Best Business Loans for 2024

Fora Financial

Fora Financial offers business loans up to $1.4 million for short-term needs, with flexible repayment plans and potential discounts for early payback. We like their relaxed requirements, including a minimum of 6 months in business, $12,000 in sales, and a credit score of 500. Additionally, you won’t need any collateral and can easily track your loan progress through their online portal.

Noble Funding

Noble Funding stands out for its commitment to transparency and customer service. They offer competitive rates and terms for various loan options, with a focus on in-person assistance and zero hidden fees. We were also impressed that customers consistently praise their service on independent review sites.

If you’re looking for long-term financing, Noble has loans up to $500,000 and bridge loans exceeding $4 million for short-term needs. While they don’t require collateral, a credit score of at least 650 is needed to qualify.

Balboa Capital

Balboa Capital is known for its fast and streamlined application process, allowing you to apply and potentially receive funding within minutes – all online. We appreciate that they avoid excessive paperwork and hidden fees, making them an attractive option for businesses seeking a hassle-free approval process.  In addition to standard business loans, Balboa Capital offers niche financing solutions, including options for franchises and vendor financing programs.

Crest Capital

Crest Capital specializes in equipment financing for businesses, offering loans between $5,000 and $500,000 with fast funding and competitive rates. They can finance up to 100% of the equipment cost, including installation fees. For equipment under $250,000, a simple online application is all that’s required. For borrowers seeking equipment financing, Crest Capital is our best pick.

Accion

Accion Opportunity Fund is a non-profit lender dedicated to supporting small businesses that might struggle to get traditional funding. They offer loans from $500 to $150,000 and are willing to work with businesses with less-than-perfect credit.  Their commitment to helping underserved markets like women-owned, minority-owned, and startup businesses makes them a unique resource. Accion even offers microloans and financing options for food and beverage businesses, often excluded from traditional lending. Term loan rates start as low as 5.99%.

When seeking a loan, you must understand the ins and outs of the lending process, the lender’s qualification requirements, and loan terms to secure the capital you need without compromising your business’s future. As you compare various lenders, consider the following elements to ensure you choose the right loan.

Loan Application Ease

While you evaluate lenders, ask how long or detailed the application process is. Your lender will collect information about your business income and debts and use that to assess your ability to repay the loan. Some lenders require a lot of paperwork, while others don’t, depending on the loan size and term length.

If you need money quickly, select a lender with an online application and relaxed requirements about necessary documentation. Speed up the approval process by having certain documents ready, including your business’s tax returns, bank statements, financials, articles of incorporation and franchise agreements.

Interest Rate

Small business loans accrue interest, which is the price you pay for a loan. Rates are either fixed or variable. Generally, alternative lenders offer a fixed interest rate. Your interest rate will depend on the lender you partner with; your business’s financials, credit score and years in business; and your personal financial history. It is important to weigh the cost of the loan against the benefits of borrowing. If the cost does not make sense for your needs, seek a lower-cost alternative.

Rules and Requirements

Lenders charge business borrowers money to access capital. That includes interest, an origination fee and other charges such as maintenance and late payments. Pay attention to the annual percentage rate (APR). That tells you the full cost of the loan, including fees.

The size of the loan also impacts how much interest you’ll pay. The loan term is the amount of time you have to repay the loan. Loan contract terms can range from as short as a few weeks to as long as several years.

Qualifying Criteria

Depending on the loan type and lender, the qualifications for approval vary. Most lenders look at your business and personal credit score, years in business, annual sales, and business plan. Lenders don’t want to lose money and will scrutinize you and your business to ensure you can repay the loan.

Collateral

Business collateral is an asset you pledge to secure your loan. If you can’t repay the loan, you forfeit the collateral to the lender. Collateral can be your building (if you own it), equipment, accounts receivables, property, or something else of value. Lenders offering secured loans require the business owner to put up a certain amount of collateral. Unsecured business loans do not require collateral.

Many lenders also require a personal guarantee, a binding legal document in which you pledge to personally pay back the loan if your business can’t. If the debt is nondischargeable and you file personal bankruptcy, you’re still obligated to repay the loan.

Funding Speed

It is important to know when you’ll have the loan funds in your bank account so you can plan accordingly and avoid a cash crunch for payroll or other business operating expenses. Some alternative lenders can fund your loan the same day you’re approved, while others take a few business days.

Paperwork

Some lenders require you to provide additional documentation, such as tax returns, photo ID, bank and credit processing statements, or a voided check. Each lender has specific requirements.

There are many business loan options aside from traditional bank loans. The one that makes the most sense for you depends on your credit score, time in business, and the amount you’re looking to borrow. Funding speed and specific terms will vary from one product to the next. With that in mind, here’s a look at the small business financing options available to you.

SBA Loans

U.S. Small Business Administration loans are processed by lenders and banks. These low-interest loans are intended to help owners expand their businesses (e.g., buy a business, land or equipment) or recover after a natural disaster. The maximum amount you can receive from an SBA loan is $5.5 million.

There are four specific types of SBA loans.

• SBA 7(a) loans: These are a good option for working capital, debt consolidation or buying equipment for your enterprise. You can borrow up to $5 million. SBA 7(a) loans feature a variable interest rate tied to the prime rate. Collateral is required.
• SBA 504 loans: This loan type also has a cap of $5 million, with rare extensions to $5.5 million for manufacturing or energy-efficient projects. Many business owners use a 504 loan to purchase machinery or land. SBA 504 loans cannot be used for working capital or inventory. Interest rates are typically fixed and are based on five- and 10-year U.S. Treasury bond rates. No collateral is required.
• Microloans: Microloans can be used for working capital and to purchase supplies, equipment or fixtures, and furniture. Rates vary from 6% to 9%. Loans are available from community-based nonprofits; the maximum amount you can borrow is $50,000.
• Disaster loans: In case of emergency, disaster loans offer borrowers up to $2 million. They are designed specifically for small business owners who must rebuild after a natural disaster or global crisis. In late 2022, the SBA announced it would waive interest on disaster loans during the first 12 months. After that, the interest rate for for-profit businesses will be 3.04%.

Term Loans

With a term loan, you get a lump sum and must repay it in installments over a set period. Term loans have different repayment schedules depending on your business needs.

• Long-term loans: These loans have terms of at least six years. They are typically used for big purchases, such as company vehicles or property.
• Medium-term loans: These loans have terms ranging from two to five years. They’re commonly used to purchase business equipment or to fund expansion.
• Short-term loans: These loans have terms of less than two years. They are typically used to purchase inventory, fill cash flow gaps for working capital, or meet other short-term cash needs.

Lines of Credit

Lines of credit, or LOCs, give business owners quick access to capital. There are no rules for how the money can be used, and you only pay interest on the money you draw. The lender determines the loan size and interest rate. Many LOC loans have qualification requirements such as a minimum annual revenue, the length of time your company has been in business, and minimum credit scores of 500 or higher.

Merchant Cash Advance

With a merchant cash advance, the lender offers merchants an advance in exchange for future credit card sales. You get access to cash quickly and must repay the advance daily via a percentage of your credit card sales.

Peer-to-Peer Lending

Peer-to-peer (P2P) lending is a loan from another business owner or individual investor interested in financing your business. This cuts out the need for banks. These loans have drawbacks and are not allowed in all states.

Unsecured and Secured Loans

An unsecured business loan doesn’t require you to put up collateral. However, you must have good credit to qualify. A secured loan requires collateral, including an asset, equipment, accounts receivable or real estate property.

Equipment Financing

Equipment financing occurs when a business owner takes out a loan to pay for equipment. The collateral is the equipment you are financing. Most business owners can get approved thanks to the collateral component.

Invoice Financing

With invoice financing, business owners receive an advance on unpaid invoices. This financing is also called accounts receivable financing. Invoicing companies can advance you as much as 80% of the value of your unpaid invoices. You receive the final 20%, minus any fees when the invoices are paid.

Alternative Loans

Alternative lenders are another small business financing option. These nonbank lenders provide loans to business borrowers. They’re typically more flexible than banks and have a quicker application process and funding time. The approval requirements are usually more relaxed than those of a bank. Any financing outside of a bank is considered an alternative loan.

To find the best business loan providers, our team of financial experts meticulously combed through an initial pool of 38 potential lenders. After a rigorous narrowing process, we identified 19 top contenders for further examination. These finalists were then evaluated across 19 key criteria reflecting the priorities of business owners seeking financing. Ultimately, we selected five for inclusion on our list.

We grouped these criteria into weighted categories, which we evaluated based on what is typically most important to a business owner when selecting a business loan. Here’s how we made our decisions.

• Rates and fees: (30%): Our team meticulously compared interest rates, origination fees, and any additional charges to identify the most budget-friendly lenders. We also looked carefully for hidden fees to ensure that there are no surprises. This empowers you to secure the capital you need without sacrificing your financial well-being.
• Loan types (25%): We prioritized the variety and adaptability of loan products on offer. This includes analyzing loan types (term loans, lines of credit, equipment loans), loan amounts available, and repayment terms. We ensured a diverse range of options exists to meet the specific needs of your business.
• Ease of application (20%): We evaluated the eligibility requirements and application process for each lender. This analysis considers factors like minimum credit score, time in business, and revenue requirements. Additionally, we assessed the application process itself, ensuring that it’s streamlined and efficient.
• Customer service: (15%): Because unforeseen situations can arise, we looked closely at the customer service offered by each lender. This included assessing phone support availability, online resources, and the responsiveness of customer service representatives. We also checked out customer testimonials on user review sites.
• Expert analysis (10%): Our recommendations were also informed by the insights of our in-house business and finance experts. Their years of experience and analysis ensure that the providers on our list make financial sense.

Evaluating these factors helped us identify not only trustworthy business loan options, but also how each lender best fits specific business needs. We recognized that some lenders excel at certain loan types or cater to particular company sizes. This analysis led to the “Best For” categories you see on this page, ensuring you can easily find the loan that aligns perfectly with your business goals.

To learn more about our methodology, see our full editorial process.

Credit availability and rising interest rates are two major themes for business loans in 2024. Over the last two years, the U.S. Federal Reserve significantly raised its benchmark interest rates. The WSJ Prime Rate, an index of prime rates from 30 major banks, has ballooned to 8.5%, which remains unchanged from the same period in 2023.

Over the last few months, inflation readings have fallen to the mid-3 percent range. More recently, the central bank has paused its rate hike campaign, and many analysts believe that rates are at or near a peak. Federal Reserve Chair Jay Powell has publicly indicated that rates could fall somewhat in 2024. For now, policymakers are holding interest rates at elevated levels and assessing the impact on the economy.

The good news for businesses in need is that many lenders are still approving small business loans at high rates. A down economy and rising inflation may leave many small business owners looking for additional funding. Alternative lenders are ready to meet that demand, and it also appears that the SBA will have more money to lend in 2024.

Additionally, artificial intelligence and machine learning are reducing loan approval wait times and increasing the speed with which funds are deposited into business owners’ bank accounts. Credit scores still matter, but lenders are increasingly scrutinizing other aspects of a business owner’s finances to ascertain their creditworthiness. Altogether, these changes are designed to make getting a small business loan easier and faster in 2023.

In response to rising inflation, the SBA has expanded its size standards for what is considered a small business. That means more businesses are now eligible for SBA loans and federal contracts.