Best Small Business Loans for 2022
Given the current improved economic conditions and a spike in competition, lenders are slashing interests for small business loans.
Still, this does not make it easy to get a small business loan, especially from conventional banks. If your attempts to borrow from a traditional bank have been futile so far, there are other convenient options.
Top Picks for Small Business Loans
Best Peer-to-Peer Small Business Loans
In P2P lending, the borrower is directly connected with investors. Each one of them funds a portion of a diversified loan portfolio. This option may not be the best for anyone seeking a low-interest loan.
LendingClub: this is the largest P2P lender in America. Some of the requirements that you have to meet include at least 12 months in business, no tax liens or bankruptcies, $50,000+ in annual sales, a fair or better credit score, among others.
Funding Circle: quite popular in the United Kingdom, Funding Circle is dedicated to financing small businesses. It made its way to the U.S in 2013.
Prosper: this one shares a number of similarities with Lending Club, except it does not have a separate program solely for small business loans.
Direct lenders are a little different from P2P lenders in that they use their own capital to fund your loan instead of doing it though individual investors. Although the APR will probably be higher, your loan will be processed faster.
OnDeck: you can get lines of credit and term loans. Without much paperback and in a very short time, you can acquire a loan of up to $500,000 at the cost of a high interest rate.
Kabbage: the application for a loan is simple and you can even get it immediately.
Fundation: this one also has an easy application process.
Where to Look for Great Small Business Loans
The comparison above only focused on online lenders. However, taking out a loan is a big deal and you should explore all your options before you commit. So do not forget these options:
Banks: conventional banks remain undefeated when it comes to loans. You can get a high amount at a low interest rate. The repayment terms are also longer.
Credit unions: the approval process with credit unions is usually more personal compared to banks. Letters of recommendation and interviews mean a lot.
SBA loan program: this is not exactly a direct lender. Due to government backing, however, riskier businesses are able to get financing.
Online lenders: there are tons of options online for acquiring a loan. One of the many advantages of online lenders is speed.
How to Acquire a Small Business Loan
- Polish your personal credit. Your track record carries a lot of weight.
- Create a detailed business plan and a sales pitch. Do not be vague, especially if you want a lot of money.
- Do not rush. Compare your options. Take your time and shop around, assessing all options.
- Target the likeliest source and pursue it first before you look elsewhere.