Best Small Business Loans for January 2022

Owning a business can be an expensive venture which is why many business owners use small business loans to help grow inventory, revenue and expand operations. The Small Business Administration reports that 99.9% of U.S. businesses are small businesses, employing 47.5% of U.S. employees. As a small business owner, you might need funding to get through a dry season, take advantage of a business opportunity or to expand your current facilities.

We used our proprietary SimpleScore to rate and review the best small business loans on a variety of factors to help readers and business owners make informed decisions on buying business loans.

Lending Partner
Loan Amount
APR Range
In this article

    Unfortunately, that doesn’t mean it’s easy to obtain a small business loan from traditional banks. You should still try — you’ll usually receive a lower interest rate if you can qualify. But if you’re like the majority of small businesses, you may come up empty.

    Fortunately, a number of online lenders are giving banks a run for their money (and clients) by working directly with small business owners. In many cases, these companies make the lending process more convenient, with quicker turnaround, more transparent terms, and more flexible lending criteria. However, be aware that you’ll likely be getting a higher APR if you choose an online lender.

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    The 6 best small business loans

    Small business loans at a glance

    LenderAPRTermsLoan AmountBusiness EligibilitySimpleScore
    LendingClub4.99%–24.09%1–5 years$5,000–$500,000At least one year in business

    At least $50,000 in annual sales

    No recent bankruptcies or tax liens

    Must own at least 20% of the business
    Accion7.00%–34.00%Up to 25 years$300–$1 millionMinimum credit score of 525

    No bankruptcies in the past year or foreclosures in the past two years

    No more than four  mortgaged properties

    No late rent or mortgage payments in the past year

    Cannot be more than 30 days late on any bills, loans, credit cards or other payments over $3,000

    Special requirements for startups
    OnDeck16.9%–99.4%Up to 18 months$5,000–$250,000Minimum of one year in business

    At least $100,000 in annual revenue

    Personal credit score of 600 or better
    Funding Circle4.99%–27.79%3 months–10 years$5,000–$500,000Minimum of three years in business

    Minimum annual revenue of $400,000

    No current federal tax liens

    Personal credit score of 680or better

    Positive book value, where assets are greater than liabilities
    PayPalVariesVariesBased on PayPal accountMust have a PayPal Business account

    Personal credit score of 550 or better

    At least nine months in business

    At least $42,000 in revenue annually

    No personal bankruptcies

    Up to $15KMust own a legal business in the U.S.Funds must be used for business purposes

    Business cannot be involved with illegal activities or MLM/direct sales

    Business cannot be in foreclosure, bankruptcy or under any liens

    Owner must show that friends or family have made a small loan

    *Rates accurate as of January, 2020.

    Best for Good Credit – LendingClub

    If you’re confident in your credit score, small business owners can get a killer deal on a loan from LendingClub.

    APR Range
    Loan Amount
    1–5 years
    2.6 / 5.0
    SimpleScore LendingClub 2.6
    Median APR 3
    Loan Size 4
    Product Variety 1
    Resources 2
    Fees 3

    LendingClub is our top recommendation for small business owners who have a good credit score. LendingClub’s minimum APR is 4.99%, but only borrowers with an excellent credit score will be able to access the low rate.

    In terms of eligibility, LendingClub’s requirements are fairly strict. Your business must be at least one year old and have at least $50,000 in sales in order to get a loan. Because of that, we don’t recommend LendingClub to new businesses, or companies that haven’t shown consistent profits.

    Best for Startups – Accion

    With a loan from Accion, startup founders don’t need to live off ramen noodles to fund their business.

    APR Range
    Loan Amount
    Up to 25 years
    3 / 5.0
    SimpleScore Accion 3
    Median APR 2
    Loan Amount 4
    Product Variety 1
    Resources 5
    Fees 3

    Accion specializes in small business loans and goes as far as calling itself a “champion for small business.” Accion is our recommendation for startups that are looking for funding. On the application, you’ll explain why your company deserves funding, and the pitch is taken into account when Accion reviews your loan request.

    Another perk of Accion is that it offers loans ranging from $300 to $1 million. Whether you need a large upfront loan or just some extra cash to get started, Accion has you covered. However, Accion has strict eligibility requirements for all businesses, plus a few extra rules for startups.

    Best for Fast Cash – OnDeck

    OnDeck is a great solution for the business owner who wants their money and wants it now.

    APR Range
    Loan Amount
    Up to 18 months
    2.8 / 5.0
    SimpleScore OnDeck 2.8
    Median APR 1
    Loan Amount 3
    Product Variety 2
    Resources 5
    Fees 3

    Small business owners who need capital fast should look into a loan from OnDeck. Once you’re approved, OnDeck will deposit the loan funds into your business bank account on the same day, as long as it’s within regular business hours. OnDeck’s term loans give you money in one lump sum upfront, but you have the option to apply for more money once the loan is halfway paid back.

    We also like that OnDeck is transparent with its pricing. The company created the SMART Box Capital Comparison Tool to help small business owners understand their loan costs. That way, there are no secret expenses or hidden fees.

    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 for Established Business – Funding Circle

    FundingCircle is strict with approvals, but it’s a good option for financially healthy businesses that just need some extra capital.

    APR Range
    Loan Amount
    3 months–10 years
    3.2 / 5.0
    SimpleScore Funding Circle 3.2
    Median APR 3
    Loan Amount 4
    Product Variety 1
    Resources 5
    Fees 3

    If your company has been in business for at least three years and has a minimum annual revenue of $400,000, look into FundingCircle. The company operates as a peer-to-peer lender, which means you can get multiple loan offers with one simple application. Most businesses can get funds within three days, which is sufficient for most small business owners.

    Keep in mind that FundingCircle has strict requirements for credit scores. Business owners must have a personal credit score of at least 680, which is on the high end. But if your company meets the requirements, FundingCircle might be your best small business loan option.

    Best for Low Credit Score – PayPal Working Capital

    Poor credit doesn’t have to hinder your chance of getting a loan. PayPal’s small business loan is ideal for anyone with a score of 550 or above.

    APR Range
    Loan Amount
    Based on PayPal account
    3.7 / 5.0
    SimpleScore PayPal Working Capital 3.7
    Median APR N/A
    Loan Amount N/A
    Product Variety 2
    Resources 5
    Fees 4

    PayPal isn’t just for business transactions. It also offers business loans and lines of credit to small business owners. PayPal’s small business loan is our top choice for small business owners who have a low credit score. In order to be eligible for the loan, you need to have a personal credit score of at least 550 and have no prior bankruptcies.

    We also recommend PayPal’s small business loan for newer businesses. PayPal will give loans to businesses that have been in operation for at least nine months, and have at least $42,000 in annual revenue. The APR varies, but you can get a loan amount based on your PayPal account.

    Best for Small Loans – Kiva

    Sometimes a little money is all you need to get going. Kiva offers microloans with few requirements or contingencies.

    Loan Amount
    Up to $15K
    APR Range
    4 / 5.0
    SimpleScore Kiva 4
    Median APR 5
    Loan Amount 2
    Product Variety N/A
    Resources 4
    Fees 5

    Kiva’s small business loans are a good option if you need to borrow a small amount of money, also called a microloan. Kiva operates as a crowdfunding lender, which means private investors will be supplying your loan if you get approved. As a result, there are very few eligibility requirements for small business owners. Even if your credit is low and your business is brand new, you can still apply for a Kiva loan.

    However, one of the downsides of Kiva is that investors have to raise the money for your loan. In some cases, that can take several months. If you need cash fast, Kiva’s crowdfunding process might not fit your needs.

    Average small business loan by state

    Source: Lendio

    StateAverage Loan Size Q1 2020Average Loan Size Q4 2019Average PPP Loan Size
    District of Columbia$20,756$29,877$116,427
    New Hampshire$32,384$22,9698$74,133
    New Jersey$15,303$15,455$73,213
    New Mexico$23,467$13,116$44,432
    New York$14,706$13,108$61,289
    North Carolina$13,394$13,852$44,347
    North Dakota$27,017$29,475$25,928
    Rhode Island$12,789$15,073$66,546
    South Carolina$15,070$18,695$33,368
    South Dakota$61,776$5,142$45,078
    West Virginia$17,030$20,119$58,809

    What is a small business loan?

    A small business loan is money that you borrow from a bank, credit union or other lender. The money is generally used for business purposes, such as paying office rent, purchasing inventory, hiring staff, funding advertising campaigns and more. Many small business owners get a business loan for the working capital to first get their business off the ground and when they want to expand or scale.

    Pros and cons of business loans


    Accelerates business growth
    Not all businesses are eligible
    Maintain control of your company Can be secured against access
    Reasonable interest rates Repayments dip into cash flow

    How do small business loans work 

    The first step in getting a business loan is to find a lender. You can choose an individual lending company, or work with a lending platform to get connected to multiple lenders. The next step is to check the eligibility requirements and submit an application, which will include information like your industry, credit score, annual revenue, the loan amount and your proposed loan terms.

    Once you complete the application, the lender will review the request and if approved, notify you of its offer. When you sign the documents, you will be funded within usually one to two weeks. But if you need money faster than that, consider lenders with fast business loans.

    You will pay off the loan in monthly installments until the loan is fully paid off. If your financial situation improves, you also have the option to repay the loan more quickly. Most lending companies do not charge a prepayment penalty, but it’s a good idea to check your lender’s terms.

    Different types of small business loans

    Before choosing a small business loan, it’s important to consider what you need the money for, as there are different types of small business loans for different 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 Business Guide to SBA Loans ]

    Similarly, there are inventory loans that help fund the cost of products. Another type of “loan” is invoice factoring, where businesses sell their invoices to a third-party company, which allows them to get an advance on payments for unpaid bills.

    What to consider when taking out a small business loan

    Taking out a small business loan is a big decision and it’s different than taking out a personal loan. There are several things to consider before you start looking at lenders. First, consider what you need the money for and how much you need. If you’re taking out a loan to avoid spending any money out-of-pocket, consider investing a small amount of your own money to avoid paying interest.

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

    Also consider the terms, fees and rates. Make sure you can afford the monthly payments before you agree to the loan. It’s a good idea to compare several lenders before you choose one to make sure you’re getting the best rate for the amount of money you need to borrow. Lastly, decide whether you want a secured loan or unsecured loan, which does not require collateral.

    Business eligibility

    Not every small business can get a small business loan. Most lenders have eligibility requirements that businesses must meet before they can get approved. For example, many lending companies require the business owner to have a minimum credit score, and have no bankruptcies or tax liens on their record.

    There may also be requirements around business history and revenue. Some lenders require businesses to have a certain number of years or months in operation, or meet specific annual revenue figures. If your business is considered a startup, there may be specific requirements you need to meet in order to get a loan.

    Where to find the best business loans

    We only compared online lenders, but you should definitely evaluate all your options before committing to a loan. Here are some other options to consider when trying to secure a small business loan:


    Traditional brick-and-mortar banks are still your best option for borrowing the largest amount of money at the lowest interest rates. They may also offer longer repayment terms if you need them.

    [ Next: Latest PPP Data Raises Questions About Loan Distribution ]

    Keep in mind however that these loans require a lot of collateral, and can be notoriously hard to secure. Application and approval can also be daunting — you’ll need to complete a slew of paperwork, put up to 30% down, and possibly wait a few months to see any money.

    Credit unions

    Many credit unions also issue small business loans, and the approval process is typically more personal than it is at a bank, with things like an interview and letters of recommendation carrying more weight. Rates are competitive and sometimes lower, since credit unions are nonprofits with less overhead.

    You do need to be a member of the credit union, but the requirements for joining are often as simple as living in a specific area. Remember that while credit unions may be more flexible than big banks, they still primarily lend to established businesses.

    SBA loan program

    The U.S. Small Business Administration isn’t a direct lender, but it does provide government backing so that riskier businesses can get financing through partner banks and credit unions, which are guaranteed to receive a portion of their money back even if you default.

    The SBA has several programs, but the most common is its 7(a) Guaranty Loan Program. Fees are lower and terms can be longer than non-SBA loans, but the main draw is the looser requirements. Still, you may encounter drawbacks such as lower dollar caps and stricter requirements for the use of the loan.

    [ See: How to Get a Small Business Loan ]

    Online lenders

    Small business owners who have trouble getting loans through more traditional channels have a growing number of options online. As we profiled above, some online lenders fund their loans all by themselves, while others pair you with individual investors, each of whom funds a portion of your loan.

    Either way, the chief advantage of going online is speed: Most lenders can deliver your money in a week or less. Applications are also typically much less time-intensive. Of course, the major drawback is higher interest rates. It’s common for small businesses to secure bank loans with single-digit APRs. While that’s technically possible online, double digits are more the norm.

    You may also have to personally guarantee the loan, which means your own credit and assets — not just those of your business — are at risk if you default.

    Check Your Business Loan Rates

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    How to get a small business loan

    Getting a small business loan involves a lot more legwork than getting a personal loan. You’ll need to stay organized, have a clear idea of your needs, and be tenacious if you’re turned down. Here are some tips for securing the best financing package for your small business:

    1. Clean up your credit

    If you’re trying to get a loan for a fledgling business, your personal credit score is all-important. Without a substantial business track record, lenders will perceive a low personal credit score as a greater risk since they have little else to judge. Boosting your personal credit before applying for loans isn’t a quick process, but it can save you time, frustration, and money in the long run.

    If your business is very small or new, you might also consider taking out a personal loan to use for business purposes. This means your own personal finances are the only thing under the microscope (and on the hook if things go south). Your loan amount will probably be lower, but the process — and lending criteria — usually won’t be as involved. To check options, see our guide on the best unsecured personal loans.

    2: Have a business plan and sales pitch

    If you’re looking for a large chunk of change, it doesn’t pay to be vague. Tell your lender exactly why you need the money in as detailed a way as possible. Present your plan for the future and explain how the lender’s potential funding makes that plan possible.

    You’ll also need a wide variety of documents to support your case, including bank statements and tax returns. Be sure to lay out what makes your business a better bet than others. This is especially important if you think you might not be a slam-dunk candidate.

    3: Compare your options

    Before you embark on what can be a lengthy application process, it’s smart to shop around and evaluate all of your lending options. Consider your own bank first, especially if you have a long, responsible relationship with it. Banks that know your backstory might be more sympathetic to your needs. This also applies to credit unions that make small business loans — they often have more flexible criteria and willingness to offer bad credit business loans.

    Some sites like Funding Circle can match you with lenders who are more willing to make a deal. After you answer questions about your business and your needs, you’ll receive a list of lenders that might be a good fit, all without picking up the phone.

    If you’re targeting specific lenders online, be sure to compare interest rates, terms, and eligibility requirements. The loan calculators found on many lenders’ websites can help you make sure you’re comparing apples to apples.

    [ Read: How to Start a Successful, Minority Woman-Owned Small Business ]

    4: Target the best small business loans

    Bigger banks tend to make bigger loans to more established businesses. So if you and your spouse have run a business online for just a year and need only $20,000 to fill orders, you probably shouldn’t ask a big bank for a conventional loan. SBA loans or online lenders are likely better bets in that scenario. Also check to see whether there are particular lenders who make a lot of loans within your industry, especially if your industry doesn’t have a high rate of success.

    On the flipside, if you have an established, low-risk business with a long track record of healthy profits, you’re probably a good candidate for a traditional bank loan, so it makes sense to pursue that first.

    How to pick the best small business loan for you

    Before you apply for a small business loan, there are some steps you should take to find the best small business loan and improve your chances of approval.

    1. Look up eligibility requirements. Before applying for a small business loan, research which options might be right for you. From your credit score to revenue and collateral requirements, you will quickly find that lender requirements vary significantly.
    2. Collect the appropriate documentation.When you are ready to apply for a loan, there will be several documents that you will need to provide with your application. Many of these are financial documents, like your tax returns, financial statements, loan history and business certificate. You will also need to disclose ownership details and corresponding credit history.
    3. Consider collateral. Some small business loans may require that you provide collateral in order to qualify for your loan. Real property, like your home or car, is the conventional way to secure a loan, but there are other ways to provide collateral. You can provide cash to create a cash-secured loan, or you can use your company’s inventory or equipment as collateral. This could improve your chances of approval and earn you better rates on your loan.
    4. Study the proposed terms for each loan. So often we fixate on the interest rate of a loan, and while that is certainly important, that’s not the only factor to consider. Each loan carries its own terms, including any associated fees and how long you have to pay it all back. Before you commit to a loan, make sure that these are terms that you will be able to meet for the next several months or even years.

    Business loan FAQs

    A small business loan is not your only option when your business needs a financial boost. You can pursue a line of credit, which allows you to pull from a set amount of revolving credit. Short-term loans are also an option if you need money urgently in the short-term that you will be able to repay quickly, usually within a year or less. Many other emerging businesses opt for using crowdfunding or angel investors to secure funding.

    When you apply for a small business loan, you want to ensure that your credit score is as attractive as possible to potential lenders. This means paying off any large debts and making all of your payments on time, so you don’t risk any damage to your credit report. Also, take the time to review your credit report to ensure that there is not any inaccurate information that could hurt your chances of approval.

    The Small Business Administration defines a small business according to a specific set of guidelines that govern over each industry. While the requirements vary depending on your specific industry, key determinants include the size of your business, such as the number of employees that you have and your total sales each year

    Yes, business loans are worth it for some businesses. If you need a large amount of money and can’t source the funds from anywhere else, a small business loan can be a good solution.

    With a Paycheck Protection Program (PPP) loan, you will receive a minimum of $1,000. The maximum loan amount is based on payroll-related costs, and will be different for every business.

    In order for a small business to qualify for an SBA loan, it must operate for profit, conduct business in the United States and/or its territories, have reasonable owner equity to invest in the business and use other sources of income, including personal money, before applying for government aid. However, there may be additional requirements for businesses in certain industries.

    First, contact your PPP lender and fill out the required paperwork. Compile your bank account statements, payroll documents, tax forms and receipts or account statements showing your contributions to employee health or retirement benefits. For non-payroll PPP loans, you’ll need to provide documentation showing rent or mortgage payments and business utility payments. Once the paperwork and documentation is submitted to your lender, it will notify you if the loan has been forgiven.

    We welcome your feedback on this article and would love to hear about your experience with the business loans we recommend. Contact us at with comments or questions.

    Ask the Experts

    Kristen Edens

    Anna Serio

    Andrew Rodderick

    Credit Repair

    Given the current situation with COVID-19, what should small business owners be wary of when seeking a small business loan?

    Be wary of adjustable interest rates, balloon payments, and personal guarantees. There’s a lot of fine print with some of the SBA and EIDL loans; just make sure you’re good with all the terms and conditions.

    How do you recommend someone prepare for applying for a small business loan?

    You’ll want to get all your books in order. That means your most recent profit and loss statements, balance sheets, and tax returns. Get an accurate picture of your projected monthly revenue and expenses and be able to explain exactly what you intend to spend the borrowed money on.

    As a small business owner, what should I do to prepare for retirement?

    As a business owner, you have a couple distinct advantages when it comes to retirement planning. First, you can contribute far more to retirement plans tax-deferred. For example, for 2020, you can contribute up to $57,000 to a Solo 401(k).

    The second advantage is that at the end of your working career, your business may be a sellable asset in itself. Small businesses usually sell for a multiple of annual profits, so the more you can grow the company



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

    Elizabeth Rivelli

    Contributing Writer

    Elizabeth is a contributor to The Simple Dollar, where she reviews insurance providers and policies. She has more than three years of experience writing for top online insurance and finance publications, including Bankrate, and

    Reviewed by

    • Courtney Mihocik
      Courtney Mihocik
      Loans Editor

      Courtney Mihocik is an editor at The Simple Dollar who specializes in personal loans, student loans, auto loans, and debt consolidation loans. She is a former writer and contributing editor to,, and elsewhere.