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The Best Small Business Loans For 2020: Top Picks For Every Type Of Business

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The beginning of a new decade offers us a chance to assess where we’ve been, where we are, and where we hope to be in the future. I think we can all agree that things have gotten off to a bit of a rough start. Nevertheless, even in times of pandemic and social unrest, businesses need a way to access capital when they need it.

With the proliferation of online financing options out there, it’s easy to become overwhelmed when looking for the lender that best suits your particular business needs.

Let’s take a deep dive into the world of small business loans, so your business can tackle the ’20s the right way, even if it looks less like they’ll be “roaring” than “screaming.”

Learn More About Our Top Picks

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Best overall option for borrowers due to the variety of loans on offer in Lendio's free business loan marketplace.

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Best for smoothing out your cash flow due to the lender's multiple well-rounded cash flow solutions.

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Best for getting a handle on your operating costs due to the excellent short/medium-term financing products on offer.

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Best for business owners with bad credit, as the lender accepts applicants with credit scores as low as 500.

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Best for getting funds quickly -- you can get funded in a matter of minutes with Kabbage.

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Other Featured Options:

  • Fundation: Fundation's loans are ideal for debt consolidation, as they are offered with longer terms than most business loans.
  • SmartBiz: The SBA loans offered via SmartBiz are great for expanding your business due to their low cost and lengthy terms.
  • Wells Fargo Business Loans: Wells Fargo offers a wider variety of business financing products than most other banks.
  • LoanBuilder: Best for young businesses -- LoanBuilder only requires nine months in business for you to qualify for a short-term loan.
  • Accion: Accion is one of the few lenders offering business loans to startups with no time in business.

Read more below to learn why we chose these options.

1. Lendio

Lendio



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Lendio is not an originator of loans, so you might be asking yourself why we’ve placed them atop our list of small business lenders.

Lendio’s business financing platform works like this: you provide Lendio information about yourself, your business, and the kind of financing you’re seeking. In turn, Lendio will send you loan offers from among the 75+ loan originators in its business financing network. You can then compare the loan offers you prequalify for and select the one that best fits your business circumstances. What’s more, Lendio’s business loan marketplace is completely free to use.

We put Lendio at the top of our list due to the sheer variety of loan options on offer through Lendio’s partners. All of the following are available via the Lendio platform:

  • Business lines of credit
  • SBA loans
  • Short-term loans
  • Business term loans
  • Merchant cash advances
  • Equipment financing

Lendio promises to send you eligible loan offers within 72 hours of applying. Once you get your loan offers, you’ll still have to go through the process of applying to a lender, so it’s not the most rapid business financing solution. However, given that Lendio does the work of finding business loan products suited to you, the convenience will be worth the wait for most borrowers. Furthermore, Lendio’s extensive lender network includes some lenders who are willing to work with would-be borrowers who have less-than-stellar credit (Lendio recommends a credit score of at least 550 for applicants).

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2. BlueVine

BlueVine



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BlueVine is a business lender best known for its invoice factoring — a type of business financing in which a B2B (or B2G) business sells its unpaid invoices at a discount in exchange for immediate cash. For B2B businesses suffering from inconsistent cash flow, BlueVine’s invoice factoring provides a good way to smooth things out. And with BlueVine, there are no long-term contracts to sign or extra fees to pay.

If your business doesn’t process invoices, BlueVine offers lines of credit and term loans as well. The latter two products are available to both B2B and B2C businesses.

With BlueVine, you can apply for financing and get funded in as little as 24 hours. Combine that with BlueVine’s relatively relaxed borrower qualifications (you can qualify for invoice factoring with a credit score of just 530), and BlueVine makes a great case for itself as a remedy for your business’s cash flow issues.

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3. OnDeck

OnDeck



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One of the original players in the online loans industry, OnDeck’s short-term loans and lines of credit offer businesses two short/medium-term financing solutions to get a handle on operating costs.

OnDeck doesn’t charge interest on its term loans. Instead, your repayment amount is a fixed rate. That means your repayment amount only gets calculated once. For example, if you are borrowing $50,000 with a fixed rate of 19%, you’ll be repaying $59,500 in total (plus fees). In addition to the factor rate, OnDeck also charges an origination fee, which is taken directly out of the principal before you get the loan.

OnDeck also offers revolving lines of credit of up to $100,000 and term lengths of six months per draw. Unlike OnDeck’s term loans, the company’s lines of credit do accrue interest, so you can save money by repaying the money early — there is no penalty for early repayment.

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4. Fundbox

Fundbox



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Fundbox is a lender whose low borrower requirements make it an excellent place to seek funding for businesses (or even freelancers) with little or no time in operation, as Fundbox has no requirements regarding your time in business. Fundbox also lends to business owners with credit scores as low as 500. You’ll be hard-pressed to find another business lender with such relaxed requirements.

Fundbox offers three business financing products: invoice financing, lines of credit, and a payment solution for B2B businesses called Fundbox Pay.

Fundbox’s invoice financing product — known as Fundbox Credit — offers credit lines up to $100,000 with term lengths of either 12 or 24 weeks. One thing to keep in mind is that to qualify for Fundbox Credit, you must have been using compatible accounting or invoicing software for at least two months.

Fundbox’s revolving line of credit product is called Direct Draw. Unlike Fundbox’s invoice financing, Fundbox evaluates your bank account activity when you apply for Direct Draw. You’ll need to have been using a compatible bank account for at least three months before applying. The borrowing fee begins at 4.66%, term lengths are 12 or 24 weeks, borrowing amounts run from $1K to $100K, and there is no prepayment penalty.

Fundbox Pay is a unique financing solution for B2B businesses that works thusly: for a small transaction fee, a business receives money for its sales right away while offering buyers the ability to pay their bills over time.

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5. Kabbage

Kabbage



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Kabbage (pronounced like the vegetable) stands out amongst other online lenders for the remarkable speed with which you can get funding for your business. Apply for a business line of credit with Kabbage, and, though Kabbage will perform a hard credit check, your eligibility should be determined within just a few minutes, after which you can immediately request funds (assuming you’re approved!).

Naturally, this speed doesn’t come without cost. Kabbage’s lines of credit come with fees that can reach up to 10% of your borrowing amount each month. The effective APRs range from about 24% to 99%, and the loans are front-loaded, so repaying the loan early may not save you much. While Kabbage’s lines of credit can be pricey, payments are made monthly. Term lengths are for six, 12, and 18 months, and you can borrow up to $250,000.

Kabbage even offers a spending card called the Kabbage Card, giving you instant access to your line of credit whenever you wish.

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6. Fundation

Fundation



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Fundation is one of our favorite players in the alternative lending industry, offering competitive rates and excellent customer support. As it happens, Fundation is great for business owners looking to consolidate debt, as the company offers loans with term lengths of up to four years — longer than most other vendors operating in this space.

You can borrow up to $500,000 with Fundation’s installment loans, with payments due on a biweekly basis. Fundation also offers lines of credit of up to $150,000, with each draw subject to a 2% fee and a repayment period of 18 months. Draws from your line of credit are repaid monthly.

Fundation’s borrower requirements are on the stringent side — you’ll need 12 months of business history, at least $100K a year in business revenue, a personal credit score of at least 660, and at least three full-time employees at your business. Yes, you can count yourself!

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7. SmartBiz

SmartBiz



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Like our top pick Lendio, SmartBiz doesn’t originate loans. But while Lendio matches you up with online vendors offering a wide variety of loan products, SmartBiz’s network of bank lenders provide SBA loans. As SBA loans tend to be low-cost and long-term, SmartBiz is an especially attractive option for qualifying businesses looking to expand.

SmartBiz’s SBA loans aren’t for startups; two years in business are required to qualify. These SBA loans are offered in three different types: debt refinancing loans, working capital loans, and commercial real estate loans.

The working capital and debt refinancing SBA loans offered through SmartBiz have a term length of 10 years and an APR around 10%. Not too shabby, eh? You can borrow up to $350,000 with these loans.

SmartBiz’s commercial real estate loans are offered for up to $5 million with term lengths of 25 years. Of course, most of you probably aren’t looking for commercial real estate loans!

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8. Wells Fargo

Wells Fargo Business Loans



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Over the last decade or so, a number of scandals have tarnished Wells Fargo’s brand. However, if you decide to seek a loan from a traditional bank, the business loans offered by Wells Fargo merit consideration. The banking giant offers a wide array of financing products for businesses:

  • Secured and unsecured business loans
  • Lines of credit
  • SBA loans
  • Invoice factoring
  • Commercial lending

Thankfully, you don’t have to go into a Wells Fargo branch to apply — you can do so online.

Wells Fargo’s borrower requirements for business loans are generally pretty steep. Your business must have a two-year record of profitability and at least $1.50 in cash flow for every $1 borrowed. You must also have a personal credit score of at least 640.

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9. LoanBuilder

LoanBuilder



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Small business lender LoanBuilder was acquired by PayPal in 2017 and is sometimes marketed as PayPal Business Loans. The lender specializes in short-term business loans that carry fixed fees instead of interest.

For new businesses just starting, LoanBuilder’s advantage is that the lender only requires nine months of business time. Most business loan vendors require 12 months or more of business history. You’ll also need revenue of $42,000+ a year and a personal credit score of 550 or above.

Borrowing amounts run from $5K to $500K. Term lengths range from 13 to 52 weeks, and the borrowing fee is a one-time fee of 2.9%-18.72% of the borrowing amount.

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10. Accion

Accion



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We here at Merchant Maverick have been fans of Accion for some time. This nonprofit is one of the very few vendors of business loans that do not require any time in business at all for loan qualification, making Accion an ideal funding solution for startups.

Do note that you’ll need a personal credit score of at least 550-575 to qualify, however. Startups must also meet a few additional requirements:

  • Have less than $3,000 in past-due debt
  • Have a business plan with a 12-month cash flow projection
  • Have a partner referral (such as SCORE or SBDC)

Accion’s small business installment loans carry an interest rate of 7%-34%, borrowing amounts from $300 to $250K, and an origination fee of 3%-5%.

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How We Chose Our Top Picks

When reviewing business financing products, Merchant Maverick gathers and examines pertinent data points on each lender (interest rates, term length, fees, borrower requirements, customer reviews, etc.), compares the lender to other similarly situated companies in the industry, and assigns the lender a score based on our research.

For this list, we’ve pinpointed some of the primary motivations for seeking business financing, identified the lenders who best fulfill those motivations based on the data we’ve collected, and presented them to you! Of course, we encourage you to compare business lenders to find the product that best suits your business needs, but we hope this list provides you with a well-substantiated starting point in your search.

Final Thoughts

As the inescapable procession of time carries us into a new decade and reveals a new set of challenges, remember that there can be opportunity in crisis. If your dreams involve growing your business — or perhaps starting one — we hope this list serves as a roadmap for making the most of this new era.

The ’20s are here. As David Byrne says in the movie True Stories: “What time is it? No time to look back.”

Now go out there and get some funding for your business!

In Summary: Best Small Business Loans For 2020

  1. Lendio: Best overall option for borrowers due to the variety of loans on offer in Lendio's free business loan marketplace.
  2. BlueVine: Best for smoothing out your cash flow due to the lender's multiple well-rounded cash flow solutions.
  3. OnDeck: Best for getting a handle on your operating costs due to the excellent short/medium-term financing products on offer.
  4. Fundbox: Best for business owners with bad credit, as the lender accepts applicants with credit scores as low as 500.
  5. Kabbage: Best for getting funds quickly -- you can get funded in a matter of minutes with Kabbage.
  6. Fundation: Fundation's loans are ideal for debt consolidation, as they are offered with longer terms than most business loans.
  7. SmartBiz: The SBA loans offered via SmartBiz are great for expanding your business due to their low cost and lengthy terms.
  8. Wells Fargo Business Loans: Wells Fargo offers a wider variety of business financing products than most other banks.
  9. LoanBuilder: Best for young businesses -- LoanBuilder only requires nine months in business for you to qualify for a short-term loan.
  10. Accion: Accion is one of the few lenders offering business loans to startups with no time in business.
Jason Vissers

Jason Vissers

Jason Vissers is a writer and cereal chef from San Diego. He graduated with a Political Science degree from San Diego State University in 2001. He's been writing about website builders, crowdfunding sites, online lenders, and credit cards for Merchant Maverick since 2015. Additionally, Jason can't eat raisins.
Jason Vissers

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