If you’re running a business that employs 500 or fewer employees, you’re one of the 28.8 million small businesses in the U.S. While that sounds like a lot of companies, two-thirds of them only last two years. To make it past this mark, you may need an injection of cash. An online business can provide the money you need for expenses such as working capital, equipment, real estate or revolving funds. Here are the best online business loans available in 2018.
To determine which business loans you qualify for and which lenders are legitimate and affordable requires research. We’ve looked at the offerings of dozens of lenders and picked our top five favorites.
What makes a good online business loan?
A good online loan is reasonably affordable, given your credit and other business information. Most include interest rates, fees and penalties. For example, if you get a $10,000 loan for 12 months that has an annual percentage rate (APR) of 5% and an origination fee of 5%, you pay $11,000 in total. Be sure to calculate the full cost of the loan when comparing potential lenders.
Wide range of loan amounts
Lenders offer varying loan amounts to borrowers. For example, OnDeck offers $5,000 to $500,000. Look for the minimum and maximum limits to determine whether they suit your needs. The amount you are offered varies depending on your qualifying information, but it is good to know what range is available.
Easy approval requirements
One great thing about online loans is they often spare you all the paperwork that traditional lenders require. Some lenders require just bank statements and personal information, some check personal credit scores, while others ask you to link them to other financial services that you use. Look into what is required for approval and see whether it fits with your current situation.
Check how long it takes for your application to get approved and for the money to be deposited into your account. Some loans can be completed in as little as one day, while others can take several weeks.
Variety of repayment period options
Check for the lender’s repayment period options. The sooner you pay back the loan, the less interest you pay. However, in some circumstances, you may need more time to pay off the loan. Repayment periods can be as short as six weeks and as long as 25 years. Be sure to check for prepayment penalties in case you opt for a longer repayment period and want to pay it off early.
Look at the reviews and feedback from customers of any lender you are interested in. Pay particular attention to comments on fair pricing, good customer service and seamless processing.
Top Business Loan Picks
Designed primarily to serve small businesses, OnDeck offers loans from a minimum of $5,000 to a maximum of $500,000 that are approved in a matter of minutes. Repayment periods range from one to three years and interest rates start at 9.99%.
- 2.5% to 4% origination fee on your first loan
- 1.25% origination fee on your second loan
- 0% origination fee on your third loan
- Starting at 9.99% APR
- $5,000 to $500,000
- At least one year in business
- 500 or more personal credit score
- Annual business revenue of $100,000
Time to fund:
- Usually within 24 hours
- Three months to 36 months
Funding Circle markets itself as the investor’s alternative to traditional banks. It prides itself in being run by small-business owners serving small-business owners. You can repay the loan within one to five years and interest rates are as low as 5.49%.
- Origination fees of 0.99% to 6.99% per loan
- 5.49% to 27.79% APR
- $25,000 to $500,000
- Minimum annual turnover of $50,000
- Two or more years of bank and income statements
- Credit check
Time to fund:
- Five to 10 days
- 12 to 60 months
Considered one of the leaders in the world of alternative lenders, Kabbage has made more than $750 million in loans to small businesses since it started in 2009. Offering flexible credit lines, you can get funds when you need them and don’t pay interest until you actually borrow from your credit line. Its mobile application makes it easy to submit requirements and get approved right away.
- Monthly 1.5% fee
- 10% for the loan
- $2,000 to $100,000
- $2,000 minimum for six-month term
- $15,000 minimum for 12-month term
- At least one year in the business
- Turnover of $4,200 per month for the last three months or $50,000 per year
- Credit check
- Within 24 hours
- Six or 12 months
BitBond offers competitive interest rates of 1% per month; approval can take place in as little as 15 minutes. The company charges a single fee and does not take into consideration credit scores, which makes it appealing to small-business owners who may have less-than-stellar personal credit.
- 1% to 3% origination fee
- 7.7% to 25% APR
- $50 to $10,000
- Link to two of your accounts and the company rates your creditworthiness
- Five days
- Six weeks to five years
When it comes to helping out small businesses, SmartBiz competes with traditional banks, peer-to-peer lenders and cash advance providers. It offers larger loans than many competitors and allows for longer repayment periods.
- One-time referral fee
- Packaging fee
- Guarantee fee
- Closing costs
- 5.25% to 7.50%
- $30,000 to $5 million
- Two years or more years in business
- Business must be owned by U.S. citizens or permanent residents
- Credit score of 650 and above
- Must have cash flow to support payments
- Within seven days
- 10 to 25 years
Review and compare online business loans
Choosing from a wide selection of online business loans online can be overwhelming, but there’s a right fit for just about any business owner. For example, if you don’t want your credit to be checked, you can opt for a lender such as BitBond, while if you have decent credit and want a larger loan you can try SmartBiz or Funding Circle.
Still not sure which of these options are best for you? Visit this page for in-depth reviews of these lenders and several others.