If you're in need of a quick influx of cash for your small business, you've never had more options. Long gone are the days when you had to wait months and make multiple trips to the bank to secure a loan. Although traditional banks scaled back lending to small businesses following the 2007-2009 recession, online lenders jumped in to fill the void. In little less than a decade, dozens of online lenders have sprung up ready to offer funding to cash-strapped businesses in a matter of days.
Of course, you'll pay for that speed and ease. A faster, simpler loan comes at a higher cost - sometimes much higher. Here we review some of the best online lenders for small businesses.
Best Online Lenders
Kabbage was established in 2011 and since then has lent more than $1.6 billion to help more than 100,000 small businesses purchase inventory, hire staff or upgrade their equipment, among other things. In 2018, the company spearheaded an initiative to mitigate the growing cybertech risks in fintech. Named one of the Top 50 Top Small Business Lending Platforms by Forbes, Kabbage has a solid business and positive customer service ratings. You can choose what online financial data you want to use to apply (for example, your business checking account, QuickBooks, Amazon, PayPal). Once you qualify, you have instant access to a line of credit. The company's rates may be a little higher than some of its competitors, but you only pay fees on the funds you withdraw. Kabbage also offers a purchasing card, which is linked to your Kabbage account.
Best for: Fast Cash/Line of Credit
Credit lines from $2,000 to $250,000
- Eligibility requirements: Minimum $50,000 in annual sales and at least one year in business
- Terms: Six, 12, or 18-month loans
Interest rates/fees: Every month, you pay back 1/6 , 1/12, or 1/18 of the total loan (depending on loan term), plus a monthly fee between 1% to 10%. This amounts to an APR somewhere between 24% to 99%.
No early payment fees.
- Turnaround time: You can apply and get approved in as little as seven minutes.
- Reputation: A+ rating from Better Business Bureau. Accredited with BBB; 32 customer complaints with the BBB closed in the past three years. BBB customer review summary: 3.7/5
OnDeck is one of the largest, most established online lenders, having lent over $12 billion to more than 50,000 small businesses since its launch in 2007. It has a variety of funding options, including short or longer-term loans and lines of credit. OnDeck loan specialists are available to advise you on choosing the best financing for your business. OnDeck was listed on the New York Stock Exchange in 2014 and has been a perennial 5-star company ever since. Overall, OnDeck provides options for newer businesses with not-so-stellar credit histories. Of course, these businesses will pay a higher price for access to credit.
Best for: Newer Businesses with Spotty Credit
Term loans up to $500,000, business credit lines up to $100,000
- Eligibility requirements: Minimum 12 months in business, $100,000 in revenue, 600+ credit score. But typical borrowers have much higher revenues, credit scores, and years in business.
- Terms: Three to 36 months, repay in fixed daily or weekly payments
- Interest rates: 9 percent and up for loans/13.99 percent and up for lines of credit (average 29.99 percent APR).
- Fees: On loans, an origination fee of up to 5 percent (that drops on subsequent loans); on credit lines $20/month, waived with initial $5,000 withdrawal.
- Time to funding: You can apply in minutes, and can be funded in one to three days.
Reputation: A+ rating from Better Business Bureau, accredited with BBB, 34 customer
complaints with the BBB closed in the past three years. BBB customer review summary: 4.69/5
Lending Club is the largest online peer-to-peer lender. Since its founding in 2006, it has provided over $50 billion in personal and business loans. You can apply for credit in under 10 minutes without impacting your credit rating. Lending Club assigns you a US-based client advisor to determine the best loan for you. If you are eligible, you will be asked to provide bank and tax statements and other documentation before receiving your funding (usually within two weeks). If you have decent credit and revenues, and can afford to wait a couple of weeks for funding, Lending Club will get you better rates than some of the competition.
Best for: Established Businesses Seeking a Longer-Term Loan
Term loans from $5,000 to $500,000
- Eligibility requirements: One year in business, at least $50,000 in annual sales, no recent bankruptcies or tax liens, you own at least 20 percent of the business, fair or better personal credit rating
- Terms: Six months to five years
- Competitive APRs: 9.77 percent to 35.98 percent
- Fees: Origination fee 03.49 percent to 7.99 percent. No pre-payment fees.
- Time to funding: Up to two weeks, depending on complexity of loan.
Reputation: A+ rating from Better Business Bureau, accredited with BBB, 201 customer
complaints with the BBB closed in the past three years.
BlueVine provides lines of credit and invoice factoring to small and medium-sized businesses. Its fast, online invoice factoring system allows you to link your software programs directly to BlueVine to get invoices paid immediately.
Best for: Established Businesses with a Large Invoicing Operation
Line of credit up to $250,000; invoice factoring up to $5 million.
- Eligibility requirements: For invoice factoring, you must be B2B or B2G (serve other businesses or governments), have a credit score over 530, revenues of at least $100,000 per year and be in business at least three months. For a line of credit, you need a credit score over 600, at least six months in business, and also at least $100,000 in annual revenue.
- Terms: Fixed payments over six or 12 months
- Interest rates: Line of credits as low as 4.8 percent.
- Fees: No prepayment fees.
- Time to funding: You can usually be approved within a day, and can access funds within a few hours of being approved
Reputation: A+ rating from Better Business Bureau, accredited with BBB, two customer
complaints with the BBB closed in the past three years.
Fundbox does not provide traditional loans. Instead, it advances you cash based on your outstanding invoices. It's a way to bridge the gap between billing customers and getting paid. You open a free account, add your invoices (by connecting your accounting app to Fundbox) and clear the unpaid invoices when you need funds. Fundbox will transfer that amount to your bank account, and you pay interest on the money advanced.
Best for: Small Businesses in Need of Invoice Advances
- Credit limits: $1,000 to $100,000
- Eligibility requirements: At least three months in business, online accounting/invoicing software
- Terms: Advance and fee are repaid in 12 or 24 weekly payments
- Interest rates/fees: You pay a fee on each invoice advanced (typically comes out to 10 to 69 percent over 12 weeks or 11 to 79 over 24 months)
- Time to funding: You can sign up in minutes, and get your invoices paid right away.
Reputation: A+ rating from Better Business Bureau, Accredited with BBB, two customer
complaints with the BBB closed in the past three years.
Rapid Advance has provided more than $1 billion in funding to more than 38,000 small businesses across the United States. The company offers a broad range of financing options, including term loans, lines of credit, merchant advances and SBA bridge loans. With the merchant cash advance, you can borrow based on your monthly credit card receivables, and pay a percentage of future credit card receipts each day. New businesses with only three months of credit card sales are eligible for the less rigid Starter program, while more established businesses (with three years in business) can qualify for better terms with the Premium Merchant Cash advance. The company does not provide important information on interest rates and fees until you apply, which is a red flag for many borrowers.
Best for: Businesses with Consistent Credit Card Income /
Merchant Cash Advance
- Credit limits: Up to $1 million
- Eligibility requirements: For merchant advances, you must have been in business for at least three months, have a "steady flow" of credit card activity, and have several other documents handy and have a physical location for your business.
- Interest and fees: RapidAdvance does not offer information on interest rates and fees on its website or when you call. You must apply to get that information, and they will run a credit check with Experian.
- Time to funding: Get approved within two days and receive funding within seven days
- Reputation: A+ rating from Better Business Bureau, 3 customer complaints with the BBB closed in the past three years, very positive consumer reviews through Better Business Bureau.
Funding Circle is a well-established online lender catering to well-established businesses. Its loans aren't as quick and easy to get as some other online lenders, but they are often more affordable. The company has lent more than $10.9 billion to more than 77,000 small businesses since 2010.
Best for: Established Businesses Seeking a Traditional Loan
- Credit limits: $25,000 to $500,000
- Eligibility requirements: Varies, but generally two years in business plus a decent credit score
- Terms: 6-month to 5-year term loans, monthly repayment schedules.
- Interest rates: Starting at 4.99 percent
- Fees: Origination fees from 3.49 percent to 6.99 percent, plus fees for late payments and insufficient funds. No prepayment fees.
- Time to funding: 10 minutes to apply, about 10 days to get funding
Reputation: A+ rating from Better Business Bureau, accredited with BBB, five customer
complaints with the BBB closed in the past three years.
StreetShares is a peer-to-peer lending platform for small businesses. Founded by military veterans, the company caters primarily to veterans and military families, but anyone is welcome to apply for a loan. You will generally be eligible for a loan up to about 10 percent of your annual revenue, according to a StreetShares representative.
Best for: Veterans and Military Families Seeking Small Loans
- Credit limits: Up to $250,000
- Eligibility requirements: U.S. resident, at least one year in business or $75,000 in revenue, reasonable credit
- Terms: Three to 36-month term loans, weekly repayment directly from your bank account
- Interest rates: 8 percent to 40 percent
- Fees: Origination fee of 3.95 to 4.95 percent depending on loan amount, length and level of risk. $10 fee for missed or late payment.
- Time to funding: Apply in minutes, receive funding in days
- Reputation: A+ rating from Better Business Bureau, accredited with BBB, zero customer complaints with the BBB closed in the past three years.
SmartBiz is an online lender offering SBA loans of up to $350,000. SmartBiz loans can be used to refinance higher-interest short-term loans, or to fund working capital, equipment purchases or business expansion. By going through SmartBiz, you can get an SBA loan in weeks instead of months. You'll pay a price for that - they take a small percentage of the loan in fees. If you don't qualify for an SBA loan, SmartBiz will help you find another loan you qualify for.
Best for: Faster SBA Loans for Credit-worthy Businesses
- Credit limit: $30,000 to $350,000
- Eligibility requirements: U.S. resident, at least two years in business, credit score of at least 640, sufficient cash flow to make payments, no recent bankruptcies, liens, typically over $100,000 in annual revenue.
- Terms: 10-year loans
- Interest rates: 7.5 percent to 8.5 percent
- Fees: 2 percent referral fee, 2 percent packaging fee, on loans over $151,000, 2.25 - 3.5 percent guarantee fee to SBA.
- Time to funding: Qualify in minutes, funding in as little as seven days
Reputation: SmartBiz does not have a Better Business Bureau rating and is not
accredited by the BBB. This may be because it is a relatively new company.
Founded in 2011, Fundation is a good option for a solid business looking for a longer-term loan. They cater to more established businesses with good credit, significant revenues, and at least three employees. Their website is easy to navigate and provides clear information about eligibility requirements and costs. Note that you will have to make twice-monthly repayments on your loan, which some borrowers may not be prepared for.
Best for: Business with at Least Three Employees
- Credit limit: $20,000 to $500,000
- Eligibility requirements: $100,000 revenues, at least two years in business, good credit, at least three employees
- Terms: One to four years, bi-monthly repayments
- Interest rates: 7.99 percent to 29.99 percent
- Fees: No prepayment penalties.
- Time to funding: Funding typically in three to five days
Reputation: Fundation is rated A+ and is accredited by the Better Business Bureau. No
complaints have been closed by the BBB in the past three years.
Dealstruck offers term loans, as well as inventory and accounts receivable lines of credit to small and medium-sized businesses. It is not very easy to find information on its website, which focuses primarily on getting you apply for more information. Luckily, you can do that without affecting your credit score.
Best for: Young Businesses That Need Working Capital
- Credit limits: $50,000 to $500,000
- Eligibility requirements: Credit score of 600 or higher, at least a year in business, and $150,000 in revenue
- Terms: 12 to 48 months
- Interest rates: 9.99 percent to 27.99 percent
- Fees: Prepayment penalties from 1 percent to 3 percent.
- Time to funding: Can take as little as one and as many as 20 days to fund
- Reputation: A+ rating from Better Business Bureau, Accredited with BBB, three customer complaints with the BBB closed in the past three years.
- Product features: In addition to term loans, Dealstruck offers businesses lines of credit
Dealstruck is one of the few online lenders reviewed here that has a pre-payment penalty.
Methodology of Ranking
We looked at each company's track record, eligibility requirements, fees, and online experience to rank them. In addition to cost, we wanted to know how fast and easy the loan process could be, whether they cater to specific types of businesses, and whether they offered something special that the competition didn't. Of course, we also looked at their Better Business Bureau rating along with consumer complaints.Ranking factors:
Businesses come in all sizes and have varying needs, so we looked for companies that offer a wide range of loan amounts.
Clear eligibility requirements
We want companies to clearly state their eligibility requirements online, so borrowers don't waste their time applying when they are not eligible.
Competitive interest rates and fees
We looked for lenders with transparent and reasonable rates. Ideally, all online lenders would clearly state their interest rates and fees online, so consumers can easily compare one to another. Unfortunately, often that's not the case. Even when interest rates and fees are posted, it is often difficult to compare because rates are quoted in different ways (monthly interest rates, annual percentage rates, factor rates, monthly fees). Your best bet is to get a detailed quote from the lenders you are considering.
Detailed, transparent website
Some lenders provide scant information, seeking to lure you in with an "Apply Now" button and little more. We looked for companies that provided clear, detailed information about their products, fees and requirements.
Quick application and fast turnaround
Most applications are quick, and turnaround times can range from minutes to weeks. The importance of this depends on how quickly you need the cash. If you can wait, you may save a little in interest and fees.
We checked the Better Business Bureau's rating, accreditation and the number of complaints resolved in the past three years. They all had positive online reviews, but those should be taken with a grain of salt.
In addition to simple online loans we considered whether the company provided other useful services.
How to Apply for an Online Loan
Before you begin, it's a good idea to assess what type of funding you are looking for. This will depend on your business and the purpose of the loan. The most common forms of funding online are:
Short-term loan: What you think of as a typical loan for a set period of time at a specified interest rate.
Line of credit: Almost like a credit card, with a maximum limit. You usually only pay interest on your withdrawals.
Merchant cash advance: Your eligibility will depend on having regular credit card revenues, and the lender will charge a percentage of these receipts to finance you.
Invoice factoring: If you have a regular stream of business invoices, you can take a loan out to get paid faster.
Once you know what type of funding you are seeking, gather the documentation you need to complete the application online. The good news is that most online lenders require a lot less information than you need for traditional bank loans. They don't usually require detailed business plans or financial statements. Online lenders tend to make decisions based on an assessment of your actual financial information, including revenues, expenses, and credit history. It's a good idea to have this documentation at the ready:
Name, email, phone number
Business name, length of time in business
Social Security number or Employer Identification Number
Recent bank statements (for the past six months)
Personal and business federal tax returns (for the past two to three years)
Some lenders will ask for financial statements (e.g. current balance sheet, profit and loss statements), but most will not.
Most online lenders have a three-step process:
You can shop around and get a quote in minutes from most online lenders. You need to provide some basic information to determine your eligibility.
Once you ask for a quote, the company will usually follow up via email or phone to get more details. Be careful - applying for too much credit can adversely affect your credit report, so be sure you don't apply before you are ready. Many of these online lenders will do a "soft" credit check, which means they can quickly check your credit without impacting your credit score. Be sure that's the case if you are just looking for an online quote and aren't ready to apply.
Once you submit your application, you will usually hear back within hours or days and get funded within days or weeks.
Small Business Administration Loans Everything you wanted to know about getting a loan from the SBA.
Get your credit reportYou are entitled to a free credit report from each of the major credit reporting agencies each year.
Small Business Borrowers Bill of RightsA group of lenders developed this bill of rights for small business borrowers and has asked lenders to sign on to it.
FunderaResearch which online business loans are right for you. Take a brief survey and Fundera will email you the best matches to suit your needs.
Small Business Development CentersThese centers provide assistance to small businesses around the country. You can search for a center in your area here.
National Small Business Association (NSBA)NSBA is a 65,000-member association dedicated to advocating for entrepreneurs.
National Federation of Independent Businesses (NFIB) NFIB is an association of 325,000 independent business owners working to represent the interests of small businesses in the US.
Small Business Finance Institute (SBFI)Dedicated to training lenders, SBFI also provides a wealth of information about small business financing on its website.