There are several loan packages available for businesses. However, some loan packages will work better for your business. Due to this, you will need to know the loan options available and choose the one that will suit your demands. There are loans designed to help business owners to deal with certain problems.
There are loans to finance the purchase of equipment, loans to finance outstanding invoice, and general loans to help in the smooth running of your business. We have put together a list of the best small business loans. There may be other great loan packages that may not be included in this list.
LendingClub is one of the biggest peer-to-peer lenders in the United States. This lender was mainly offering unsecured personal loans until March 2014 when they started granting business loans. Although LendingClub has not been offering business loans for long, the company has risen to be one of the best business loan lenders in the country. Borrowers can borrow $5,000 to $300,000 and you can pay back in one to five years. These loans have fixed APR that ranges from 5.99% to 29.99%. You will also need to pay fees including origination and processing fees. Late payments also attract fees.
To qualify for a business loan from LendingClub, you should meet the following requirements.
- Your annual sales should be at least $50,000.
- You should also be in business for at least 12 months.
- You should also not have records of tax liens or a recent bankruptcy.
- The lender will also look at your personal credit score. Your credit score should be fair or good.
- You should also own at least 20% of the business.
OnDeck can offer you that huge sum you need in less than 24 hours. You can lend up to $500,000 with very little paperwork. The online lender has both long-term and short-term options. With the short-term loan, you will need to repay it within 12 months with an interest rate of 9%. The long-term payment term ranges 15 to 36 months with an interest of 9.99%. if your business is not well established, you may still have a chance to acquire a loan. However, the interest rate will be higher.
- Your business should operate for at least one year.
- Your gross annual should be at least $100,000.
Kabbage offers businesses financial relief in no time. You can get up to $150,000 by completing their simple form. Kabbage loans have a six months average repayment term. Although you can get funds fast, the APR can be very high. Sometimes, the APR can be as high as 90%.
- Wells Fargo
Wells Fargo offers several small business loan options for small business owners. The most popular loan option offered by this lender is the Wells Fargo unsecured business loan. This loan is a medium term loan with the terms ranging from one to five years. The interest rate on this loan also ranges from 7.75% to 22.99%. The interest rate will depend on your eligibility, the more eligible you are, the lower the interest rate. Borrowers can access loan amounts ranging from $10,000 to $100,000. The loan option is recommended because it is not risky for the borrower. There is no collateral so you do not risk losing your property if you cannot pay the loan on time. The application process is also simple. You will complete a one-page form only.
Another Wells Fargo loan option that is great is the unsecured business line of credit. Wells Fargo will grant you $5,000 minimum revolving credit and $100,000 maximum revolving credit. You can draw from this balance to settle any unexpected cash flow problems. The good thing about this is that anytime you pay back, your balance increases and you can take more. The rates for this option is lower than the unsecured loan option. However, it is difficult to qualify for a business line of credit.
- Capital One
Capital One several business loans including equipment financing, SBA loans, lines of credit, and business installment loans. Most businesses have opted for a business line of credit loan from Capital One due to the lender’s flexibility in offering this loan. This form of business financing is available for small businesses as well. There is no need to submit a financial statement when you are applying for a line of credit less than $50,000. The minimum credit offered is $10,000 and you have the opportunity to make unlimited withdrawals. The lender does not give you a specific timeline for the loan repayment.
- You should have an active Capital One checking account.
- You should also be in business for at least 2 years.
LoanBuilder is a Paypal service that offers up to $500,000 in business loans. You can get a loan that ranges from $5,000 to $500,000 is your business qualifies. Depending on the loan amount, you will be required to pay back with loan terms that range from 13 weeks to 52 weeks. The fund will be available to you within the next 72 hours after application. Some applicants receive funds within 24 hours.
- You should a minimum credit score of 550.
- The minimum annual revenue from your business should also be $42,000.
This lender offers a wide variety of business loans. You can get up to $5,000,000 if you apply for invoice financing. You can also get lines of credit up to $250,000. The funds will be made available to you by the next working day when your request is approved. You will not pay termination fees when you decide not to work with them any longer. There are also no contracts to sign when you apply for a loan. You will need to pay back the loan in 6 to 12 months if you apply for a business line of credit. You can make weekly or monthly repayments for the business line of credit.
Accion offers loans for a startup that have been in business for less than six months. This lender does not request for minimum annual revenue. Hence, business who have been ineligible for other business loans due to the revenue requirement can apply to Accion. The payment term can be up to sixty months. You will also need to provide a personal guarantee in order to acquire the loan. If you are requesting for a high amount, you will be asked to provide collateral for the loan. unfortunately, the fees on this loan are quite high. You will pay a 3% closing fee and a flat fee of $165 as processing fees. One good thing about this loan is that there is no origination fee.
FundBox’s loan package is a great option for business owners who need short term funding to close the gaps in cash flow. This lender is flexible when it comes to the loan requirements. FundBox does not request for a personal guarantee and you do not need to provide collateral when applying for the loan. The lender focuses on invoice financing and business line of credit. When you have unpaid invoices and you need cash to maintain a constant cash flow, you can rely on FundBox. FundBox has a maximum loan limit of $100,000. Unfortunately, the term for a business line of credit is three months and the maximum term for invoice financing is six months. One of the best features of Fundbox loans is that you can save on some fees. You will not pay origination fees, inactivity fees, or maintenance fees.
- JPMorgan Chase
The bank offers several small business loan products including SBA backed loans, business lines of credit, equipment financing, business term loans, and trade financing. They fund your loans at a relatively quick rate. The bank offers lower monthly payment terms and longer loan terms. The bank can fund huge amounts when you meet their requirements. You can access up to $5 million in the SBA 7(a) program and there is no limit on the amount you can access in the SBA 504 program.
How to Get the Best Small Business Loans?
- Repair your personal credit or maintain a good personal credit score.
Lenders do not only check your business credit score, they also check your personal credit score. They want to make sure you have a strong financial standing. A good credit score will prove that you are able to manage your finances very well. it will help the lender to have confidence in your financial management skill. If your FICO credit score is above 650, you can get a access to the very best business loan packages at lower interest rates. Lenders believe that it is less risky to grant business loans to business owners with good credit scores. Hence, if you want to get access to the best business loans, you should clean up your personal credit score.
- Have a good business plan.
Lenders will want to know the purpose of the loan. A lender will confident about granting you a loan if the purpose of the funding is bound to bring good returns. You should be able to tell the lender about the role of the funds in your business plan. The project you intend to undertake with the loan should be promising enough. If the lender is seeing chances of the project failing, he or she may not be comfortable granting you a loan for that purpose.
- Compare Loan Options
You should shop around for loan packages. Some lenders will offer more flexible payments than others. Some will also offer lower interest rates. Due to the disparities in loan offers, you should check for more options before settling on one.
How to pick the best small business loan?
- Clear eligibility requirements
The lender must clearly spell out their requirements. This will help you to know if you qualify even before you apply. If there are questions about the lender’s requirements, you should ask for clarification. It will be frustrating to realize in the middle of the application that you do not qualify.
- High Loan Amounts
It is important to look out for lenders who will offer you the amount you require. To be on the safer side, narrow your options to lenders who offer amounts higher than your required amount. This will make it easier for you to get that amount.
- Competitive APRs
Lenders offer varying APRs. With some lenders, they have APRs that are extremely low on one side and extremely high on the other. Most times, the rate you will pay for the loan will be decided by your eligibility. Even though rates vary, lenders that are offering competitive rates are the best options because you will end up paying reasonable interest rates on the loan.
- A good small business loan package must offer flexible repayment terms. Most of such lenders allow you a period of four to five years to repay huge loans. this helps your business to pay the loan comfortably. You can maintain an appreciable cash flow even as repay the loan. if the repayment terms are not flexible, you will end up repaying huge amounts daily, weekly, or even monthly. This can affect your cash flow and even slow down the pace of certain projects.
- A good lender will also fund your request in a reasonable time frame. Some lenders will approve your loan quickly and you will have the cash in your account before you know it. Such lenders are reliable and they will give you the cash in time for you to use it for the desired purpose. When you are looking for good loan packages, look out for lenders who will fund your loan as quickly as possible. There are lenders who will fund your loan fast but will charge high rates and fees. Those lenders are not the lenders you should be looking for. This is because their loan will be expensive. Look out for lenders with competitive rates and quick turnaround time.
- If you are applying online, there are certain things you should look at. The website must be transparent and answer all your questions even before you ask. Good lenders have FAQ sections that address all the doubt you may have about a loan product. There should be reliable contact numbers you can contact to address certain issues as well. although some lenders do not state their fees and rates outright, there should be some form of information that will give you an idea about the rates and fees. Some lenders allow you to calculate your potential payments. They have calculators where you will input the loan amount and your proposed loan term and the calculator will tell you how much you will pay at the end of your loan period.
- When searching for the best small business loans, check for reviews from other customers. Do not check only reviews on the lender’s website. These may be partial although some truly reflect the lender’s performance. Check for reviews from loan review websites. These reviews will tell you more about the loan package. Sometimes, the lender should not necessarily be in business for a long time. Some lenders have been operating for a short period but they offer exceptional services.
Before you begin the application process, you should put all the required documents together. This will help speed up the application process. Depending on the lender you may need to provide a collateral. Some standard requirements include proof of business ownership, statement of accounts, tax returns, and business credit report. Your personal credit score may also be required.
Joshua is a financial lawyer who plans on writing a book about his experience on debt collection laws and lending terms and conditions. He is currently one of the senior partners at his law firm but wants to take more time off for his writing.
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