The Best Low-Interest Small Business Loans For 2020

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It’s no secret that qualifying for a Small Business Administration loan is difficult. The process can be long and arduous, but qualified borrowers get rewarded with extremely affordable and flexible loans with long repayment terms.

While SBA loans are available through banks, credit unions, and other traditional lenders, more people are turning to online intermediaries to simplify and expedite the process. One of the most popular online SBA lenders is SmartBiz.

Through SmartBiz, you can apply for a working capital/debt refinancing or commercial real estate loan.

With a SmartBiz working capital/debt refinancing loan, you can apply for $30,000 to $350,000. APRs are between 9.02% and 10.26%, with repayment terms of up to 10 years. Loan proceeds can be used to purchase inventory or equipment, launch a marketing campaign, pay operating expenses, or hire more employees. You can also use your funds to refinance high-interest business debt. You may receive funds as quickly as seven days after approval.

To qualify, you must be in business for at least two years. You must have a personal credit score of at least 650 and enough cash flow to cover your new loan payment. Your credit report must also be free of bankruptcies or foreclosures within the last three years, outstanding tax liens, and prior defaults on government loans.

For your business expansion, SmartBiz also offers SBA loans for commercial real estate. You can borrow from $500,000 up to $5 million with APRs of 6.62%-6.66%. Repayment terms are up to 25 years. Loan proceeds can be used to purchase commercial real estate or refinance your existing commercial mortgage. You can receive funding as quickly as 30 days after credit approval.

To qualify, you must be in business for at least two years. Your personal credit score should be at least 675, and you must have enough cash flow to pay your loan payments. The property being purchased or refinanced must be at least 51% owner-occupied. Your credit report must be free of bankruptcies or foreclosures within the last three years, outstanding tax liens, and past defaults on government loans. This type of loan cannot fund investment properties and new construction.

2. Fundation

Fundation

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Banks and credit unions offer some of the most competitive terms and fees. However, many qualified business owners avoid these loans due to the long and sometimes difficult application process and the time it takes to receive funds. Alternative online loans are more convenient, but those come at a higher cost, right? Not with Fundation.

Fundation offers installment loans and lines of credit with rates and terms comparable to bank loans. These products are available to the most creditworthy borrowers, and if you qualify, you can receive an affordable loan much sooner (weeks or even months sooner) than you’d get from a bank.

With a Fundation installment loan, you can apply for $20,000 to $500,000 to be repaid bi-weekly over terms of one to four years. Fundation’s APRs range from 7.99% to 29.99%.

Fundation’s lines of credits are available in amounts from $20,000 to $100,000. Repayment terms are monthly for 18 months. APRs are 7.99% to 29.99%, and you must pay a $500 closing fee and a 2% draw fee.

To qualify for either financial product, you must have a personal credit score of 660 and annual revenue of $100,000. You must be in business for at least one year and have a minimum of three full-time employees.

The time it takes to receive your funds is significantly shorter than it would be with a traditional bank loan; most borrowers receive their funding within two to seven days of submitting their applications.

3. StreetShares

StreetShares

StreetShares is an online lender that offers short-term installment loans and lines of credit. This lender is veteran-friendly, but you do not have to be a veteran to apply.

StreetShares’ installment loans are available in amounts from $2,000 to $100,000 with repayment terms of three to 36 months. Installment loan APRs start at 7% for the most creditworthy borrowers, with rates up to 39.99%. Your installment loan is paid back through weekly payments.

You can also apply for a line of credit from $5,000 to $100,000. Repayment terms are three to 36 months. Lines of credit have APRs of 7% to 39.99%. With each draw from your line of credit, you’ll pay a fee of 2.95% of the total borrowing amount. Line of credit draws get paid back through weekly payments.

To qualify for StreetShares’ financial products, you must be in business for at least one year, and a minimum revenue of $25,000 is required. You can only borrow up to 20% of your annual revenue. You also need a minimum credit score of 620 to qualify.

4. OnDeck

OnDeck

Through OnDeck, you can apply for a term loan or line of credit for your business. You can receive your approval decision in just minutes with no impact to your credit score. With OnDeck’s financing, you could have the money you need in your bank account in as little as 24 hours.

OnDeck offers term loans up to $500,000 for any business expense. For short-term financing needs, such as inventory or seasonal hiring, you could qualify for a short-term loan with terms of three to 36 months. These loans come with fixed monthly fees between 0.4% and 0.43%. This makes OnDeck’s loans a little harder to compare against some of its competitors that will frequently give you a flat fee for the entire term. To find out the total amount you’d owe, multiply your monthly fee by the number of months in your term.

OnDeck’s term loans have an origination fee of 0% to 4%. Fixed daily or weekly payments get deducted from your business bank account. To qualify, you must be in business for at least one year, have at least $100,000 in annual revenue, and have a personal credit score of at least 600. The most creditworthy borrowers will receive the lowest rates.

If you want more flexible financing to use as working capital, cover payroll, or pay for emergency expenses, apply for OnDeck’s line of credit. Lines of credit are available up to $100,000, and the APRs range between 11% and 57.9%. There are no draw fees, but a monthly maintenance fee of $20 is required. However, this fee is waived for six months if you withdraw at least $5,000 within five days of opening your line of credit. Weekly payments are automatically deducted, and maximum repayment terms are 12 months.

To qualify for an OnDeck line of credit, you must be in business for at least one year. You must also have at least $100,000 in annual revenue. The minimum credit score required to qualify is 600.

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5. Funding Circle

Funding Circle

For many business owners, peer-to-peer lending has opened up new opportunities to receive affordable loans. If you’re looking for competitive interest rates, one of the top choices is Funding Circle.

Through Funding Circle, you can borrow from $25,000 up to $500,000 with repayment terms between six and 60 months. Interest rates for the most creditworthy borrowers start at just 4.99%. Less creditworthy borrowers may qualify for rates up to 22.99%.

Funds from a Funding Circle loan can be used for any purpose. These loans are particularly popular with franchise owners.

To qualify, you must be in business for at least two years. Your personal credit score must be at least 620. Borrowers with higher scores will be eligible for the lowest interest rates. Most borrowers receive their funds within ten days of applying with this lender.

6. BlueVine

BlueVine

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BlueVine may be known for invoice factoring, but it also offers short-term loans and lines of credit to qualified businesses.

A BlueVine term loan will allow you to borrow up to $250,000, at a term length of either six or 12 months. Interest rates start at 4.8%, but there’s no origination fee.

BlueVine offers two types of lines of credit, one lasting six months, the other 12 months. The lender can extend you a credit line of up to $250,000 with a draw fee between 1.6% and 2.5%. Depending on which line of credit you get, interest rates are calculated weekly (0.3%-1.5% in the case of a six-month line of credit), or monthly (1.5%-6.5% for a 12-month line of credit).

To qualify for a term loan or a six-month line of credit, you’ll need to have been in business for six months and have a credit score of 600. For a 12-month line of credit, you’ll need to have been in business for two years and have a credit score of at least 620.

7. LoanBuilder

LoanBuilder

PayPal’s LoanBuilder is a service that allows you to “build” a business loan with the borrowing amount and terms that work for your business. LoanBuilder is available to borrowers with credit scores as low as 550. Borrowers with high credit can get approved for higher amounts with lower fees.

LoanBuilder is a bit different from some other lenders on this list because its loans do not have an annual interest rate. Instead, you’ll pay one fixed fee for borrowing.

LoanBuilder loans are available in amounts from $5,000 to $500,000, and you can receive funds as soon as one business day after approval. There are no origination fees or hidden fees. Instead of interest, you’ll pay one fixed fee starting at just 2.9% of the borrowing amount. Less qualified borrowers may qualify for loans with fees up to 18.72%.

To qualify for a LoanBuilder loan, you must have been in business for at least nine months and a minimum annual revenue of $42,000. You must not have any open bankruptcies on your credit report, and your personal credit score should be at least 550, although the lowest fees are reserved for borrowers with good to excellent credit.

8. Accion

Accion

Accion is a nonprofit lender with low barriers to entry for small businesses, particularly those falling into one of its specialty areas. Initially, the organization specialized in offering microloans and financial education to low-income communities across the globe. Since then, Accion has continued its mission to improve local communities by lending capital to startups and other businesses that may not qualify for other lending options.

To qualify, you’ll just need a credit score of 575 (550 in some places), enough cash flow to be able to repay your loan, and be up-to-date on your bills.

Accion offers loans from as small as $300 to as high as $1 million. APRs range from 7% to 34%, which takes into account a 3% to 5% origination fee.

9. Breakout Capital

Breakout Capital

Get Started with Breakout Capital

Businesses having a hard time qualifying for a loan may want to check out Breakout Capital. It offers two products: a business loan and a loan that combines elements of invoice factoring called FactorAdvtange.

Both products have terms of up to two years and fixed fees that start at 1.25% per month. While this rate can get expensive pretty quickly, Breakout Capital will give you a discount if you pay your loan off early. You can borrow up to $250,000 with the business loan product or $500,000 with FactorAdvantage.

To qualify for the loan, you’ll need to have been in business for a year and have a credit rating of 600+. Because it’s backed by your invoices, there are no similar prerequisites for FactorAdvantage.