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Best small business loans of 2023

Written by Amanda Push | Edited by Katie Lowery | Reviewed April 3, 2023
Read more about how we chose our picks for best personal loans

Personal loan lenders at a glance

Best for same day credit approval

APR range 7.99% - 35.99%
Loan amounts $5,000 - $50,000
Term (months) 24 to 60
Origination fee 1.99% - 6.99%
Min. credit score 620
Pros Cons

  Competitive interest rates (7.99% - 35.99%)

  Same-day credit approval

  Offers multiple interest rate discount options

  High minimum borrowing amount of $5,000

  May take up to 72 hours to receive funds after approval

  Charges origination fee of 1.99% - 6.99%

Achieve is known for its same-day credit approval decisions and multiple interest rate discounts. This lender offers a discount if you have a co-borrower, retirement assets or allow Achieve to pay your creditors directly if you get a debt consolidation loan. However, this lender’s high minimum borrowing amount of $5,000 may not make it the ideal option for borrowers looking for small personal loans. You’ll also need to pay an origination fee, which can range from 1.99% to 6.99% of your loan balance. Read our full Achieve review.

Other than Achieve‘s minimum credit score requirement, you’ll also have to offer this lender:
  • Proof of income
  • Social Security number
  • Proof of identity
  • Employment status

Best for same day credit approval

APR range 7.99% - 35.99%
Loan amounts $5,000 - $50,000
Term (months) 24 to 60
Origination fee 1.99% - 6.99%
Min. credit score 620
Pros Cons

  Competitive interest rates (7.99% - 35.99%)

  Same-day credit approval

  Offers multiple interest rate discount options

  High minimum borrowing amount of $5,000

  May take up to 72 hours to receive funds after approval

  Charges origination fee of 1.99% - 6.99%

With a low minimum credit score requirement of just 580, consumers with low credit scores may qualify for an Avant personal loan. This lender offers quick funding and you can repay your loan early without worrying about being penalized. However, Avant charges origination fees — Up to 4.75% — and consumers don’t have the option to add a co-applicant if they have poor credit. Read our full Avant review.

Aside from its credit score requirements, Avant also requires that applicants provide recent bank statements and pay stubs.

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What is a small business loan?

Small business loans help entrepreneurs build, maintain or expand their companies. They can help to purchase inventory, buy new equipment or even cover unexpected expenses.

Getting business loans for your company doesn’t always require walking into a bank to secure the funds — there are also a variety of online small business lenders to consider, which may have easier qualifications and faster applications.

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Types of business loans

Business loans come in a variety of flavors, with terms as short as a few months or as long as 25 years. You can find business loans with traditional brick-and-mortar banks, credit unions, online lenders and even the U.S. Small Business Administration.

Term loans

Business term loans provide a lump sum of cash upfront, paid with interest in fixed monthly or weekly installments. Short-term business loans have repayment terms of a few months to a year or more and are commonly available from online lenders. Long-term business loans, usually offered by traditional brick-and-mortar banks, can last as long as 10 years.

Line of credit

Similar to a credit card, a business line of credit is a revolving form of funding that requires you to pay interest only on the amount you borrow. A flexible lending product, it can be useful for recurring expenses like rent or inventory purchases.

Equipment financing

Also known as equipment loans, equipment financing enables businesses to purchase heavy machinery, computers, vehicles or other necessary equipment to operate the business. The equipment acts as collateral for the loan.

Commercial real estate loans

Commercial real estate loans allow businesses to purchase, build or renovate property for business uses. They function similar to a home mortgage, but a commercial real estate loan may require a higher down payment upfront.

SBA loans

SBA loans are guaranteed by the U.S. Small Business Administration (SBA), offering long repayment terms with comparatively low interest rates. The 7(a) loan offers up to $5 million for a wide range of business purposes, but the 504/CDC loan is more commonly used for purchasing fixed assets, like equipment or real estate. You’ll apply with a bank or online lender, not directly through the SBA.

Microloans

Microloans are loans for $50,000 or less. The SBA makes microloans, as do several nonprofit or community organizations. Microloans are often geared towards startups or underrepresented business owners, such as women or people of color.

Working capital loans

Working capital loan is an umbrella term for financing used to cover short-term operating expenses, like payroll or covering cash flow gaps. Working capital loans can come in a variety of flavors, like lines of credit, term loans and cash advances.

Invoice factoring

Invoice factoring is a type of financing that allows a business to unlock cash from unpaid invoices. The business sells the invoices to a factoring company in exchange for a cash advance. This may be a good option for businesses with poor or limited credit, but it can be expensive – you’ll only get 60% to 90% of your invoice value, depending on your industry.

Additional business funding options

In addition to traditional business loans, there are several other sources of business funding to consider.

Merchant cash advance

A merchant cash advance also gives you a lump sum of cash upfront, but the advance is against your future sales. Because of this, the merchant cash advance is repaid through a preset percentage of daily or weekly credit card sales. This type of funding can deliver cash fast, but it can be a very expensive method of borrowing.

Credit cards

You probably have one or more personal credit cards, but business credit cards can help track business expenses, unlock travel or cash-back rewards or just help monitor employee spending. To avoid paying a high annual percentage rate, make sure to pay off your statement balance in full by the due date.

Small business grants

The federal government, state governments and private corporations and foundations offer grants for small businesses. Because grants are free money that usually doesn’t need to be repaid, competition can be quite stiff. There are also grants specifically designated for minority- and women-owned businesses.

Crowdfunding

Crowdfunding allows you to ask family or friends for donations to help kickstart your business. This method helps you test out a business idea and may appeal most to startups or other businesses struggling to get funding — but be aware that crowdfunding platforms may charge a fee.

Personal loans

Personal loans may be easier to obtain if you’re struggling with the eligibility criteria for a business loan. But, because this relies on your personal credit and income, your personal assets are at risk and it won’t help you build business credit.

Bootstrapping

Bootstrapping is when you use your own financial resources to fund your business. Startup businesses may use bootstrapping to get off the ground, but the risk is that you may not recoup your investment if your business struggles.

3 steps to getting a business loan

The business loan application process differs depending on each lender and on the type of funding you’re seeking. But that doesn’t mean it has to be hard or painful. Start by answering these questions.

Decide why you need funds

Are you looking to buy a vehicle for your new food truck business? Are you looking for commercial real estate so you can expand to a second location across town? Or maybe you just need a little bit of quick, extra cash to fill in the gaps during the off season.

Determine what you can afford

After you decide why you need the money, take a hard look at your business finances and see what you can afford. Some business loans are repaid monthly over long periods of time, while others require weekly or even daily repayment. Business loans are debt you’ll have to repay, so make sure your business can handle the extra payment.

Compare offers to get the best rates

Before you decide to apply to a lender, take the extra time to shop around and compare offers to get the best rates. This extra bit of legwork may help save you lots on interest or fees in the long run.

Business loan requirements

Business loan requirements When you’re applying for a business loan, lenders want to know that your business and credit history are relatively stable. Common eligibility requirements they’ll consider include your credit profile, time in business, capacity to take on debt and any collateral you may have.

TIME IN BUSINESS

In general, a business that’s been around for a couple of years is more stable than a startup. This is key for lenders, as a business that has a proven track record of revenue over the past two years is a more attractive borrower than a company with spotty revenue over the past six months.

CREDIT SCORE

Your credit score is a data point lenders use to determine your reliability as a borrower. In most cases, you’ll need a credit score in the 600s to qualify for financing, although certain lenders and loan types may allow scores as low as 500.

CASH FLOW

A cash-flow projection shows when money is collected, when cash goes out and what’s left. Lenders typically like to see that the borrower has a thorough understanding of the financial operating cycle of the business.

COLLATERAL

Collateral is an asset that lenders can legally seize if you can’t make payments, including company buildings, equipment and accounts receivable. Some business owners choose to use their personal assets — including their homes — as collateral on a business loan.

DEBT-TO-EQUITY RATIO

Your company’s debt-to-equity (D/E) ratio measures the proportion of your company’s debt divided by shareholders’ equity. This metric helps a lender understand how likely you are to cover new debt based on the debt you’re already paying. While high D/E’s are common in some industries, your goal should be to keep your business’s D/E ratio as low as possible.

WORKING CAPITAL

Your working capital refers to the available money you have to fund your company’s day-to-day operations. You can calculate your working capital by subtracting the business’s debt liabilities due within a year from current assets that you can convert to cash.

Frequently asked questions

With a personal loan, most lenders will allow you to use your money to pay for almost anything. Whether you need to consolidate your debt, pay off unexpected medical expenses or make repairs at home, a personal loan may help you meet your financial goals.

Personal loan requirements vary by lender, but most lending institutions will typically analyze your credit score, your income and any other debts you have out in your name. You should also come prepared with the following information, as it could impact eligibility: the purpose of your loan, how much money you want to borrow and your preferred repayment schedule.

Personal loan amounts typically range from $1,000 to $50,000. However, some lenders, such as BHG Money, offer loan amounts as large as $200,000. The LendingTree personal loan marketplace offers loan amounts up to $50,000.

If you have less-than-ideal credit, you may still qualify for a bad-credit personal loan, though you may get stuck with a high APR. Alternatively, you may be able to add a cosigner with good credit to your application to access more attractive rates.

When applying for a personal loan, you’ll need to provide proof of income and employment, bank account information and proof of other debt. You’ll also need to verify your identity by providing a government-issued identification.

Common alternatives to personal loans include credit cards, lines of credit, home equity loans and 401(k) loans. While these options also come with interest and fees, one of these different financing opportunities may be a better fit for your situation. For instance, if you aren’t sure how much money you need, a credit card with access to a line of credit may be a better fit.

Yes — if you took out a personal loan and want to change the terms, you can refinance that personal loan. Refinancing allows you to assess an old debt and potentially qualify for conditions that better suit your current financial position, such as lower interest rates or monthly payments.