When it comes to cash flow, it’s not always…shall we say…steady, is it? You may make more revenue one month, then find yourself scrambling to pay the bills the next. There are plenty of benefits to being an entrepreneur, but you also take the risk of not bringing in enough money.
So if this happens, should you just close up shop? Not at all. There are small business loans available that can help you make it until better times.
What is a Small Business Lender?
There are financial institutions, like banks and credit unions, as well as online lenders, that specialize in providing financing to small business borrowers like you. They may also offer personal loans, but these are specifically designed to be used for working capital to launch or grow a business.
Best Small Business Lenders
Small business owners have never had so many options when it comes to small business loan programs. Loan products vary from one to another, as do rates and loan terms, depending on your qualifications. Here are some to consider.
Kapitus offers short term loans up to $500,000 in as little as 24 hours. The process is quick and easy with limited documentation and offers the best prepayment discounts in the industry. This funding is ideal for inventory, immediate cash flow, bridge financing or any other use you may need for financing your business over a term of 3 – 36 months.
If you need a quick turnaround on your loan, consider financing from Rapid Finance. This lender offers SBA loans, lines of credit, and bridge loans, as well as asset-based loans and merchant cash advances. Some of these have to be paid back within six to 18 months, so that’s something to be aware of.
Speaking of merchant cash advances, Credibly also offers them. They’re not a loan; instead, they are an advance on future sales and tend to have shorter repayment terms than other loans.
Credibility Capital provides fair, affordable funding to help small businesses grow and succeed. They offer transparent, fully amortizing term loans from $50,000 up to $500,000 that are paid in fixed monthly payments over 1 to 5-year terms. Rates start as low as 6.99% and there are no prepayment penalties or other hidden fees. Their application takes just 5 minutes to complete and applying will not effect your credit score. Their superior product, simple process and best-in-class customer service have earned an A+ grade from the Better Business Bureau.
If you want to buy commercial real estate, SmartBiz is an option. The lender also offers lines of credit, SBA loans, invoice financing, and credit cards, so you’ve got plenty of options to choose from.
How Do I Qualify for a Small Business Loan?
Before you start your online application with a lender, look at eligibility criteria to make sure you qualify.
The largest factor for most lenders will be your creditworthiness. Lenders may look at both your personal credit and business credit to see how financially responsible you are, and may have a minimum credit score requirement.
Don’t have business credit? It’s normal for newer businesses. Learn how to establish business credit so you qualify for more offers.
In the loan application process, you may be asked to provide financial details, such as a profit and loss statement or bank account statements, your annual revenue. If you apply through a traditional bank, you may also need to have a business plan.
If you meet the requirements for revenue, credit scores, and time in business, even then you may get different repayment terms from another applicant, simply based on your specific details.
Which Loan is Best for my Small Business?
With so many financing options, it can be hard to know which is best for your business. That’s why it’s so important to really delve into what your business needs.
Do you want a lump sum of cash up front, or would you prefer to have access to a business line of credit when you need it?
What do you need the loan for? Working capital? Refinancing? There’s a type of loan for just about every business use.
Are you looking for financing for a specific use? There are equipment loans and commercial real estate loans that use the asset you’re buying as collateral.
What kind of down payments and monthly payments can you afford? It’s important to budget in that monthly payment so you can always make it on time.
If you run a startup, you might not qualify for an SBA or long-term loan, so you may need to explore short-term loans, invoice financing, and merchant cash advances.
Do you just want to be able to make purchases when you need them for your business? In that case, business credit cards might be the solution, though realize they tend to have higher interest rates (some have promotional introductory 0% offers for a year).
Which Lenders Give SBA Loans?
One type of loan we haven’t yet covered is the SBA loan. The U.S. Small Business Administration guarantees loans through programs such as the SBA 504 and SBA 7(a) loans, though the SBA is not a lender.
There are banks and online lending partners that are also SBA lenders. This means that they can accept your SBA loan application and process it. Of all your loan options, an SBA loan likely offers the lowest interest rates and longest loan terms, so if you qualify, I recommend you apply.
Nav’s Verdict: Small Business Lenders
Small business financing can be the difference between your business struggling and thriving. But not all small business lenders are the same, so spend some time exploring your options, from traditional bank loans to online financing.
Look for reviews from other customers to see what it’s like to work with that lender. You want a reputable brand that will work hard to help you find the loan that’s best for you, not the one that makes them the most money.
The relationship you have with your small business lender is one you’ll have for years, so make sure it’s a good fit.
This article was originally written on November 1, 2021 and updated on January 4, 2022.