee structure is complicated.
Fundera Lending Marketplace
Fundera cooperates with not so many lenders as the company is very selective about what lenders they partner with. That’s why they don’t have any specific requirements for a borrower.
It offers many commercial options for different purposes, such as SBA and term loans, equipment financing and a business line of credit, invoice financing and merchant cash advance, short-term small business loans, and startup financing option as well as personal loans for business.
- Maximum amount starts from $2,500 to $5 $5 million (it depends on the loan type you’ve chosen).
- Its average business loan interest rate is 7-30%. The age of the company influences on the fees: the larger the company, the smaller the fees.
- The funding process might take 1 day or 3 weeks.
According to its FAQ, the commonly required items are:
- The statements from the bank, tax returns and credit card statements.
- Balance sheets and profit and loss statements.
- Verification from the landlord if the borrower rents office space.
It is necessary to know that some of Fundera’s partner funders have high-interest rates or fees and they are quite possible, which is not a very suitable option for businessmen.
Featured Business Loan Providers
Where to Look for Financing
We focus on alternative business loans, but you should consider the best banks for small businesses as well. One can apply for the first time business loans from institutions, such as:
- Banks have the lowest small business loans rates but often require collateral.
- Credit unions approve twice as many requests as the banks do.
- SBA program provides government backing to help riskier borrowers get a loan from credit unions and partner banks.
- Online lenders give you money in a week or less but have higher unsecured business loans rates.
How to Get a Small Business Loan
It is much harder to get a business loan than a personal one. Read the tips on how to get new small business loans:
1. Improve your credit. In case your personal credit score is low, the lenders will perceive you as a greater risk.
2. Create a business plan. To get more money from a lender, present a detailed plan. Show your bank statements. Prove why you are better than others.
3. Compare all the available options. Lenders are the ones who make a choice. Nevertheless, try all the options: banks, credit unions, peer-to-peer or private business loans. Compare the rates.
4. Try the appropriate sources. As a rule, big banks give bigger amounts to companies with a good reputation. It’s not easy to get new business loans. However, SBA and online lenders are ready to give them. Choose the lender, whose requirements you can meet.
To choose the best business loan, consider the following factors:
- high amounts
- clear requirements
- competitive APRs
- flexible terms
- detailed website
Looking for Options Without Hustle
Despite a wide range of alternative lenders, it is hard to qualify for long term business loans. To choose the best one, you should do thorough research.
LendingClub is perfect for the owners of established companies. OnDeck and Kabbage are great if you’ve started your business recently. If you cannot handle your finances, try hiring a public accountant. Such kind of investment will pay off when your applications get approved.