No small business loan is one size fits all. Your choice of lender will depend on the features of your business. Are you just starting out, or well-established? Is your credit score great, or not-so-great? Do you need approval fast, or are you willing to wait in exchange for a lower interest rate?
We’ve compiled the best small business loans of 2022 in eight categories, so you can find the one that fits for your business.
There’s something for every small business owner here: traditional bank loans, online lending, invoice factoring, line of credit, and more.
Best traditional bank for business loans: Wells Fargo
Loan amount: $10,000 to $100,000
Lowest interest rate: 7.00%
Minimum credit score: 640
Terms: One to five years
- Low interest rates
- Long terms
- Few extra fees
- Tons of branches
If you’d prefer to work with a traditional bank, Wells Fargo may be your best bet. It frequently tops best-of lists for small business banking, and for good reason. It’s got over 8,000 branch locations in the U.S., and an established track record of small business lending.
You should be able to sign on for a lower interest rate and longer term with Wells Fargo than you would with many other traditional banks. That is, if you qualify; besides a minimum credit score of 640, Wells Fargo is known for having more stringent application criteria than other banks. Specifically, they’ll want to look at your financial statements to see how liquid your assets are, and to ensure you have good cash flow.
But if you do qualify, you’ll be working face-to-face with one of the biggest small business lenders in the U.S., most likely at a branch in your community.
Best low-rate business loan: Lendio
Loan amount: $5,000 - $5 million
Lowest interest rate: 6%
Minimum credit score: 560 (for line of credit)
Terms: One to five years
- Matches you with the best lender on the market
- Wide variety of funding options
- Low credit score requirements
Lendio offers 10 different types of loans for your small business, from equipment financing and real estate to startup loans and low interest business credit cards. Credit score requirements are low, the application process is quick, and you’re pretty much guaranteed to find the best interest rate available.
Why? Because Lendio is an aggregator, not a lender. The service connects with a network of 75 business financing options—banks, alternative lenders, credit unions (including some listed in this article, like Kabbage and BlueVine). When you apply through Lendio, they look at your company, assess your business needs, and connect you with the lender that best fulfills them.
Which lets us dodge the “Who has the lowest rates?” question. Because the lowest rate for your business isn’t always the lowest rate on the market. If it doesn’t meet your other needs—a long enough term, or eligibility requirements within your reach—then it isn’t viable. Lendio saves you a lot of number crunching by taking a look at your business and doing it for you.
Plus, it’s free. Lendio earns revenue from their lending partners, not from borrowers. So, even if you don’t sign on for the loan they recommend, there’s no harm in trying out the service.
Best choice for Small Business Administration (SBA) loans: SmartBiz
Loan amount: $30,000 to $5 million
Lowest interest rate: 4.75%
Minimum credit score: 650
Terms: 10 to 25 years (for SBA 7(a) loans)
- Lets you apply for an SBA loan without going through a bank
- Quicker turnaround than traditional banks
- Quick turnaround for small loans
The traditional method of applying for an SBA business loan involves going through a traditional bank. The process can take up to three months from application to approval.
SmartBiz bypasses this by letting you apply through their online service. (If you’re feeling iffy about choosing an online service for your SBA loan application rather than an old school bank, you may take some comfort in SmartBiz’s TrustPilot rating.)
SmartBiz promises quick turnarounds—it’s possible to get working capital of $350,000 or less deposited in your bank account within a week of applying. That being said, you’re still applying for an SBA loan; you’ll need to provide the same extensive documentation (including a business plan) and meet the same requirements the SBA demands of any lender—including a minimum personal credit score of 640.
Note that SmartBiz’s rates aren’t as low as Live Oak Bank—another popular online SBA option. But Live Oak only caters to businesses within certain industries, while SmartBiz is open to many different types. That makes them the better all-round option for SBA lending.
Best startup loan: Kabbage
Loan amount: $1,000 - $150,000
Lowest APR: No traditional interest rate, average fees range from 3 to 42%
Minimum credit score: 640
Terms: 6, 12, or 18 months
- Get approved for a line of credit with a short repayment term
- Low eligibility requirements
- Quick online application and approval
- Deposit loans in bank account or Paypal business account, or use Kabbage payment card
If you’re just getting off the ground, haven’t built up a business credit score, and want to get approved ASAP, Kabbage could be the right choice for you. Kabbage loans take the form of short-term lines of credit.
Kabbage’s online application process is quick, and you don’t need much to qualify: At least one year in business, and $50,000 in revenue. That being said, they’ll also look at your average bank account balance and most recent financial statements to make sure you’ll be able to make your daily or weekly repayments. And you’ll be required to make a personal guarantee before opening a line of credit.
Other lenders may offer more competitive interest rates and longer repayment terms. But other lenders also require higher credit scores, a longer time in business, or more annual revenue. Kabbage is accessible and puts money in your pocket fast, without loading you with hidden fees or impossible terms. And it’s a viable alternative to taking out a personal loan in order to get your new business off the ground.
Best P2P business loans: Funding Circle
Loan amount: $25,000 - $500,000
Lowest interest rate: Fixed rate, dependant on your creditworthiness
Minimum credit score: 620
Terms: 6 months - 5 years
- Quick turnaround on loan applications
- No prepayment penalties
- Straightforward fee structure
If your business is fairly well-established and you’re looking for a significant peer-to-peer loan, Funding Circle is the first place you should check out.
You’ll need a decent credit rating, and must have been in business two years before applying. But if you meet these requirements, your application could pay off. Funding Circle’s interest rates are competitive, and they’re transparent about their fees. Aside from interest payments and origination fees (3.49% - 6.99%), the only fees you may need to cover are for insufficient funds or late payments.
Funding Circle also offers pretty quick turnaround on loan applications—about three days from application to approval, on average. That’s longer than some online lenders, but definitely faster than a bank loan.
A few things to keep in mind: Funding Circle will require a personal guarantee when you sign on, and they’ll issue a general lien on your business. Meaning, if you default on a loan, they reserve the right to collect from you, and take priority over other creditors.
All that being said, if you’re looking for a quick cash injection for your business and competitive rates, Funding Circle tops the list of peer-to-peer lenders.
Best lender for a business line of credit: BlueVine
Loan amount: $6,000 to $250,000
Lowest interest rate: 4.8%
Minimum credit score: 600
Terms: Six months or twelve months
- Easy to qualify for—will consider applicants who don’t meet credit requirements
- Approval in 12 to 24 hours
- Weekly repayment schedule
- Must have been in business for at least six months
In terms of eligibility, quick turnaround, and transparent pricing, BlueVine leads that pack. That said, their interest rates are higher, and payment terms more restrictive, than some of their competitors. If those are major pain points, you may want to look elsewhere.
BlueVine’s lines of credit come in two flavors: Six-month payment terms, and 12-month payment terms. With either term package, you’ll be paying down the money you take from your line of credit weekly. And in both cases, the line of credit cycles—so, once you pay it down, credit is available again.
Even if you don’t meet minimum credit requirements, BlueVine will consider your application. In that case, they want to see that you have a steady cash flow and earn significant revenue. Be prepared to provide financial statements and past tax returns as proof.
Also worth noting: If you’re looking for fast cash, BlueVine has it. Their approval times for financing max out at around 24 hours—making the application process much faster than a traditional bank.
Best online lender for invoice factoring: Breakout Capital
Loan amount: Up to $1,000,000 (lump sum)
Lowest interest rate: 1.25% per month
Minimum credit score: None
Terms: Up to 24 months
- Transparent pricing
- Offers cash up front
- Daily, weekly, or monthly payments
Breakout Capital’s FactorAdvantage blends small business loans and invoice factoring. (Note: Factoring is different from invoice financing.) That unique approach to lending, plus the fact that they’re accessible to brand new businesses, make them the top choice for invoice factoring loans.
With traditional invoice factoring, you receive money only for the invoices you factor; essentially, you sell an invoice to a factoring company, they pay a portion of the total up front, and then collect on the invoice. They’ll pay you the remaining value of the invoice, minus fees based on how long it took your client to pay.
Breakout can set you up with their invoice factoring services, while also lending you a lump sum. So you can get cash-in-hand to grow your business, plus the option of factoring your invoices in order to speed up cash flow. They also promise to clear up any small liens on your revenue, such as those set by merchant service providers. These liens typically prevent small businesses from using invoice factoring.
If you’re looking for a bridge loan, or you’re planning a quick expansion of your business, FactorAdvantage could be the right choice for you. And if you aren’t a good match for any Breakout’s services, they’ll try to connect you with a different lender.
Best business loan for bad credit: OnDeck
Loan amount: $5,000 to $250,000
Lowest APR: 9%
Minimum credit score: 600
Terms: 3 to 36 months
- Offers both loans and lines of credit
- Low eligibility requirements
- Same-business-day turnaround
If your credit score is less than amazing but you’re looking to finance your small business, OnDeck has got loan options for you. They specialize in helping out small businesses that have trouble securing credit elsewhere.
Heads up, though. In exchange, you can expect to pay higher interest rates, often with daily or monthly repayment plans. You’ll also have to make a personal guarantee, and OnDeck will issue a lien on your business. Plus, the fee schedule is fixed—meaning, you won’t benefit from paying off your loan early.
So there’s no such thing as a free lunch. But OnDeck also comes with benefits. Apply online, and you can get cash in your bank account the same day. That’s excellent in case of an emergency. Plus, OnDeck reports your payment activity to major credit bureaus. Making timely repayments can help you build up your score—so you have a broader selection of borrowing options in the future.
Further Reading: 7 Non-Traditional Ways to Finance Your Small Business