Business Finance

Best Small Business Loans for Good, Bad and Fair Credit 2022

Are you a business owner looking for the best small business loans to take your company to the next level? Maybe you need working capital, or you want to invest in real estate or equipment.

Most businesses eventually start looking into loan options for one reason or another. But traditional financial institutions are reluctant to lend to small businesses. A survey conducted by Ondeck reported that out of 10,000 small businesses applying to banks for small business loans, a whopping 82% were declined. This can be even more discouraging if your credit is less than desirable.

A survey conducted by Ondeck reported that of the 10,000 small businesses that applied for loans, a whopping 82% were declined any form of credit by their banks.

So where can you turn to find the best small business loans? And what are the best options for good, fair, and bad credit?

Types of small business loans

There are a variety of loan types available for small businesses! Here are the ones you should know.

SBA loans

Best Small Business LoansThe U.S. Small Business Administration provides Guaranteed Loan Programs in an effort to help small businesses get financial assistance. They have created guidelines for loans, which are then offered by third-party lenders. The SBA does not directly provide loans but does guarantee that they will be paid.

The primary advantages of these loans are their low-interest rates and long repayment periods. The disadvantages are their strict requirements and long application process. SBA loans are recommended for funding expensive one-time investments, buying real estate for expansion, purchasing necessary equipment, buying out other existing businesses, or refinancing other debt.

SBA loans - Features

Common loan term: Loan terms are for a five- to 25-year period with annual percentage rates (APRs) ranging from 7% to 8%.

Typical loan amounts: Loans start at $10,000 and could reach as high as $5 million. The average loan amount is $350,000.

Time for funding: The time to approve loans can take anywhere from 30 to 90 days.

Qualifications: As the business owner, you will need a personal credit score of 650 or more. As for your business, you will need to supply excellent financial records, business plans, projections, and some collateral.

Where to find it: Learn everything you need to know about applying here.  Follow these links to find out the information you need to provide when applying and the eligibility requirements.

Online invoice financing

Another popular type of loan is invoice financing. If you go this route, a lender will loan you the money for your invoices, which you’ll then pay back when your customers pay you. This can be helpful if you get paid long after you deliver goods or services.

There are two ways this works: invoice factoring and invoice financing.

With invoice factoring, you sell your accounts receivable based on the total value. You then get a cash advance that equals a percentage of the total invoice value (65% on average). When the invoice is paid, you get the remainder. The cost is a factoring fee that totals 3% to 5% of your invoice value.

With invoice financing, your invoices are used as collateral for an advance, and you pay 2% to 4% in fees per month. This can help to manage cash flow and fund short-term business needs.

Online invoice financing - Features

Common loan terms: For factoring, individual invoices often determine the repayment period for the loan, or a contract is set for one year.  APR typically range from 11% to 64%.

Typical loan amounts: Loan amounts again depend on how much is owed on each invoice, but range from $100,000 to $2,000,000.

Time for funding: These loans have a fast approval rate, often no longer than five working days.

Qualifications: There are a few qualification requirements that need to be met, both personal and relating to your business.  As the small-business owner, you will need a personal credit score of 500 or more. As for the business, it often needs to have been in operation for more than a year and it must have guaranteed cash flow. No other form of collateral is necessary, however.

Where to find it: Online lenders.

Term loans

These online loans are sometimes called business term loans. There are two forms available, short-term and long-term. With short-term loans, repayment periods range from six months to a year while with long-term loans, repayments can be up to 10 years and in some cases, even longer. Both loan types are available from banks as well as online lenders.

Bank term loan - Features

Common loan term: If you opt for this loan type, you can expect repayment terms that last three to 10 years. APRs will vary by lender.

Typical loan amounts: These generally start at $50,000, and the average loan amount is $500,000.

Time for funding: If you apply for a bank term loan, you can expect to wait from two weeks to two months for approval.

Qualifications: You will need a high personal credit score, usually over 680. Your small business will also need to have been in operation for over two years, and you must provide some form of collateral. This could take the form of equipment or real estate.

Where to find it: Banks. You can apply online or visit your local branch.

Short-term online business loan - Features

Common loan term: Loan terms for this type of online loan range from three months to two years. APRs will vary by lender.

Typical loan amounts: Loans start at $5,000 and go up to $250,000+.

Time for funding: If you need access to cash in a hurry, these loans are perfect. Approval times can be as short as 24 to 48 hours.

Qualifications: You will usually need a personal credit score of 500 or higher. Your business will also typically need to be in operation for more than a year and have an annual income of at least $100,000. No collateral is necessary to secure the loan.

Where to find it: Online lenders.

Long-term online business loan - Features

Common loan term: You can expect repayment terms of one to five years. APRs will vary by lender.

Typical loan amounts: These loans start at about $5,000 and go up to $500,000, depending on the online lender you choose.

Time for funding: Loans are often approved within 48 hours.

Qualifications: You will usually need a personal credit score of 600 or more. As for your business, it will typically need an annual revenue of more than $100,000 and to have been in operation for more than a year. No collateral is necessary to secure the loan.

Where to find it: Online lenders.

Credit lines

A line of credit works differently than a traditional loan. Instead of receiving a lump sum, you are given access to a cash amount that is flexible and can be accessed on an as-needed basis.

For example, you may be eligible for a business line of credit of $100,000. You can choose to use that in one lump sum, or to withdraw the amount you need at a certain time. Only when you access the line of credit, will you start to make payments and be charged interest.  This form of credit is perfect for short-term financing needs, emergencies, and help in managing cash flow.

Line of credit - Features

Common loan term: Depending on the lender as well as the overall credit amount, terms can vary greatly. For the most part, you will have six months to pay back the amount drawn from your line of credit. APRs also vary based on the institution chosen, be it a bank or online lender.

Typical loan amounts: Loan amounts can range from $2,000 to $500,000, on average.

Time for funding: When applying through an online lender, turnaround time can be as little as a few days. More traditional financial institutions such as banks may take longer.

Qualifications: You will need to have a personal credit score of more than 680, own your business for more than two years, average $10,000 in revenue each month, have a profitable business, and have no tax liens, foreclosures, or bankruptcies.

Where to find it: Online lenders and traditional lenders such as banks.

Now that you know the types of business loans, let’s look at some of the best business loan providers for good credit, fair credit, and bad credit.

How to get approved for a small business loan

Small business lenders are different than consumer lenders in many ways. According to data from the Bureau of Labor Statistics, 20% of businesses fail in their first year. And only 50% are still around after five years.

With that kind of potential for default, business lenders have stricter-than-average requirements.

Lenders require basic business information, such as how long you’ve been in business and your annual revenue. But they’ll also want as much information about your business as possible before approving you.

“Each small business needs to have their financials in place, including business and personal tax returns,” says Dave Hanold, the chief lending officer at Excelsior Growth Fund. “They’re going to try to understand where you’ve been, what your current need is, and where you’re going.”

Small business lenders might check your personal credit score, especially if you have no business credit history. They may also request collateral and even a personal guarantee in case your business can’t pay back the debt.

This means, if your business is new, you may have a hard time finding a good loan. Your options aren’t entirely gone, though.

Among SuperMoney’s top picks, you’ll find lenders that are friendlier to new business owners. We’ve also included lenders who accept applicants with good, fair, and even poor credit.

Let’s take a look.

Best small business loans for good credit


Fundation offers two forms of loans – working capital and business expansion loans. These are an excellent choice if you need cash fast.

To qualify, your business must be two years or older. You should also have two full-time employees that do not include you as the owner.

Balboa Capital offers a range of loan options for the small-business o

wner. These include merchant capital advances, franchise financing, working capital loans, and small-business loans.

To qualify for a small-business loan from Balboa Capital, your business needs to be more than a year old. You should have no recent bankruptcies against your name as well as no big tax liens. Your business also will need to generate $100,000 in annual sales.

The rates you qualify for will depend on the age of your business, your revenue generated, and your credit profile.

Prosper does not offer separate small-business loans, but do have unsecured personal loans that can be taken out and used for the purpose of your small business. This is one way to borrow small amounts of money, especially if your business is starting out and cannot yet qualify for more traditional loans.

However, to secure a Prosper loan, you will need a good credit rating, since it’s essentially a personal loan taken out for business purposes.

If you’ve been in business for at least a year and have generated substantial revenue, National Funding is a solid option.

The lender provides borrowers with competitive interest rates, reasonable repayment periods, and no collateral requirements. As such, you may not qualify if you’re a new startup or your business is struggling.

Best small business loans for fair credit

This is a market lending product aimed specifically at small businesses with a range of capital options.

To qualify, your business will need to generate more than $150,000 per year and should also have been in operation for two or more years. When applying, you will need to provide your personal and business tax returns.

Smart Biz is a small-business loan guaranteed by the federal Small Business Administration. These are online loan options available to finance a multitude of small-business requirements, including real estate financing.

To qualify for a Smart Biz loan, your personal credit score will need to be 675+, while your business should have been operational for more than three years and be generating $250,000 annually.

Best small business loans for bad credit

Kabbage offers short-term loans to business owners in which your credit rating is not taken into consideration.

To qualify for a Kabbage loan, your company must have been in business for more than a year and must generate more than $50,000 in annual revenue.

Fundbox offers invoice financing based on your outstanding credits from customers. There’s no minimum credit score needed to qualify. You will, however, need to provide a range of documents. The most important of these is the invoice proving outstanding customer credit. Additionally, you will need to show six months of activity in an online accounting package.

OnDeck loans are great to buy inventory, expand your business, or when you need cash in a hurry.

To qualify, you will need a personal credit score of at least 500 and you cannot have filed for bankruptcy in the last two years. Your business needs to have been up and running for at least a year and show an annual income of at least about $100,000.

Fora Financial offers unsecured business loans and merchant cash advances to small business owners. Its interest rates can be on the high side. However, they’re lower than some of the other bad-credit business lenders on our list.

Your business needs to be at least a few months old, and you won’t have a ton of time to repay the debt. But Fora Financial could be a solid option for small business owners who are newer but don’t yet have a great track record.

Rapid Advance provides a wide variety of business loans and lines of credit for all kinds of business owners. While you need to be in business for at least six months, the lender’s credit score requirements are low, and you can borrow as much as $1 million.

How to pick the right small business loan

There’s no single best option, so it’s important to compare several different small business lenders to find the right one for you. Compare lenders by their features and terms, especially their interest rates and fees.

“We recommend that business owners work to understand the true annual percentage rate of a loan,” says Hanold, “which is the actual yearly cost of funds over the term of the loan, including all fees. Some alternative lenders include significant costs in their fees to keep the interest rate seemingly low.”

If you can’t manage to get approved with any of these lenders, however, you still have some options.

“Startups may have difficulty qualifying for a bank loan if they don’t meet the institution’s credit or collateral requirements,” Hanold says. “More likely options for new businesses are funding from friends, family, and personal savings, or through crowdfunding or investors.”

Once you’ve assessed all of your options, you’ll have a much better chance of getting the funding you need when you need it. And as you pay off your small business loan, you’ll build up your business credit history to make it easier to get your next loan.

Getting started

As a small-business owner, you don’t need to worry about the fact that traditional financial institutions such as banks are likely to turn you down for a loan. Even if you have a poor credit rating, there are loans available to fund your business. And if your credit rating is fair or good, your options are even better. The key is never to jump at the first possible loan you come across. Always take the time to review and compare lenders.

Curious about what else is out there? Check out our business loans page to compare dozens of reputable lenders side by side.