Best Small Business Loan Rates of 2020

Owning a business means you need to spend money to make money. But where can small business owners access the funds they need to keep their business running and grow? How do you know if you’ve found a good rate? There are lenders available offering some of the best small business loan rates out there, but you have to do a little research first. We analyzed the data to come up with a SimpleScore and help you choose from the best business loans.

The best small business loan rates of 2020

Small business loans at a glance

Lender APR Loan Amount Terms Eligibility Criteria
American Express 6.98%–19.97% $3,500–$75,000 30, 60 or 90 days At least one year of account history on an American Express business card
SmartBiz 4.75%–7% $30,000–$5 million 10–25 years Two years in business and a credit score of at least 650
OnDeck 10.99%–99% $5,000–$500,000 3–36 months One year in business, $100,000 in annual revenue and a credit score of at least 600
Bank of America 5.50%–12.25% $10,000–$100,000 12–60 months Two years in business, $250,000 in annual revenue, and personal credit score of 670 or higher
BlueVine 15%–88% $5,000–$250,000 6–12 months At least three months in business and a credit score of at least 530
Funding Circle 8.75%–36% $20,000–$5 million 6 months–5 years Two years in business, at least $660,000 in annual revenue, and not a resident of Nevada

Rates accurate as of July 21, 2020

Best for credit card customers: American Express

American Express

American Express expands into corporate financing by providing business loans.

APR
6.98%–19.97%
Loan Amount
$3,500–$75K
Terms
30, 60, or 90 days
SimpleScore
3.4 / 5.0
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SimpleScore
American Express
3.4
  • Rates
    4
  • Loan Size
    4
  • Product Variety
    2
  • Resources
    5
  • Fees
    4
You may be familiar with American Express as a credit card provider, but the financial institution also provides small businesses with loans. American Express loans can be used for nearly any business purpose and come with varying term lengths and amounts. Besides short-term small business loans up to $75,000, you can apply for merchant financing or settlement advance loans up to $2 million if your company processes credit card sales.
Full review

Our Two Cents — American Express is everywhere you want to be, including as a viable option when your business needs funding.

Best SBA loans: SmartBiz

SmartBiz

SmartBiz provides low-cost SBA loans for established businesses of all sizes.

APR
4.75%–7%
Loan Amount
$30K–$5M
Terms
10–25 years
SimpleScore
4 / 5.0
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SimpleScore
SmartBiz
4
  • Rates
    5
  • Loan Size
    5
  • Product Variety
    3
  • Resources
    5
  • Fees
    2
SmartBiz is a peer-to-peer lending platform where your business loan application is evaluated according to SBA requirements and passed on to the list of SmartBiz preferred lenders. You’ll save time and increase your odds with this method. SmartBiz matches your application with the lender it believes will be most likely to approve your loan and fund you.

The platform is best for established businesses looking for funding, since a company’s revenue trends are heavily weighed during the loan process. The SmartBiz Advisor is a free online tool that will show you your chances of getting approved for a business loan and advise you on what concrete steps your company can take to increase your odds of approval.

Full review

Our Two Cents — If your business has been around the block, SmartBiz will save you time by matching your application with the lender most likely to fund your loan.

Best online term loans: OnDeck

OnDeck

Businesses at least one year old that earn $100,000 annually, will likely find an SBA loan through OnDeck.

APR
10.99%–99%
Loan Amount
$5K–$500K
Terms
3–36 months
SimpleScore
2.6 / 5.0
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SimpleScore
OnDeck
2.6
  • Rates
    1
  • Loan Size
    2
  • Product Variety
    2
  • Resources
    5
  • Fees
    3
If you’re in search of a loan to fund business operations, OnDeck provides online loans that can be approved in a matter of minutes and funded the next day.

Your company will need to be in business at least one year and have $100k in annual revenue. OnDeck does soft credit pulls to check your credit history, so you avoid affecting your credit score with a hard inquiry. The business lender reports your payments to the business credit bureaus, so your company builds business credit to improve the chances of qualifying for better rates in the future.

Full review

Our Two Cents — SmartBiz is a great funding resource, but watch the interest rates and pay your loan back ASAP.

Best equipment financing loans: Bank Of America

Bank of America

Fund your business expansion with a loan to purchase equipment and commercial vehicles.

APR
5.50%–12.25%
Loan Amount
$10K–$100K
Terms
12–60 months
SimpleScore
3.6 / 5.0
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SimpleScore
Bank of America
3.6
  • Rates
    4
  • Loan Size
    4
  • Product Variety
    2
  • Resources
    5
  • Fees
    4
Bank of America has a variety of business loans available, but one of the most unique is its equipment loans. If you’re in need of financing on general or industrial equipment, construction equipment, or vehicles, turn to Bank of America. With no maximum for equipment financing and APR as low as 3% plus relationship discounts, you can outfit your business with a fleet of vehicles or new machinery to keep the company going.

Remember that Bank of America is a traditional lender. Getting approved for funding is likely harder than through an online or upstart lender. The bank only has two qualifications — sales of at least $250,000 and two years in business, but it takes more than the two requirements to get approved for a loan. Have a backup, just in case your application is denied.

Full review

Our Two Cents — Finance your equipment with a specialized Bank of America loan for potentially better interest rates than you’d receive for a general business loan.

Best for fast funding: BlueVine

BlueVine

Even new businesses can receive the funding they need quickly from BlueVine.

APR
15%–88%
Loan Amount
$5K–$250K
Terms
6–12 months
SimpleScore
3.2 / 5.0
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SimpleScore
BlueVine
3.2
  • Rates
    5
  • Loan Size
    4
  • Product Variety
    4
  • Resources
    3
  • Fees
    4
BlueVine helps you out in a few ways. The two most significant loan products are term loans and invoice factoring. If you need funding fast, you can apply for a term loan and get approval in as little as 10 minutes. As long as your business is at least three months old with a credit score of at least 530, you should see the money you need within 24 hours. Use caution — you’ll need to personally guarantee the loan, which means if your business is unable to pay the loan back, you’ll be personally responsible for it.

Then there’s the invoice factoring method to borrow cash. BlueVine will lend you up to $5 million within 24 hours on your outstanding invoices. The amount you can borrow depends on how much your customers owe you. Either option can help newer businesses and startups get the funding they need fast.

Full review

Our Two Cents — If you have a lot of outstanding customer invoices, BlueVine is a good option to cash in on your invoices faster.

Best good credit term loan: Funding Circle

Funding Circle

A one-stop-shop for SBA and investor-funded loans to improve your chances of getting funded.

APR for term loan
8.75%–36%
Loan Amount
$20K–$5M
Terms
6 months–5 years
SimpleScore
3.6 / 5.0
close
SimpleScore
Funding Circle
3.6
  • Rates
    5
  • Loan Size
    4
  • Product Variety
    1
  • Resources
    5
  • Fees
    3
Like SmartBiz, Funding Circle is a peer-to-peer lending platform — but it’s more comprehensive. The platform matches applicants with SBA lenders, as well as investor-funded loans. Funding Circle only works with established businesses, which are at least two years old with FICO credit scores of at least 660 for the business owners. This unfortunately rules out less-established businesses which will need to turn to other business loan alternatives.
Full review

Our Two Cents — If other peer-to-peer lending platforms don’t get you the funding you need, Funding Circle has expanded loan options.

What is a small business loan?

A small business loan provides an entrepreneur, founder or business owner with the funding they need for capital improvements, equipment, business real estate, commercial vehicles, payroll and other typical business expenses. Small business loans are usually provided by banks, the federal government through the SBA loan program or from private lenders.

Small business loans are normally larger than a personal loan and can provide a company with millions of dollars if the business can qualify for the amount. Businesses have their own credit score, which lenders can use, along with company revenue and the assets the business owns, to review a loan application and make a lending decision.

[Read: How to Keep Your Small Business Afloat When Cash Runs Low]

How small business loans work

Depending on the type of small business loan you apply for, the process can take hours to days to receive the funds you need. To get started with a small business loan you’ll need to apply. The process is faster online. If your business is established, meaning it’s been operating at least two years and has a steady stream of revenue, all you may need for an application is to provide your company financials such as profit/loss statements and a balance sheet.

If your business is less than a year old or has not developed a business credit profile, you’ll need to personally guarantee the loan. To apply for a small business loan as the guarantor you’ll need to provide your personal financial information and Social Security number. The lender will check your credit to determine if your company qualifies for a loan.

[Read: How to Build Business Credit]

Small Business Association

The Small Business Administration is a federal agency that guarantees business loans. Lenders that participate in the program are backed by the SBA so the lender can provide more loans to small businesses with lower interest rates and more flexible terms.

SBA loans are usually the most favorable type of loan for a business to get. 7(a) loans are the SBA’s most popular product and the funds can be used for a variety of business expenditures. SBA loans are more difficult to qualify for — they take more time and paperwork to apply, but the effort is worth it if you’re approved.

[Read: Small Business Guide to SBA Loans]

APRs

The annual percentage rate is the interest rate you’re charged for borrowing the funds plus loan-related fees. The rate varies, according to the risk level a lender assigns your business. If your company is established and can show a stable stream of income, your loan’s APR will likely be lower, saving you money in the long run.

Types of small business loans

There are different types of business loans, depending on your needs. They include:

  • Term loans: Loans with a set period of time for repayment
  • Lines of credit: A set amount of money available to your company to draw on and pay back as you need
  • SBA loans: Federally-backed business loans with lower rates and better terms
  • Invoice factoring: Borrowing money based on the outstanding invoices owed to your company
  • Merchant-related cash advance: Borrowing against your credit card sales

[Read: Small Businesses Can Apply For PPP Loans Again Thanks to a Second Round of Funding]

How to choose the best small business loan for you

Choosing the best small business loan will take some organization before you get started. It may be a good idea to keep a file of important financials ready for times when you need business funding fast. Follow these steps to choose the best small business loan:

  1. Get your financials in order. You’ll likely need financials, such as profit and loss statements and a company balance sheet for the last couple of years, the last two years of business tax returns, and bank statements from the last three to six months.
  2. An SBA loan typically provides the most favorable business loans. Do your research to see if you can qualify for an SBA loan first.
  3. Whether you can qualify for an SBA loan or have to search for an alternative, find the best small business loan rates and lenders to learn more of what lenders have to offer and the types of loan products they provide for varying industries.
  4. Visit the lenders at a local bank branch or through their online platform to learn more about interest rates and the application process.
  5. Apply for a loan.
  6. Evaluate the terms and if you’re willing to accept them.

[Read: A Loan to Build a Dream On: Where to Find Small Business Funding]

Small business loan FAQs

How do I qualify for a small business loan?

Qualifying for a small business loan really depends on the type of loan you’re applying for. Loans with more competitive rates such as SBA loans require that your company has been in business at least two years and has a minimum amount of revenue. If your small business is not established yet, it’s likely you’ll need to personally guarantee the loan.

What exactly is a small business?

A small business is a privately owned and operated company. Small businesses may have as few as only one employee and as many as 500 in certain industries, according to the Small Business Administration. The annual revenue of a small business depends on the industry. According to the SBA, retail and service industries labeled as a small business have an annual revenue of $6 million or less. Construction small businesses have an average of $28.5 million or less in annual revenue.

How much should I borrow as a small business?

Deciding on how much you should borrow as a small business is a complicated question. There is no catch-all answer. Borrow only as much as you need — small business loans charge interest rates on the money you borrow, which you will need to pay back in addition to the amount you borrowed. If you’re not sure about how much you need, sit down with your business accountant or an advisor to determine.

[Read: Seven Things New Business Owners Should Do Their First Year]

Too long, didn’t read?

Regardless of the age and size of your business, there are a variety of lenders offering competitive small business loan rates. If your company is established, a federally-backed Small Business Administration (SBA) loan is the least expensive option. For newer businesses, choose two or three lenders from our best business lenders to compare, shop and find the best loan terms and rate to fund your company’s needs.

Keep reading

Methodology

The SimpleScore is our proprietary scoring metric to compare products and services at The Simple Dollar in a transparent, evidence-based way. Our editorial team identifies five quantifiable aspects to compare for every brand, determines the rating criteria for each aspect score, then averages the five aspect scores to produce a single SimpleScore. For small business loans, we compared interest rates, product variety, loan amounts, resources and fees for every major lender. Our ratings are meant to be a directional tool to help you in the process of choosing a personal loan provider. Be sure to continue your research and shop around for the best personal loan that fits your specific needs.

We welcome your feedback on this article and would love to hear about your experience with the car insurance companies we recommend. Contact us at inquiries@thesimpledollar.com with comments or questions.

Jason Wesley
Jason Wesley
Contributing Writer

Jason Wesley is a seasoned copywriter with a passion for writing about banking, tech, personal growth, and personal finance.As a business owner, relationship strategist, and officer in the U.S. military, Jason enjoys sharing his unique knowledge base and skill set with the rest of the world.

Reviewed by

  • Courtney Mihocik is an editor at The Simple Dollar who specializes in insurance, personal finance, and loans. Previously, she wrote and edited for Interest.com, PersonalLoans.org, Ballantyne Magazine, Thread Magazine, The Post, ACRN, The New Political, Columbus Alive and the Institute for International Journalism.