Top Small Business Loans for 2024: Funding Options & Application Guide

If you recently started a business, you might be wondering whether it’s a good idea to take out a small business loan. Small business loans can make it easier for you to buy equipment, hire employees, and get your business off the ground.

And fortunately, it’s never been easier to apply for a small business loan. This article will explain how to apply for a small business loan and seven different online lenders you might consider.

Best Small Business Loans

Banks and credit unions used to be the go-to source for small business loans. But borrowers increasingly turn to online lenders because of the easy application process and quick funding. Listed below are seven online lenders we recommend trying.

Are small business loans hard to get?

Many people believe that it’s next to impossible to qualify for a small business loan, but this isn’t true. If you go into it with a plan, you can successfully qualify for the funding you need.

One thing that will affect your likelihood of approval is the lender you apply with. Some lenders have more stringent application and credit requirements and make it harder to qualify for a loan.

If you want to apply for a small business loan, there are three main types of lenders you’ll want to consider.

Banks or Credit Unions

If you’re hoping to qualify for the lowest interest rates, a bank or credit union will be your best bet. These lenders may also offer more flexible repayment terms as well.

However, these loans are very competitive and hard to get if you don’t already have an established business. In addition, you’ll most likely need to provide collateral, and it could take weeks or even months to receive the funding.

SBA Loan Program

The U.S. Small Business Administration backs an SBA loan, so it’s less risky for banks to loan you the funds. The most popular SBA loan program is the 7(a) Guaranty Loan Program.

SBA loans are a great option if you can get approved, thanks to their low interest rates and longer repayment terms. But they are notoriously difficult to qualify for. And if you’re looking to receive the funds immediately, you’ll want to consider other options.

Online Lenders

And finally, online lenders are growing in popularity thanks to their quick application process, variety of lending options, and quick funding. And there is no shortage of online lenders for you to choose from.

With an online lender, you’ll likely qualify for a business loan even if your credit score isn’t very high. However, the trade-off is that online lenders charge higher interest rates.

How do you qualify for a small business loan?

So now that you know where to go to apply for a small business loan, how can you maximize your chances of getting approved? Below are four steps you should take to qualify for a small business loan.

Step 1: Improve your Credit Score

Having a low credit score doesn’t necessarily rule you out from qualifying for a small business loan, but it makes it much harder. So the first place to start is by trying to improve your personal credit score as much as possible.

Improving your credit score takes time, but here are a few simple steps you can take that can make a difference:

• Check your credit report and request to have any derogatory marks removed
• Dispute any inaccuracies on your credit report
• Make sure you pay all your bills on time since this counts for 35% of your score
• Consider taking out a small unsecured loan to build your business credit score

Step 2: Get Your Paperwork Together

There is a lot of paperwork involved in applying for a small business loan. You’ll make the process much easier on yourself if you organize everything you need before you start the application process. This paperwork includes the following documents:

• Personal tax returns
• Business tax returns
• Bank statements
• A copy of your driver’s license
• Article of incorporation
• Your resume
• A detailed business plan
• Financial projections

Step 3: Shop Around and Compare Lenders

Before you spend a lot of time filling out small business loan applications, it’s a good idea to compile a list of possible lenders. Then, decide whether you want to apply with a bank, credit union, or online lender.

If you’re interested in using an online lender, lending marketplaces can be a great place to start. You’ll apply once, and the site will match you with multiple lenders. Using a lending marketplace can be a great way to save time and get the most bang for your buck.

Step 4: Choose the Lender That’s Right for You

Now it’s time to choose a lender and finalize the application process. Here are a few things you’ll want to consider when you’re choosing a lender:

• What kind of credit requirements does that lender have?
• What is the average loan amount the lender offers?
• How long are the repayment terms?
• What is their average turnaround time for funding loans?
• What is the APR range?
• Does the company have a good reputation?

What if my application is denied?

Even if you do everything right, there’s always a chance you could be denied your small business loan. If this happens, there are other options you can consider.

For instance, you could try applying for a business credit card. Business credit cards are easier to qualify for than small business loans, but they come with much higher interest rates. And with the right business credit card, you can take advantage of cashback rewards.

If you’re looking for a lump sum of cash, then you might consider applying for a personal loan. Personal loans come with lower interest rates than credit cards. A small personal loan could give you the momentum you need to get your business off the ground.

Summary

If you’re interested in applying for a small business loan, there are plenty of options available. If you want to qualify for the lowest interest rates, you’ll probably want to consider applying with a bank or credit union. However, if your goal is an easy application process and fast funding, an online lender will be your best bet.

Make sure you understand the lender’s requirements and go into the application process prepared. Don’t get discouraged if your application is denied because plenty of other options are available.