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Small Business Loan Reviews

buyers guide
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  • SnapCap Review

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    Pros Low factor rates Relaxed credit score requirements Cons Some additional fees Overview SnapCap is a South Carolina-based alternative lender dealing in short and medium-term unsecured loans. While the usual warnings apply when dealing with alternative lenders, SnapCap does an admirable job of educating their prospective customers about what they offer and the pros and […]

  • Wells Fargo Business Loans Review

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    Pros Suited for small to large businesses Suited for start-ups Low interest rates Few additional fees Cons Stringent borrower qualification Poor public reputation Overview Wells Fargo is an international bank and financial services holding company based in San Francisco; it is one of the largest banks in the world by assets. Wells Fargo has deep […]

  • Republic Review

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    Pros Equity crowdfunding for non-accredited investors Low investment minimums Strong company vetting gives backers reassurance Cons High fees Can’t collect funds if you don’t hit your funding goal Republic is exclusive — not for small startups Overview Republic is one of the pioneering companies in the new world of open-to-all equity crowdfunding. Does their approach […]

  • American Express Business Loans Review

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    Pros No origination fee Reasonable terms and fees Suited for small businesses Cons Only available to American Express customers (Some products) unsuited to large businesses Overview American Express is a financial service company based in New York City. You’ve probably heard of their charge cards. What you may not know is that they provide a […]

  • MicroVentures Review

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    Pros Equity crowdfunding for non-accredited investors Broker-dealer registered by the FINRA Secured funding for big-name companies Cons Exclusive Opaque about costs Overview MicroVentures is an equity crowdfunding platform that offers accredited investors and non-accredited investors alike the chance to invest in early-stage companies. Founded in 2009 by Bill Clark and based in Austin, MicroVentures specializes […]

  • U.S. Bank Business Loans Review

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    Pros Suited for small to large businesses Low interest rates Few additional fees Cons Stringent borrower qualification Fair public reputation Only operates in 25 states Overview U.S. Bank, headquartered in Minneapolis, MN, is the fifth largest bank in the United States, serving 25 states with over 3,000 branches. For many parts of the country, U.S. […]

  • Accion Review

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    Pros Relaxed borrower qualifications Relaxed credit score requirements No prepayment penalty Excellent customer service Suited for startups and small businesses Cons Potentially high APR Some additional fees Overview Accion is a nonprofit company that began as a grassroots organization back in 1961. Originally, the organization specialized in offering microloans and financial education to low-income communities […]

  • Prosper Review

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    Pros Competitive terms and fees Fast application process No prepayment penalty Good customer support Excellent support materials Cons Must have at least fair credit Potential application process delays Overview While it’s unlikely the Vulcans are referring to this company in their traditional greeting, getting a loan from Prosper may be the logical thing to do. Founded […]

  • TD Bank Business Loan Review

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    Pros Suited for small to large businesses Low interest rates Few additional fees Cons Stringent borrower qualification Only operates in 16 states Overview T.D. Bank, N.A. is the American branch of Canadian bank Toronto-Dominion Bank. The division is based out of New Jersey and operates in 16 states, primarily on the East Coast. They also […]

  • Chase Business Loans Review

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    Pros Suited for small to large businesses Suited for start-ups Low interest rates Cons Stringent borrower qualifications Poor public reputation Overview Chase Bank (JPMorgan Chase Bank, N.A.) is a national bank based in New York City. It is currently one of the four largest banks in the United States. While banks like Chase have tightened […]

What is a Business Loan?

A business loan is a way for merchants to secure funds without giving up equity or control of their company. Business loans are a type of debt financing, meaning the merchant takes on debt they must repay in exchange for access to immediate funds.

There are many types of business loans available, from traditional installment loans to invoice financing and business lines of credit. Some types work better than others depending upon the business’s history, financial situation, and assets.

Types of Small Business Loans

Below are descriptions of the most common business loan terms and types you may find during your search for a loan. Which is best for your business?

Bank Loans

Banks loans are, simply, business loans originated by a bank. Banks may offer many types of business financing, including installment loans, lines of credit, and equipment loans. These institutions can normally offer the best rates and fees, but also have a reputation for low acceptance rates and very long application processes.

Bank loans are alternately referred to as traditional financing or traditional business loans.

Business Expansion Loans

These are loans used to purchase and open additional business locations. Most business expansion loans are installment loans, but some businesses may use lines of credit if they do not know exactly how much the project will cost.

Equipment Loans

These are loans used to purchase equipment. Normally, the lender will loan about 80% of the cost of the equipment, and the merchant is responsible for paying the remaining 20%. Equipment loans are an alternative to leasing or purchasing equipment outright.

Installment Loans

Also commonly called term loans, installment loans are loans repaid in fixed, regular installments over a set period of time. The repayment period for business installment loans is normally between one and 10 years, though some lenders will allow for shorter or longer terms.

Installment loans may also be called short-term loans (loans with repayment terms under two years), medium-term loans (repayment terms between two and five years), or long-term loans (repayment terms of six years or more).

Invoice Financing

A catch-all term that includes (among other non-loan financing products) loans that are backed by unpaid invoices. If you have cash flow problems caused by unpaid invoices, invoice financing may be for you.

Lines of Credit

Loans that grant you a credit facility from which you can draw any time without the need for application. These loans are convenient for businesses that have occasional cash flow problems, those that often have to deal with unexpected expenses, or any other businesses that need financing but don’t want to go through an application process each time. For our full list of line of credit reviews, head over here.

Online Loans

Also called marketplace loans or alternative loans, online loans are originated by a variety of non-bank lenders that utilize technology to make fast and easy lending decisions. Individual online lenders may offer products including installment loans, lines of credit, short-term loans, or other loan types, but are similar in that most can offer funding within two weeks or less.

SBA (Small Business Association) Loans

While SBA loans are usually originated by banks, the application process is handled by the Small Business Association itself. The SBA also guarantees a portion of the amount borrowed, which means these loans are often easier to get and require less collateral than standard bank loans.

Short-Term Loans

Unlike most loans, in which the fee is calculated by an interest rate, short-term loans carry a fee that is calculated once based on the original borrowing amount. As you would expect, short-term loans carry short term lengths; normally they are intended to be repaid in under two years, but some lenders allow term lengths up to three.

Head over here for a list of all our reviews of short-term loans (and their non-loan counterpart, merchant cash advances).

Startup Loans

Quite simply, these are loans used to finance startups. As startups are very risky, there are very few lenders that will finance this type of business. However, entrepreneurs may be able to get a loan through certain nonprofits or by utilizing their personal creditworthiness to get a personal loan for business.

Working Capital Loans

These loans are used to cover business operating costs while business funds are tied up elsewhere.

Are You Eligible For a Loan?

Eligibility for a loan is contingent upon a number of different factors; lenders cannot make the final decision about whether or not you’re eligible, and what rates they can give you, until they have performed the full underwriting and verification process. However, lenders can look at a few business factors to determine whether you have a good chance of getting a loan from their company.

Here are four big factors lenders will look for when deciding if your business is eligible for a loan:

  • Time in business: Lenders want to be able to see that your business has successfully been operating for some time.
  • Personal credit score: You must have a track record of making payments in a timely manner.
  • Business revenue: Your business has to be making enough money to meet the incremental payments. Many lenders will not let you borrow more than 15% – 18% of your total business revenue.
  • Collateral: In the event that you can no longer pay, some lenders want collateral so they will be able to recoup the lost money. While plenty of lenders do not require collateral (or don’t require specific collateral) businesses that can put up collateral will find the search for a business loan much easier.

Each lender has different requirements regarding each of these categories; the stronger your case, the more lenders you will have access to. However, most businesses will have access to some form of business loan.

Each of our reviews list the borrower qualifications for individual lenders, so don’t spend your time considering lenders you aren’t yet qualified for!

For more information on the business loan process, take a look at our Small Business Loans 101 series: