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Attention small business owners: Do you have an urgent need to fill your inventory? Purchase equipment? Pump up your marketing campaign? Hire another employee? You’re in funding luck these days, thanks to the many websites that cater to small business loans online.
With the decline of smaller community banks, it’s harder than ever for you, as a business owner, to obtain the financing you need to keep your business up and running — and successful.
What are the benefits of getting a small business loan online versus going the traditional bank route?
- Your loan approval and getting cash-in-hand is a MUCH quicker process when you apply for loans online.
- If you can’t qualify for a traditional bank loan (i.e., your credit score isn’t up to par), you’re more likely to be approved by an online lender.
Of course, this raises the question — how can online lenders offer consumers financing that traditional lenders don’t offer? The short answer, unfortunately, is that your APR is normally much higher with online loans. BUT if you’re in dire straits and need money right away, your best bet is to secure one of the best small business loans online that we’ve reviewed here.
Ask yourself these few questions before searching for an online loan:
- How much cash do you need?
- How soon do you need it?
- What kind of financing can you afford?
- How long before you can pay it off?
- Are you willing to sign a personal guarantee? (Allows the lender to pursue your personal assets if you default.)
The major benefits of securing a small business loan online come down to saving you the time and hassle you’d likely face trying to get a traditional small business loan. If you need financing right away, your options are limited unless you consider an online loan source.
Read our reviews below to see what your options are. We’ve done the research to provide our small business lending recommendations along with some of the information you’ll need to get started.
OnDeck launched in 2007 to fill a much-needed financing gap for small businesses. They claim they’re committed to offering financing based on performance rather than just a credit score.
OnDeck offers two financing options: line of credit and term loans, which range from 3 to 36 months. Customers around the web rave about OnDeck’s seamless application and approval process and their exceptional customer support.
Funding Circle is a well-established and financially sound peer-to-peer lending site, meaning it’s directly backed by everyday investors rather than large financial institutions. It has an excellent reputation and has provided more than $10.2 billion in business funding globally. Funding Circle solely focuses on small business loans (no lines of credit).
Funding Circle isn’t your go-to funding source if you’re a startup — they require at least 2 years in business. But if you’re an established business, Funding Circle is worth serious consideration with some of the most competitive rates you can find online.
Kabbage is one of the better-known small business lending sites. It has major media endorsements, from MSNBC, Forbes, Time, etc., — and more than 100,000 small businesses as customers. However, potential borrowers be aware — Kabbage only offers loans structured as a line of credit; they don’t provide “traditional” small business loans.
If you’re looking for a long-term loan, Kabbage is not for you. They only offer 6, 12 and 18-month terms, and they front-load your fees for the first two months, so you have to pay more right out of the gate. But if all you need is quick money to stock inventory, for example, Kabbage is a trustworthy and easy way to accomplish that goal.
We know it’s hard to compare all the details, so we’ve included a comparison table of all the websites we’ve reviewed in this article to help you compare at a glance.
In case you’re new to lending, what’s the difference between a term loan and a line of credit? A term loan is a lump sum of money that is repaid over a fixed term. A line of credit is a revolving account that allows borrowers to draw funds, repay them and redraw from available funds.
|Best Overall: OnDeck||Lowest APR: Funding Circle||Quickest Access To Funding: Kabbage||Balboa Capital||Biz2Credit||Can Capital||Credibly||LendingClub||LendingTree||National Funding|
|Best Overall: OnDeck||Lowest APR: Funding Circle||Quickest Access To Funding: Kabbage||Balboa Capital||Biz2Credit||Can Capital||Credibly||LendingClub||LendingClub||National Funding|
|Business Term Loans|
|Loan Amount||$5,000-$500,000||$25,000-$500,000||N/A||Up to $250,000||$5,000-$5 Million||$2,500-$250,000||$5,000-$400,000||$5,000-$500,000||Unlisted||$5,000-$500,000|
|Lines of Credit|
|Line of Credit Amount||Up to $100,000||N/A||$500-$250,000||Up to $250,000||$10,000-$1 Million||N/A||N/A||N/A||Unlisted||N/A|
|Avg. APR Range||25%-35%||7%-33%||40%-80%||Unlisted||Varies||Unlisted||10%-40%||9%-35%||Varies||Unlisted|
|Terms||3-36 Months||6 Months -5 Years||6, 12, 18 Months||3-18 Months||Varies||6-18 Months||6-24 Months||1-5 Years||Varies||Unlisted|
|Approval Time||Same Day||1-3 Days||Same Day||Same Day||Same Day||Same Day||1 Day||Several Days||Up to 2 Days||Same Day|
|Earliest Fund Receipt||1 Day||5 Days||Same Day||Several Days||1 Day||2 Business Days||2 Days||4+ Days||Several Days||24 Hours|
|Min. Credit Score||600||Unlisted||Unlisted||None||Varies||Unlisted||500 or 600||Varies||Varies||620 (Equip. Financing)|
|Must Be In Business For:||1 Year||2 Years||1 Year||1 Year||Varies||6 Months||6 Months||1 Year||Varies||6 Months (Equip. Financing); 1 Year (Working Capital Loan)|
|Min. Income Requirement||$100,000/Year||Unlisted||$4,200/Month or $50,000/Year||$300,000/Year||Varies||$150,000 Gross Revenue||$15,000/Month Deposits||$50,000/Year||Varies||$100,000/Year (Working Capital Loan)|
|Personal Guarantee Required||Varies|
|Offers Merchant Cash Advance|
FastPay is not included in the table because there are no details about its financing/loan options on its website.
Click on one of the links below to jump to other websites we’ve reviewed that provide small business loans online.
Balboa Capital offers a wide range of small business loans, including working capital, cash advance, unsecured loans, and programs for women, minorities and veterans. This company has deep pockets and has been a stable source of financing for 10+ years.
We are concerned with the numerous complaints about billing problems, less-than-transparent fees, rates and terms, and unwanted sales calls. Also, many small businesses likely won’t qualify due to their hefty annual revenue requirement of $300,000.
Biz2Credit is a loan marketplace that serves as a facilitator between small businesses seeking loans and its network of partner lenders, which include traditional banks, alternative lenders, peer-to-peer lenders and other finance organizations. With their marketplace model, it’s hard to know up front what kind of loan you’ll be offered, the terms, APR, etc.
Biz2Credit, however, offers a wide variety of loans, including lines of credit and merchant cash advances, and they have special programs for women, minorities and veterans. Their website has a cool Biz Analyzer tool that helps you figure out what type of loan is best for your needs.
CAN Capital enjoyed 15+ years as a highly-stable alternative capital provider to U.S. small businesses. In late 2016, however, the company suspended its lending services citing internal leadership shakeups and poor loan performances. They resumed funding in July 2017 after executive hires and a new partnership with Varadero Capital.
Despite CAN Capital’s recent problems, current customers give this company two big thumbs up for their easy small biz loan process and customer support. Although you’re only required to be in business 6 months, the high-income requirement of $150,000 could make it tough for many to qualify.
Credibly offers competitive interest rates and a good track record of small business lending. Credibly offers 3 financing options: small business expansion loans, working capital loans and merchant cash advances. The catch is you have to have a financially sound business to the tune of having an average of $15,000 deposits per month for the last 3 months. They also have a reasonable minimum credit score of 500 to qualify for their Working Capital Loan (600 for Business Expansion). If you can qualify, they’re an excellent small business loan source for quick funding.
FastPay Capital is a unique company that specializes in financing and payment solutions for digital media agencies and publishers. This company has facilitated more than $2.5 billion in loans since its inception in 2009. They used to have detailed information on their site about options to get a line of credit against your company’s account receivables (pending invoices), but we can’t find any of that information online anymore. You must contact them to learn details about their financing options.
LendingClub is another peer-to-peer lending site with a secure base of investors. It’s been a major player in alternative online funding over the last decade, and small business loans are only part of their business. They offer more affordable APRs than many other websites we’ve reviewed here. With an origination fee of 3-8% on top of an annual APR, however, they’re not as good of a deal as you might think at first glance (but still much lower compared to others in this article).
In the past, LendingClub was one of our top picks for online small business loans, but they’ve dropped out of our best of categories. This is due to a pending FTC complaint alleging dishonest fee disclosures, marketing practices and other issues, as well as many complaints about poor customer service.
LendingTree is another loan marketplace, similar to Biz2Credit. LendingTree traditionally facilitated personal, auto, mortgage and other types of loans, but they branched out into small business lending in late 2014.
Their loans vary widely regarding terms, APR, etc. since they’re financed by a diverse group of lenders. The good news is you don’t incur a fee until you accept a loan offer, so it can’t hurt to try!
Founded in 1999, National Funding offers small business loans, working capital loans, equipment financing and leasing and merchant cash advances. They’ve provided more than $2 billion in financing to over 40,000 small businesses. Unfortunately, their website doesn’t disclose any interest or APR rates, fees or what it takes to qualify for term loans. You’re also required to make a weekly payment.
Experian, one of three major credit bureau’s in the U.S., shares some great tips about what can affect your business’s credit score in the video below.
Many of the websites we’ve reviewed here offer merchant cash advances in addition to providing small business loans or lines of credit. What’s the difference? A Merchant Cash Advance is available for small and medium-sized businesses that process credit card sales.
Instead of taking out a loan, you get a lump sum payment, and the lender gets a share of your future credit card sales. This is great for businesses who have poor credit and need cash immediately. The catch? Merchant Cash Advances come with a much higher APR, upwards of 100% to even 200%.
MyBizAdvance, an online broker that specializes in cash advances, is a quick option to get up to $500,000 in funds within 2 business days. There’s no application fee, and you’ll know if you’re approved within minutes.
The last thing you want do to is put in all the hard work to secure your business loan and grow your business only to run out of the necessary funds to pay it back in a timely manner. Our accounting guide can help you save costs and our commerce section can help you streamline your business and improve your margins with how-to guide’s on everything from e-commerce and inventory management to merchant accounts and POS systems.
What’s your experience so far with getting a small business loan?
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