5 Online Loan Companies That Won’t Screw You Over

Online loans make it fast and easy to fund your small business. For business owners with bad credit or who haven’t been in operation very long, obtaining a loan from a traditional bank is very difficult; non-traditional lending institutions can be a godsend for these borrowers.

Unfortunately, certain online loan companies take advantage of cash-strapped startups and credit-poor entrepreneurs, charging exorbitantly high interest rates and fees on their business loans. Oftentimes, the loan terms are overly confusing, and you end up having to pay back the loan sooner or at a higher rate than you expected.

However, not all online loan companies are shady. While too many predatory and unscrupulous online lenders exist, there are also some good eggs out there. Some online lenders charge competitive rates and fees and are completely upfront about their terms; several of these lenders are even startup- and bad-credit-friendly. Here are the 5 top online loan companies that offer fair rates and crystal-clear terms for small businesses in need of capital.

Lender	Borrowing Amount	Term	Interest/Factor Rate	Req. Time in Business	Min. Credit Score	Next Steps
	$5K - $500K	3 - 36 months	x1.003 - x1.04/mo	1 year	600	Apply Now
	$20K - $500K	1 - 4 years	7.99% - 29.99% APR	1 year	660	Apply Now
	$30K - $5M	10 years or 25 years	Prime rate + 1.5% – 3.75%	2 or 3 years	650 or 675	Apply Now
	$2K - $5M	Varies	As low as 2%	6 months	550	Apply Now
	$5K - $500K	13 - 52 weeks	x1.029 - x1.1872	9 months	550	Apply Now

1. Fundation

Fundation is arguably one of the top alternative (non-bank) lenders online, offering medium-term installment loans and lines of credit for working capital and business expansion. Fundation is a highly reputable online lender, and well-qualified applicants can get rates close to what they would get with a bank or credit union. The borrower qualifications are stricter than those of some other online lenders but still less stringent than those required to receive a bank loan—you can qualify for Fundation financing even if you only have fair credit and 1 year in business.

Time-to-funding is usually between two and seven days.

Terms & Fees

These are the terms and fees for Fundation’s installment loans:

And here are the terms and fees for lines of credit:

Borrower Requirements

Takeaway

Transparent advertising, excellent customer service, fixed-rate pricing (the interest rate will not increase over the life of the loan), and a short time-to-funding are just a few of the benefits you get with this online lender. If your business meets all of the above requirements, I’d encourage you to apply for a Fundation loan online and see what interest rate you qualify for; if you don’t yet have a profitable, multi-employee business, or the rate they quote you is too high, keep reading!

2. SmartBiz

SmartBiz is another respected online lender that will not take advantage of you. SmartBiz® Loans is the leading online marketplace for SBA loans. SmartBiz facilitates these loans through its marketplace of preferred SBA lending banks and helps increase approval rates by matching small businesses with the bank most likely to say “yes” to their loan. To qualify, you must have good credit and have been in business a couple years, making this online-SBA loan hybrid a good choice for businesses that would qualify for an SBA loan but don’t want to deal with the considerable hassle of applying in the traditional way.

A couple important benefits of SBA loans from a SmartBiz partner bank (compared to other online loans) include monthly repayments (many online lenders require weekly or even daily repayments) and a long term-length – you have 10 years to pay off your general 7(a) small business loan, or 25 years if you do a commercial real estate loan. You also get a personalized loan manager to lead you through the application process.

Terms & Fees

Here are the terms and fees for SmartBiz Working Capital & Debt Refinancing Loans:

And here are the terms and fees for SmartBiz Commercial Real Estate Loans:

Borrower Qualifications

Borrower qualifications vary depending on which type of loan you’re applying for. What follows are the minimum requirements for SmartBiz Working Capital & Debt Refinancing Loans:

And here are the minimums for their Commercial Real Estate Loans:

Takeaway

SBA loans are high-quality business loans — the polar opposite of predatory financing. However, the application and underwriting process for a traditional SBA loan can be long and arduous. SmartBiz simplifies the SBA loan by bringing it online.

To apply for a SmartBiz loan, just answer a few basic questions about your business, and they’ll let you know within minutes if you prequalify (much faster than with a traditional SBA loan). The time-to-funding ranges from two weeks to two months, which, again, is much faster than a regular SBA loan; however, if you need money faster or don’t meet the borrower qualifications, you’ll want to look elsewhere.

3. Lendio

The best way to make sure you’re not being taken advantage of by an online lender is by comparing multiple loan offers; if you only see one or two offers, it’s hard to know whether you’re getting a good deal or not. Lendio, while not technically a lender itself, is a loan “matchmaking service” that allows you to apply for and compare multiple business loans online.

Lendio uses an algorithm to determine which loans you are eligible for based on your qualifications, so you can potentially pre-qualify for multiple loans with just one loan application. Lendio’s network includes 75+ different lenders, including online alternative lenders as well as big banks.

Lendio offers many different types of small business financing, ranging from short-term loans and MCAs for startups with bad credit, to SBA loans for established businesses with excellent credit.

Terms & Fees

Lendio lenders’ terms and fees vary greatly because the lending network is so large. However, most lenders in the Lendio network fall into the following ranges:

Installment Loans

Short-Term Loans

Line Of Credit

Merchant Cash Advance

SBA Loan

Equipment Financing

APR, other fees, and collateral requirements tend to vary by lender.

Note that Lendio itself does not charge the borrower any fee in exchange for its services; Lendio is paid a commission from the lender every time someone accepts a loan offer.

Borrower Qualifications

Lendio borrower qualifications vary by lender. However, Lendio recommends you meet or exceed the following qualifications:

Certain types of financing have more stringent requirements. For example, the preferred requirements for equipment financing are 12 months in business and a 660 credit score. You can find out more details about Lendio’s loan terms and borrower requirements in our Lendio review.

Takeaway

Lendio’s free online loan aggregator service takes into account your unique financing needs in addition to your borrower qualifications to connect you with the online lender that best matches your profile. This service can potentially save you a lot of time while also making it easy to compare different offers so you can choose the best one.

Lendio’s application takes only about 15 minutes to fill out, and you can potentially get financed through Lendio as soon as 24 hours after approval.

4. LoanBuilder

Owned by PayPal, LoanBuilder is a 21st-century lender that makes it easy for you to put together and apply for the perfect loan with just a few clicks. Using an online tool, you can adjust your loan’s term length and borrowing amount to see how those changes affect your repayments. Besides their quick application and useful loan-building tool, other things we like about LoanBuilder include its weekly repayments (most short-term lenders require daily repayments) and the fact that you only need to make $42K/year ($3,500/month) in order to qualify.

LoanBuilder offers smaller, short-term loans which are ideal for newer businesses that can’t qualify for a bank loan yet. But unlike a lot of lenders in the short-term lending space, LoanBuilder is not predatory and shares PayPal’s reputation for quality.

Terms & Fees

Short-term lenders like LoanBuilder do not charge interest in the traditional sense; rather, this lender charges a one-time fee that is deducted from the loan’s total amount. This fee is also called the factor rate. For example, LoanBuilder’s factor rate would be x1.029– x1.1872.

Borrower Qualifications

As you can see, LoanBuilder’s borrower qualifications are quite relaxed, though startups (usually defined as businesses 6 months old and younger) are ineligible.

Takeaway

LoanBuilder is quick, easy, and accessible to businesses that can’t get a bank loan—and unlike a lot of online lenders that share these distinctions, they’re not trying to scam you. Rates are on the higher side for short-term lenders, and LoanBuilder is no exception. However, more qualified applicants (businesses with a higher credit score and longer time in business) will pay less for their loan, and LoanBuilder’s transparent process lets you see exactly what you’re getting into before you commit, even letting you change the terms to your liking before accepting the offer.

LoanBuilder’s application takes just several minutes, and you can get funded within a few days.

5. OnDeck

OnDeck is probably the most popular and established short-term lender you can find online. Founded in 2007, OnDeck was one of the first online lenders in existence and today they are the largest online business lender in the United States.

Like LoanBuilder and other short-term lenders, OnDeck’s borrowing rates can be high. However, for many businesses, it can be worthwhile in the long-term to pay a little more for your loan. OnDeck is a respected lender offering quick and easy business funding, and importantly, it provides financing to businesses that would not otherwise qualify for a loan. With that said, OnDeck’s average customer has been in business for at least seven years, makes more than $450,000 in annual revenue, and has a FICO score of at least 660.

OnDeck offers two financing products for small businesses: short-term loans and lines of credit.

Terms & Fees

These are the terms and fees for OnDeck’s short-term loans:

Note that because it can vary so much, APR is not a good standard of measure for short-term loans and merchant cash advances that have a factor rate fee model.

OnDeck requires daily loan repayments so they prefer applicants with strong daily cash flow.

Here are the requirements for OnDeck’s lines of credit:

Note that OnDeck does not charge a draw fee, though they do charge a monthly maintenance fee to keep your LOC open.
Borrower Qualifications

As you can see, startups are ineligible for OnDeck financing, but you can qualify even if you have credit as low as 600.

Takeaway

OnDeck has a respected name in online lending and is the leading online business lender in the U.S. OnDeck has a speedy, convenient online application, and is a viable (if expensive) source of financing for businesses with strong cash flow but poor credit. Even if you have good credit, you might want to check which rate OnDeck offers you, as more qualified businesses will receive lower borrowing rates.

Best Nonprofit Online Lender: Accion

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To qualify, you must: Have a credit score of 575 or above (550 in some places) Be no later than 30 days overdue on any bills Have had no bankruptcies in the past 12 months Have had no late rent or mortgage payments in the last 12 months Have no foreclosures for the past 24 months Have no mortgage adjustments during the length of the loan Startups also must: Have less than $500 in past-due debt Have a business plan with a 12-month cash flow projection Have a partner referral (like SCORE or SBDC) Borrower requirements (click to expand) Hide

Accion is a nonprofit online lender that lends to startups (and established businesses), even those with bad credit. These loans aren’t free, but the company charges fair interest rates and they offer microloans for when you only need a small amount of capital ($15K or less).

Accion is a solid online loan option for new businesses or those with poor credit. It’s also a reputable company whose flexible lending requirements open up business opportunities for individuals who are underserved by traditional bank lending – such as women, minorities, people with disabilities, and veterans.

Terms & Fees

Terms and fees vary greatly by location and loan type. However, here are the most common terms for Accion loans:

In addition to small business term loans, most of which max out at around $100K, Accion also offers short-term microloans in amounts as low as $300. These loans have a quicker approval process and more flexible credit requirements.

Borrower Qualifications

Borrower qualifications also vary by location and loan type, but here are the most common requirements:

Additionally, Accion requires that you are not late on bills, rent, or mortgage payments, and that you have not recently gone through a bankruptcy or foreclosure. If you have been in business for fewer than 6 months, you must have less than $500 in past-due debt.

Takeaway

Accion is a nonprofit that aims to help marginalized business owners, so you can rest assured that they are definitely not trying to screw you over. If you don’t meet the qualifications to get approved for a bank loan or SBA loan, Accion might be able to help you access fairly priced small business financing, especially if you need only a small amount of capital. The Accion application and approval process is a little more thorough than that of some other online lenders, however, and you will only be able to apply to loan offers specific to your area.

Which Online Loan Should I Apply For?

Here’s a short summary of which loan is best for which type of borrower:

• Fundation: Medium-term loans and lines of credit for established, good-credit businesses; fair credit also acceptable (max $500K)
• SmartBiz: Long-term SBA term loans for established, good-credit businesses (max $350K for working capital and debt refinancing loans, max $5M for commercial real estate loans)
• Lendio: Loan marketplace for newer businesses and established businesses alike (max $5M)
• LoanBuilder: Short-term loans perfect for newer and bad-credit businesses (max $500K)
• OnDeck: Bad credit-friendly, short-term loans and lines of credit for established businesses (max $500K)
• Accion: Startup-friendly microloans and term loans, especially for underserved businesses (max $1M)

Final Thoughts

It’s always a good idea to shop around when applying for loans. For example, if you have bad credit, you’ll want to compare quotes from LoanBuilder, OnDeck, and possibly Accion. More qualified businesses looking for an online loan should compare quotes from Fundation or SmartBiz.

For more help connecting to a trusted online lender, you might want to check out Lendio, a free service that partners with a large network of small business lenders and borrowers. You can also email us for more information about online business loans that won’t take you for a ride.

Lender	Borrowing Amount	Term	Interest/Factor Rate	Req. Time in Business	Min. Credit Score	Next Steps
	$5K - $500K	3 - 36 months	x1.003 - x1.04/mo	1 year	600	Apply Now
	$20K - $500K	1 - 4 years	7.99% - 29.99% APR	1 year	660	Apply Now
	$30K - $5M	10 years or 25 years	Prime rate + 1.5% – 3.75%	2 or 3 years	650 or 675	Apply Now
	$2K - $5M	Varies	As low as 2%	6 months	550	Apply Now
	$5K - $500K	13 - 52 weeks	x1.029 - x1.1872	9 months	550	Apply Now