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Many entrepreneurs and business owners launch their companies through bootstrap financing. But for larger ventures, or for expanding existing companies, business loans become a necessity. Ironically, the type of business loan you ultimately obtain often depends largely on your personal circumstances – including your credit profile and FICO score. That's because many commercial business loans demand that borrowers possess good personal credit along with presenting strong business plans.

Obtaining Business Funding

Depending on the type of funding you pursue, you will need to have most or all of the following elements in place before obtaining business credit.

  • Legal business existence (e.g. DBA, LLC, Inc.)
  • Business banking account(s)
  • Business plan
  • Business tax forms and financial records
  • Explanation for loan purpose
  • Personal credit report and financial records

The Business Plan – a Must-Have

Ideally, you should develop a business plan before launching your company or practices. In reality, many entrepreneurs skip this step. However, commercial business lenders, government business lenders and many alternative business lenders almost always require a well-executed business plan as a condition for extending credit.  At minimum, a business plan should include the following elements:

  • Company Description (including type of business, e.g. partnership, corporation, etc.)
  • Service or Product Offered
  • Bios and Personal Financial Statements for Principal Officer(s)
  • Company Financial Statement
  • Market and Industry Analysis
  • Marketing Plan and Sales Strategy

Secured versus Unsecured Loans

Borrowers with marginal credit often have a better chance of obtaining approval for funding by applying for secured business loans rather than unsecured loans. Secured business loans are also a common means for purchasing costly equipment or inventory – the property purchased serves as collateral for the loan.

Fixed-Rate versus Variable-Rate Interest Loans

Fixed-rate interest business loans provide predictability that makes it easier to plan budgets, and allow borrowers to lock in low interest rates.  However, variable-rate interest loans often carry lower initial interest rates, and may be an attractive alternative – provided that you can repay the loan in full while interest rates are low.  Loans with longer repayment terms translate to lower monthly payments that may be easier to manage – but result in a higher total repayment amount.  The APR on loans with longer repayment terms also tends to be higher.

Government Business Loans

The Small Business Administration is one of the best sources for business loans because of their low interest rates and favorable repayment periods. SBA loans represent especially good funding opportunities for women, veterans and members of disadvantaged ethnic groups who might otherwise find it difficult to obtain business loans. However, the lending process for SBA loans can be both demanding and lengthy.

Alternatives to Commercial or Government Business Loans

Some small business owners find that despite their best efforts, obtaining a loan from a bank or credit union or even from the SBA is not an option. For such business owners, alternative lending sources represent an opportunity to obtain the funding they need.

  • Vendor Lines of Credit: potential borrowers who don't need large sums of money right away can establish business credit by opening and maintaining separate business bank accounts and establishing vendor relationships with lines of credit using their business bank accounts.
  • Credit or Invoice Based Financing: business owners with fair or average personal credit may find that alternative business financing represents the best opportunity for obtaining funding. Businesses owners may obtain alternative financing through services that purchase invoices or claim a percentage of incoming credit card transactions.
  • Nonbank Business Loans: Peer-to-peer lending adapts the crowd funding model to business loans, while lending brokers adapt the peer-to-peer model to a curated group of lenders rather than the general public.

Compare Business Loans

Many entrepreneurs and business owners launch their companies through bootstrap financing. But for larger ventures, or for expanding existing companies, business loans become a necessity. Ironically, the type of business loan you ultimately obtain often depends largely on your personal circumstances – including your credit profile and FICO score. That's because many commercial business loans demand that borrowers possess good personal credit along with presenting strong business plans.

Obtaining Business Funding

Depending on the type of funding you pursue, you will need to have most or all of the following elements in place before obtaining business credit.

  • Legal business existence (e.g. DBA, LLC, Inc.)
  • Business banking account(s)
  • Business plan
  • Business tax forms and financial records
  • Explanation for loan purpose
  • Personal credit report and financial records

The Business Plan – a Must-Have

Ideally, you should develop a business plan before launching your company or practices. In reality, many entrepreneurs skip this step. However, commercial business lenders, government business lenders and many alternative business lenders almost always require a well-executed business plan as a condition for extending credit.  At minimum, a business plan should include the following elements:

  • Company Description (including type of business, e.g. partnership, corporation, etc.)
  • Service or Product Offered
  • Bios and Personal Financial Statements for Principal Officer(s)
  • Company Financial Statement
  • Market and Industry Analysis
  • Marketing Plan and Sales Strategy

Secured versus Unsecured Loans

Borrowers with marginal credit often have a better chance of obtaining approval for funding by applying for secured business loans rather than unsecured loans. Secured business loans are also a common means for purchasing costly equipment or inventory – the property purchased serves as collateral for the loan.

Fixed-Rate versus Variable-Rate Interest Loans

Fixed-rate interest business loans provide predictability that makes it easier to plan budgets, and allow borrowers to lock in low interest rates.  However, variable-rate interest loans often carry lower initial interest rates, and may be an attractive alternative – provided that you can repay the loan in full while interest rates are low.  Loans with longer repayment terms translate to lower monthly payments that may be easier to manage – but result in a higher total repayment amount.  The APR on loans with longer repayment terms also tends to be higher.

Government Business Loans

The Small Business Administration is one of the best sources for business loans because of their low interest rates and favorable repayment periods. SBA loans represent especially good funding opportunities for women, veterans and members of disadvantaged ethnic groups who might otherwise find it difficult to obtain business loans. However, the lending process for SBA loans can be both demanding and lengthy.

Alternatives to Commercial or Government Business Loans

Some small business owners find that despite their best efforts, obtaining a loan from a bank or credit union or even from the SBA is not an option. For such business owners, alternative lending sources represent an opportunity to obtain the funding they need.

  • Vendor Lines of Credit: potential borrowers who don't need large sums of money right away can establish business credit by opening and maintaining separate business bank accounts and establishing vendor relationships with lines of credit using their business bank accounts.
  • Credit or Invoice Based Financing: business owners with fair or average personal credit may find that alternative business financing represents the best opportunity for obtaining funding. Businesses owners may obtain alternative financing through services that purchase invoices or claim a percentage of incoming credit card transactions.
  • Nonbank Business Loans: Peer-to-peer lending adapts the crowd funding model to business loans, while lending brokers adapt the peer-to-peer model to a curated group of lenders rather than the general public.

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Company

Reviews

Loan Amount

APR

Loan Term (Months)

Additional Details

Company Website

OnDeck

OnDeck

8
2
2
12 total votes
Loan Amount $5K - $500K $25 $1M+
APR 9.99% - 99% 0% 100%+
Maximum Loan Term (Months) 36 Maximum Loan Term (Months)
  • No Prepayment Fee

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Funding Circle

Funding Circle

7
 
 
9 total votes
Loan Amount $25K - $500K $25 $1M+
APR 4.99% - 26.99% 0% 100%+
Maximum Loan Term (Months) 60 Maximum Loan Term (Months)
  • No Prepayment Fee
Fora Financial

Fora Financial

3
 
 
3 total votes
Loan Amount $5K - $500K $25 $1M+
APR 10% - 50% 0% 100%+
Maximum Loan Term (Months) 15 Maximum Loan Term (Months)
  • No Prepayment Fee
Kabbage

Kabbage

2
3
5
10 total votes
Loan Amount $2K - $150K $25 $1M+
APR 20% - 99% 0% 100%+
Maximum Loan Term (Months) 12 Maximum Loan Term (Months)
  • No Origination Fee
LendingClub

LendingClub

2
1
3
6 total votes
Loan Amount $5K - $300K $25 $1M+
APR 9.77% - 35.71% 0% 100%+
Maximum Loan Term (Months) 60 Maximum Loan Term (Months)
  • No Prepayment Fee
Rapid Advance

Rapid Advance

 
 
1
1 total votes
Loan Amount $5K - $500K $25 $1M+
APR 15% - 80% 0% 100%+
Maximum Loan Term (Months) 18 Maximum Loan Term (Months)
National Funding

National Funding

Be the first to rate

Loan Amount $5K - $500K $25 $1M+
APR 5.9% - 29.9% 0% 100%+
Maximum Loan Term (Months) 60 Maximum Loan Term (Months)
  • No Prepayment Fee
PayPal Working Capital

PayPal Working Capital

18
 
21
45 total votes
Loan Amount $100 - $85K $25 $1M+
APR 36% - 120% 0% 100%+
Maximum Loan Term (Months) 11 Maximum Loan Term (Months)
  • No Prepayment Fee
  • No Origination Fee
The Business Backer

The Business Backer

1
 
 
1 total votes
Loan Amount N/A Loan Amount
APR N/A APR
Maximum Loan Term (Months) 15 Maximum Loan Term (Months)
  • No Prepayment Fee
  • No Origination Fee
BFS Capital

BFS Capital

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Loan Amount $5K - $500K $25 $1M+
APR N/A APR
Loan Term (Months) N/A Loan Term (Months)