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 interest rates, product variety, loan amounts, resources and fees to rate, review and assign a SimpleScore to business lenders in order to help you choose the best business loan for you.

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Loan Amount
APR Range
Term

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In this article

    The best small business loan rates of 2020

    Small business loans at a glance

    LenderAPRLoan AmountTermsEligibility Criteria
    American Express6.98%–19.97%$3,500–$75,00030, 60 or 90 daysAt least one year of account history on an American Express business card
    SmartBiz4.75%–7%$30,000–$5 million10–25 yearsTwo years in business and a credit score of at least 650
    OnDeckas low as 35.91%$5,000–$500,0003–36 monthsOne year in business, $100,000 in annual revenue and a credit score of at least 600
    Bank of Americaas low as 3.00%$10,000–$100,00012–60 monthsTwo years in business, $250,000 in annual revenue, and personal credit score of 670 or higher
    BlueVineas low as 4.8%$5,000–$250,0006–12 monthsAt least three months in business and a credit score of at least 530
    Funding Circleas low as 4.99%$20,000–$5 million6 months–5 yearsTwo years in business, at least $660,000 in annual revenue, and not a resident of Nevada

    Rates accurate as of September, 2020

    Best for credit card customers – American Express

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

    APR Range
    6.98%–19.97%
    Loan Amount
    $3,500–$75K
    Term
    6–36 months
    SimpleScore
    3.4 / 5.0
    close
    SimpleScore American Express 3.4
    Median APR 4
    Loan Amount 2
    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.

    Best SBA loans – SmartBiz

    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.

    APR Range
    7.99%–24.99%
    Loan Amount
    $30K–$500K
    Term
    2–5 years
    SimpleScore
    3.4 / 5.0
    close
    SimpleScore SmartBiz 3.4
    Median APR 3
    Loan Amount 4
    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.

    Best online term loans – OnDeck

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

    APR Range
    16.9%–99.4%
    Loan Amount
    $5K–$50K
    Term
    3–36 months
    SimpleScore
    2.6 / 5.0
    close
    SimpleScore OnDeck 2.6
    Median APR 1
    Loan Amount 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.

    OnDeck Disclosure

    *There are some industries we cannot serve (see list of restricted industries), as well as some industries and states impacted by the Coronavirus to which we are temporarily not lending. In addition, OnDeck does not lend to businesses in Nevada, North Dakota or South Dakota. OnDeck is no longer accepting new Paycheck Protection Program (PPP) loan applications. Registration terms and conditions apply. Instant Funding registration and withdrawals are currently supported from your desktop and the OnDeck mobile website. They are not currently supported in the OnDeck mobile app. Occasionally, transfer may take up to 30 minutes to complete due to potential Visa & bank processing lags. This benefit is available at no additional cost with a vast majority of major banks participating. Instant Funding is available for transactions between $1K-$10K.

    Best equipment financing loans – Bank of America

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

    APR Range
    as low as 3.00%
    Loan Amount
    $10K–$100K
    Term
    12–60 months
    SimpleScore
    3.8 / 5.0
    close
    SimpleScore Bank of America 3.8
    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.

    Best for fast funding – Bluevine

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

    APR Range
    15%–88%
    Loan Amount
    Up to $250,000
    Term
    Varies
    SimpleScore
    3.6 / 5.0
    close
    SimpleScore Bluevine 3.6
    APR 3
    Max Loan Size 3
    Product Variety 2
    Resources 5
    Fees 5

    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.

    Bluevine Disclosure

    1. For businesses organized as a limited liability company or corporation, we do not perform a hard credit pull at any point in our process, which means your credit score will not be impacted. For businesses organized as sole proprietors or general partnerships, we will only perform a hard credit pull after you receive and accept your offer.

    2. The rate is a simple interest rate calculated from total repayments over 26 weeks.

    3. Once approved, get funds deposited in your bank account in as quickly as a few hours if you choose our bank wire option ($15). Or, choose our free ACH transfer option which typically gets funds deposited the next business day, although it may take up to three.

    Best good credit term loan – Funding Circle

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

    APR Range
    4.99%–27.79%
    Loan Amount
    $5K–$500K
    Term
    3 months–10 years
    SimpleScore
    3.2 / 5.0
    close
    SimpleScore Funding Circle 3.2
    Median APR 3
    Loan Amount 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.

    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]

    Check Your Personal Loan Rates

    Answer a few questions to see which personal loans you pre-qualify for. It’s quick and easy, and it will not impact your credit score.

    Get Started

    with our trusted partners at Bankrate.com

    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

    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.

    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.

    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]

    Methodology

    SimpleScore

    We’ve created the SimpleScore to help you objectively compare products and services here at The Simple Dollar.

    Our editorial team:

    • Identifies five factors to compare across each brand
    • Determines the rating criteria for each factor
    • Calculate an average of those five factor scores to get one SimpleScore™

    We break down each of these five factors and their rating criteria for our review of the best auto loan companies of 2020.

     

    Why do some brands have different SimpleScore on different pages?

    Some brands offer a variety of financial products, which is why they have different SimpleScores on different pages. We rate individual products that brands offer — not the brand as a whole. 

    For instance, in our American Express personal loans review we rated the company a 4.25 out of 5 based on rates, loan amount, customer satisfaction, customer support and fees. In our review of the best small business loan rates, American Express earned a 3.4 out of 5 SimpleScore based on its business loan product. By tailoring our SimpleScore to each financial solution, we’re able to give you a more accurate view of each brands’ services and how they compare to competitors’ products.

    Median APR

    Lenders with a lower median APR are awarded higher scores — because even if you’re APR is average, your business is not.

    Maximum loan size

    Lenders that dole out loans with high maximums are also rewarded with higher scores. It takes money to run a business, and businesses need access to as much capital as it takes.

    Product variety

    Need more than just a business loan? Lenders that offer more than one type of financial product for businesses score higher than others that don’t.

    Educational Resources

    We gave out higher scores to lenders that have the following subjects covered in their blogs: loans, marketing, employee and staff, and credit or finance resources.

    Fees

    Fees can add up fast and eat into operating costs –– that’s why we give a higher score to lenders that have fewer fees.

    Jason Lee

    Contributing Writer

    Jason Lee is a U.S.-based freelance writer with a passion for writing about dating, banking, tech, personal growth, food 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 sets with the rest of the world. Follow Jason on Facebook here

    Reviewed by

    • Courtney Mihocik
      Courtney Mihocik

      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.