Best Small Business Loan Providers 2020 - Invest in Your Business

Nadav Shemer

In what are challenging times for small business owners, there are a wide range of lending options. The internet hosts many fintech business lenders that use advanced algorithms to assess—and efficiently approve—applicants. The end result is that regardless of your funding needs and preferences, there is a lender to match your needs.

In this guide, we present our list of the top 10 small business loan providers for 2020. Because of the variation in business loan types, it did not make sense to rank lenders based on one factor alone. Instead, we researched the best lenders for different purposes, including the best lenders for business expansion, immediate funding, and the best lenders for borrowers with bad credit.

Some of the companies listed are direct lenders, while others are marketplaces where you can compare your options. Some only offer term loans, while others offer alternative funding such as lines of credit, invoice factoring, and SBA loans. Some have strict eligibility requirements (e.g., minimum monthly revenue and minimum credit score), while others are more flexible.

This guide will help you find the right lender for your small business.

Marketplace
Direct
Direct
Marketplace
Marketplace
Direct
Marketplace
Direct
Direct
Marketplace
$5,000-$2 million
$500 - $250,000
$1,000-$300,000
$25K - $5M
$30,000 - $5M
$10,000 - $500,000
$5,000 - $5M
$5,000 - $250,000
$5,000 - $100,000
Up to $500,000
$10K
$4,200
$4,166
$8,300
$8,300
$7,000
$5,000
Up to $40,000
$4,166
$4,200
No minimum
1 year
100 days
2+ years
2 years
3 months
3 months
3 months
6 months
None
580
550
525
680
640
700
350
530
500
500
1-5 years
6-18 months
3 months – 10 years
3 months – 25 years
10 – 25 years
3-18 months
3 - 36 months
6-12 months
3-6 months
Up to 50 years
within 24 hours
1-3 days
1–3 days
within 10 calendar days
1 day – 1 month
Soon as same day
3 hours – 14 days
Soon as next day
Next day
Next day – 1 month

The Best Business Loan Providers - An In-Depth Look

  • 1
    11 loan types from 300+ lenders
    Lendio
    • Loan amount:$5,000-$2 million
    • Minimum credit score:580
    • Repayment terms:1-5 years

    No matter how you measure it, Lendio is America’s leading business loan marketplace. It has the largest network (300+ lenders), the most loan options (11, including term loans, SBA loans, lines of credit, invoice factoring, and business acquisition loans), and has facilitated more loans than anyone else ($2 billion in small business term loans and billions elsewhere). Lendio has also helped fund more than $8 billion in Paycheck Protection Program loans for small businesses in 2020.

    Most lending marketplaces ask a few basic questions and then show you a selection of loan options. Lendio is more sophisticated: the platform takes you through a 15-minute questionnaire and then finds the most suitable lender and funding options for you using its proprietary algorithm. This 15-minute process is all it takes to receive funding, making Lendio much quicker than traditional business lenders.

    Pros
    • Sophisticated algorithm matches you with best lender
    • It only takes 15 minutes to receive a match and approval
    • Covers almost all business loan types
    Cons
    • Loan requirements vary by loan type and lender
    • Not all partnering lenders offer excellent terms
  • 2

    Kabbage

    Line of credit with low FICO requirement
    Kabbage
    • Loan amount:$500 - $250,000
    • Minimum credit score:550
    • Repayment terms:6-18 months

    Kabbage is a Fintech lender providing lines of credit to small businesses. Its proprietary algorithm assesses applicants from many perspectives, which reduces the weight placed on your personal credit score and increases your likelihood of approval. Although lines of credit are the platform’s focus, Kabbage occasionally makes other loan options available (such as the Paycheck Protection Program (PPP) loan program in 2020).

    Kabbage’s technology offers several unique features not offered by traditional lenders. The platform allows borrowers to receive and repay funds using only PayPal and the Kabbage mobile app, eliminating the need for a bank account. Each monthly payment is made by autopay, eliminating the need to wire payments each month. During the application process, you have the option of connecting to third-party providers, such as Stripe and QuickBooks, to automatically upload your data.

    Pros
    • Simple payment schedules
    • Funds can be withdrawn online or using a mobile app
    • Funds can be deposited to a bank or a PayPal account
    Cons
    • Only lines of credit are available, no other products
    • Only open to businesses operating for at least one year
  • 3

    First Down Funding

    Customized funding to suit your needs
    First Down Funding
    • Loan amount:$1,000-$300,000
    • Minimum credit score:525
    • Repayment terms:3 months – 10 years

    First Down Funding is a direct lender focused on business owners who may have been denied funding from traditional institutions. Licensed in all 50 states, First Down Funding offers a range of funding options including term loans, lines of credit, invoice, and equipment financing. Compared to other lenders, the platform’s loan terms are flexible. Rather than lock you into a fixed term, First Down Funding works with you to customize a suitable repayment term that strikes a balance between comfort and affordability.

    First Down is very much a hands-on lender, and its website is best used for information-gathering purposes only. Before completing the online application, we recommend entering your name and contact details in the contact form on the First Down Funding home page to schedule a call with a funding manager. Your manager will help you design a loan that suits your needs and preferences.

    Pros
    • A range of funding options
    • Personalized customer service
    • Low FICO threshold
    Cons
    • The website is outdated and difficult to navigate
    • Fees and requirements are not transparent
  • 4
    Marketplace with select group of vetted lendi...
    Fundera
    • Loan amount:$25K - $5M
    • Minimum credit score:680
    • Repayment terms:3 months – 25 years

    Fundera prides itself on the fact that most of its users are repeat borrowers. Fundera forges personal relationships with each user encouraging them to become return customers. Fundera also provides stacks of useful resources. The lender  doesn’t just find you a lender and forget about you, it actually assigns you an in-house loan specialist who helps guide you through the underwriting process, ensuring a smooth path to funding.

    Although the lender network is deliberately small, this does not limit the number of loan options. Fundera offers all the most common types of business loans, such as term loans, lines of credit, all types of SBA funding (including everything to do with the PPP and Covid-19 relief), and invoice and equipment financing. Fundera also specializes in startup loans, making it an excellent option for early-stage small businesses with enterprising ideas.

    Pros
    • Information is uploaded from QuickBooks to your application
    • Eligibility tracker for previously ineligible borrowers
    • Practical free how-to resources
    Cons
    • Pre-qualification does not guarantee loan approval
    • Lender fees and terms vary significantly
  • 5

    SmartBiz

    Online marketplace for SBA and term loans
    SmartBiz
    • Loan amount:$30,000 - $5M
    • Minimum credit score:640
    • Repayment terms:10 – 25 years

    SmartBiz was created in the wake of the 2008 financial crisis and is the oldest online marketplace for SBA loans. From its inception, SmartBiz has helped American small businesses secure more than $1.2 billion in SBA loans, including SBA 7(a) loans, SBA Commercial Real Estate loans, and, more recently, SBA PPP loans. SmartBiz also offers regular business term loans.

    SmartBiz sees its users as more than just borrowers. When you secure a loan through SmartBiz, you can access SmartBiz Advisor, a financial health tracking tool that improves your chances of being approved for small business funding. The tool calculates your Loan Ready Score, which benchmarks your business against thousands of other small businesses using the SmartBiz platform. SmartBiz also offers extensive educational resources to guide you in your funding decision.

    Pros
    • Financial health tracking tool
    • Expertise in SBA loans
    • A dedicated agent guides you through the funding process
    Cons
    • Limited loan options
    • High minimum FICO requirements
  • 6
    Funding for startups and established businesses
    Torro
    • Loan amount:$10,000 - $500,000
    • Minimum credit score:700
    • Repayment terms:3-18 months

    Torro is an alternative business lender targeting startups in their preoperative phase and established businesses needing urgent bridge financing. Torro’s proprietary funding system lets you digitally submit your application to Torro and dozens of partnering investors. Once approved, the funds arrive in your account as soon as the same day.

    Torro’s website really lacks detailed information. However, the platform’s excellent 4.7-star Trustpilot rating earns it a place in our ranking of top 10 business lenders. The customer reviews indicate that business owners find Torro particularly useful when they are in urgent need of cash because Torro offers more rapid funding than its rivals.

    Pros
    • Accepts new businesses with no revenue
    • The platform’s proprietary funding system speeds up the process
    • Funds sometimes received within the same day
    Cons
    • The website lacks detailed information
    • There is no indication of rates before you submit an application
  • 7
    Funding options for all types of credit scores
    Become
    • Loan amount:$5,000 - $5M
    • Minimum credit score:350
    • Repayment terms:3 - 36 months

    Become (formerly Lending Express) is a loan marketplace for small businesses struggling to find funding elsewhere. The platform has a network of around 50 lending partners, many of which cater to borrowers with poor personal credit. These lenders offer a range of different loan types including term loans, merchant cash advances, and invoice factoring.

    Although it may not appear so, Become is a legitimate service that fills a gap for small business owners with limited funding options. Become’s partners have extremely flexible funding requirements, raising your chances of getting approved. However, be aware that the APR and terms may not be as favorable as competitor platforms.

    Pros
    • Extremely flexible funding requirements
    • Range of loan types
    • Become partners are listed on the home page
    Cons
    • Borrowers should check that a partner is trustworthy
    • The information on the website can be confusing
  • 8

    BlueVine

    Specialist in invoice factoring, lines of credit
    BlueVine
    • Loan amount:$5,000 - $250,000
    • Minimum credit score:530
    • Repayment terms:6-12 months

    BlueVine is a direct lender targeting small business owners with bad credit and an immediate need for cash. BlueVine differs from its competitors in that it does not offer regular term loans. Instead, the platform focuses on loan types with more built-in flexibility, such as invoice factoring and lines of credit. BlueVine has also been known to temporarily add products that offer business relief, such as SBA loans during Covid-19.

    If your credit is below the threshold of traditional business lenders, BlueVine can help you. This provider does not assess and reject you  primarily on your credit score, and it takes only five minutes to apply and receive a decision. Although an online service, BlueVine’s advisors will guide you through the process and answer any questions.

    Pros
    • Quick online application process
    • Flexible credit requirements
    • Rapid transfer of funds
    Cons
    • Short repayment terms
    • $15 charge to receive funds by wire transfer
  • 9

    FundBox

    Operating capital for small businesses and fr...
    FundBox
    • Loan amount:$5,000 - $100,000
    • Minimum credit score:500
    • Repayment terms:3-6 months

    FundBox is a fintech company that uses predictive analytics to find rapid funding for small businesses and freelancers. The platform offers two funding options, both of which are designed to help small business owners maintain cash flow. The two options are invoice factoring and lines of credit.

    If you have poor credit and cash flow concerns, it’s worth considering FundBox. However, as is the case with other companies that specialize in invoice factoring and lines of credit, FundBox’s APRs tend to be relatively high. Moreover, the short repayment terms (three to six months only) make this a viable option only for businesses that typically have a high volume of outstanding invoices.

    Pros
    • Approves borrowers that may be rejected elsewhere
    • An excellent option for maintaining cash flow
    • Rapid funding
    Cons
    • The website can be confusing and difficult to navigate
    • Higher than average APRs
  • 10

    LendingTree

    Loans marketplace for all purposes
    LendingTree
    • Loan amount:Up to $500,000
    • Minimum credit score:500
    • Repayment terms:Up to 50 years

    LendingTree is the oldest and largest online lending marketplace in the United States. It specializes in every type of loan imaginable, including home loans, personal loans, and of course (because why else would we include it here?) business loans. LendingTree’s partners offer business loans for every purpose, from term loans to invoice factoring to lines of credit.

    Although LendingTree does not specialize in business loans, it is worth using this platform if you want a broad comparison of options. LendingTree works with a huge network of lenders, and it takes just a few minutes to complete an application and find matches. Moreover, the process will not affect your credit score.

    Pros
    • Excellent choice for a broad market comparison
    • Specialization in all types of loans—not just business
    • Funding options for all types of credit profiles
    Cons
    • Business funding is not LendingTree’s only focus
    • Varying lender terms and requirements

Business Loans: What You Need To Know

Business Loans: What You Need to Know

It’s not unusual to need a business loan to cover expenses that exceed your current budget. Seasons and circumstances change, impacting daily cash flow and your ability to support continued growth. Before approaching a lender, educate yourself on the types of loans available, the terms you can expect, and what documentation will be required to determine eligibility.

What Are the Types of Business Loans?

Business Loan Type
Best For
Secured loans
Companies with property to put up as collateral
Unsecured Loans
Good credit scores
Line of credit
Ongoing working capital expenses
Merchant Cash Advance
Good credit, low risk
Accounts receivable
Outstanding invoices, short term debts
Equipment loans
Necessary equipment to grow business
Construction loans
Expansion or new facility
Invoice factoring
Filing cash flow gap

Lenders offer a variety of loans for businesses depending on the intent of the financing and how companies are able to guarantee payment.

  • Secured loans require collateral to back up the amount of the loan, meaning you could lose what you put up if you fail to pay in full.
  • Unsecured loans are granted to companies with solid credit ratings and may offer lower interest rates than secured loans.
  • Lines of credit work like a credit card, allowing you to borrow against a set amount as needed and only requiring interest payments on the money you use.
  • Merchant cash advances are based on your volume of monthly credit card sales and are paid back using a percentage of each future sale.
  • Accounts receivable loans use outstanding invoices as collateral to help pay off short-term debts.
  • Equipment loans are granted specifically for the purchase of new equipment, using what you purchase as collateral.
  • Construction loans provide funding to expand your existing location or build a new facility, and the building is considered collateral.
  • Invoice factoring lets businesses with rigid cash flow constraints operate more flexibly by providing them with access to the funds they require until invoices are paid in full.

Each loan type has a specific payment structure, term length, and interest rate. Some are more difficult to qualify for than others, and most require you to present detailed paperwork when applying.

How to Apply for a Small Business Loan

When you’re ready to apply for financing, find out what documentation your lender requires. The following is a list of things lenders may take into consideration:

  • Personal background, including criminal record. Anyone owning more than 20% or more of the business must fill out a form with their personal information and sign a personal guarantee.
  • Business background. Members of the company management team should be prepared to provide a resume outlining their business and work experience.
  • Business plan. This should include a value proposition, financial statements and projections, details of any existing debts, and a clear outline of how the SBA loan funds will be used.
  • Personal and business financial statements, tax returns, and bank statements.
  • Business credit report. As with a personal credit report, the lender will need you to provide details so it can access this report.

Benefits of An Online Small Business Loan

A business loan is an expensive growth opportunity that, if used wisely, will pay off for your small business in the long term. Whether you borrow money to expand to new premises, hire new employees, or finance the purchase of new equipment, there is a common thread: your loan is an investment to help your business grow. 

One of the reasons that people seek out online lenders is the greater ease at securing a loan. Banks and other financial institutions view many small businesses as too risky to finance, and if you’re running an online business with no brick and mortar storefront or more traditional revenue stream, you may find yourself out of luck. Not only are the loans easier to secure, they tend to come through quicker. Applying can often be as simple as a series of online questionnaires that don’t require meeting with a loan representative or anyone who can hold your hand and walk you through it. Once approved, the loans tend to be issued in a matter of days, not weeks or months like with banks.

Below are 5 reasons you could use your business loan to grow your business.

1) To Expand Your Location or Open a New One

If your small business operates out of a physical location such as a storefront or office, at some stage you’ll want to expand or move to new premises in order to grow and attract more business. The same can be said for an online business: your website might have done of a good job of attracting new customers, but sooner or later you’ll have to add more features, upgrade servers, or open multiple URLs to keep your business going.

2) To Build Credit for Future Loans

Your personal credit can affect the terms of your business loan, as many small business owners discover the first time they talk to a lender. If you have good personal credit, lenders will be willing to offer you favorable terms for your business loan. If your personal credit is poor, you could treat your new business like a blank slate. Taking a business loan or business credit card presents you with an opportunity to build business credit. Even if you only take out a $1,000 loan (the minimum amount offered by most lenders), every payment you make on time helps build your credit and strengthen your case for a better loan the next time around.

3) To Finance Equipment

A common purpose of business loans is funding the purchase of fixed assets, meaning property or equipment used to generate income. Equipment loans differ from general business loans in that they’re made by a lender or equipment-financing company and are designed specifically for buying expensive equipment. An equipment loan allows you to spread the cost of the purchase over several months or years. The equipment is put up as collateral, meaning the lender can seize the equipment if you default on payments. Equipment loans are offered for things like:

  • Commercial printers
  • Computer servers
  • Manufacturing equipment
  • Specialized machinery
  • Kitchenware or kitchen equipment

4) To Fund New Inventory

Inventory refers to your business’s products and the raw materials that go into manufacturing the products. Because inventory is different from equipment, it has its own special type of financing called inventory financing. This can take the shape of an inventory loan or inventory line of credit. Inventory loans are good for making a one-off purchase of a large amount of inventory. A line of credit offers flexibility to make regular, unscheduled inventory purchases.

5) To Recruit New Talent

Many businesses start off as one-person or two-person operations, but if your business expands you’ll eventually reach a point where you need assistance. Payroll can be the largest and simultaneously most necessary expense for small businesses. Unless you operate the type of business where you can attract interns or pay employees in equity, you’ll need to have cash on hand from the moment your employees walk in the door. A business loan can help cover payroll until you generate enough cash flow to pay employees from your earnings. Payroll loans could also be suitable for businesses that employ seasonal workforces. If you need extra help to meet the Xmas or Black Friday rush, then a one-off loan might be the best solution for your small business.

Line of Credit vs. Business Loan: Which Is Best for You?

  • Business loans work best for long-term capital costs, such as buying equipment for the business. Since the equipment will last a number of years, the loan term can be roughly matched to the number of years that the asset is expected to be productive. This will not only avoid the need for a large out-of-pocket outlay for the equipment, but it will also spread the purchase price out over several years.
  • A line of credit is better used as a source of working capital, to pay short-term operating expenses, such as the acquisition of inventory, the payment of payroll, or a surge of expenses that is expected to take place within the next few months. Lines of credit act as an additional source of cash to cover these needs, and you don't need to access it until the expenses are actually due and payable. As income catches up with expenses, you can repay the line.

A business loan should be taken when a specific capital expenditure is necessary, while a line of credit should be taken before it's even needed. The difference being that the loan has a very specific purpose, while the line mostly acts as a reserve to even out cash flow disruptions. Decide what it is you want the financing to do for you, and you will know whether to take a business loan or line of credit.

Nadav Shemer
Nadav Shemer specializes in business, tech, and energy, with a background in financial journalism, hi-tech and startups. He enjoys writing about the latest innovations in financial services and products.