Over the past year, we have been following financing providers that fall under a variety of different loan categories: online term loans, merchant cash advances, microloans, etc. Based on what we’ve found, we came up with a list of financing products that we think will be the best business loan options for business owners in 2015. Here is that list.
Best Term Loans
1. Lending Club
Many business owners do not realize that Lending Club offers business loans in addition to their personal loan products. Business loans are available up to $300K at interest rates as low as 5.99% with 0.99-5.99% origination fee. Lending Club is one of the larger, more established lenders in this list. They have great customer care, and you can be prequalified online for a loan in under 5 minutes.
Businesses looking for a Lending Club loan must have 2 years of operations under their belts and a personal FICO score of at least 600 to qualify. Lending Club’s rates are still higher than a typical SBA lender or bank loan, however the Lending Club funding process will likely take one quarter the amount of time that a bank will take.
Bottom Line: Lending Club is a great lending partner to work with, and they offer very competitive rates.
FundingCircle is an international organization that offers businesses higher loan amounts — up to $500,000. Their interest rates also start at 5.99% and max out at 20.99%, lower than other term loan lenders, and they charge a fixed origination fee of 2.99%.
FundingCircle’s requirements are slightly higher than other alternative lenders — personal credit scores must be 620+, the business must be at least 2+ years in business, and the owner cannot have bankruptcies on their record or current tax liens.
Bottom Line: FundingCircle targets high quality small businesses, so if you feel as though you meet their requirements then FundingCircle is a great option for you. If you aren’t sure, we recommend giving it a shot because of their great terms, which are much better than other fast financing options.
Fundation is one of the newer lenders in the term loan category. They are a bit different from LendingClub and FundingCircle because they are not a marketplace lender — they lend directly from their own balance sheet. They offer loans from $50,000 – $500,000 at 8-25% interest rates with up to a 3% origination fee.
Unfortunately, there is no pre-qualification using Fundation’s online application, but if you have all your documentation ready then you can still complete their application in under 30 minutes and be instantly qualified if your business has enough business credit history. To qualify you must be 2 years in business with at least 2 employees beyond yourself.
Bottom Line: Fundation’s application process is educational and transparent — if you do not qualify, they will tell you why and what you can do become a more worthy applicant. If you do qualify, Fundation could be a good option for you.
Dealstruck is the youngest lender on the Best Business (Term) Loans list. They offer loans from $50,000 – $250,000 at an average APR of 12%. Dealstruck’s funding can reach your bank account in 7 days — the fastest turn around of these term loan lenders.
To qualify, you must have 1 year in business under your belt and a good credit score. Dealstruck’s terms are very reasonable, but slightly less flexible than the more established lenders (e.g. repayment terms up to 3 years instead of 5, $250,000 max instead of $500,000).
Bottom Line: Dealstruck’s term loan products are very competitive. They also offer a revenue secured loan and an asset based line of credit. Dealstruck would be a very good lender to establish a relationship with given their variety of products and competitive rates.
SmartBiz allows business owners to apply for SBA loans in an easy-to-use online application. They have the most competitive rates of this whole list, ranging from 7-9% APR for loan amounts $5,000 – $150,000 with a 10 year payment duration.
SmartBiz also has the toughest requirements. Businesses must be 2+ years in business with 2 years of tax returns filed. Their application takes longer than other term loan lenders, but with the necessary documents prepared, you should be able to finish it in around an hour.
Bottom Line: If you qualify for a SmartBiz loan, this will probably be the best option for your business in terms of cost.
Best Short Term Loans
Kabbage offers short term loans to small business owners. These loans range from $500 – $100,000 with a 6 month repayment term and APR ranging from 20 – 90%. The approval process can take as little as 7 minutes.
Bottom Line: If your business isn’t quite qualified for the online term loans , Kabbage is one of the best working capital options out there. Be weary about the cost, however, and make sure to consider other fast financing options such as credit cards.
2. Paypal Working Capital
PayPal Working Capital is available to PayPal merchants who have $20,000+ annual sales through PayPal. Their APR is very reasonable — around 25%, and merchants are able to borrow about one month of revenue’s worth for working capital.
Bottom Line: If you are a PayPal merchant, PayPal Working Capital is a fast and relatively inexpensive financing option.
3. Square Capital
Square Capital is similar to PayPal’s working capital product — Square merchants with consistent card sales are eligible to be invited by Square to receive fast funding. Businesses can borrow $2,000 – $50,000 at ~35% APR.
Bottom Line: This option is more expensive than an online term loan, less expensive than other Merchant Cash Advance providers, and the funding is very fast. If you are invited to Square Capital and are in need of financing, this could be a great option for you.
Best Receivable Financing Options
P2Binvestor offers receivable financing, asset-backed lines of credit, working capital secured by contractual future revenue, and purchase order financing. They are unique in that they crowdsource all financing products. Businesses do not need to be profitable to secure financing from P2Bi, but they do need to show how they plan to become profitable, and that they have at least $500K+ in Annual Revenue.
P2Bi will fund up to 90% of your business’s outstanding contract value. Compared to other asset-based lending products, P2Bi is reasonably priced at 1-2% per month.
Bottom Line: If you are running a B2B business with at least $500K in Annual Revenue, P2Binvestor could be a great way to cover your outstanding contracts while forming relationships with investors.
Bluevine offers invoice financing for B2B small businesses. They are incredibly transparent, and the funding is fast with minimal paperwork. Bluevine financing is offered at 30-60% APR for a $5,000 – $100,000 line of credit.
Bottom Line: If you own a B2B business with $500+ in outstanding invoices and a personal credit score >530, Bluevine might be a good product to ease cash flow problems in your business. Make sure you use our Invoice Financing Calculator before accepting financing from Bluevine.