Your business has big goals and aggressive growth plans. However, you’re getting tripped up by the old adage: “You have to spend money to make money.”
Many small businesses have their expansion plans hamstrung by a lack of funds, which is why it’s important to find a reliable and trustworthy company to provide a small business loan.
Whether you’re looking for a term loan, a line of credit, invoice factoring, or another form of financial lending, there are many reputable online companies offering a wide variety of options. But how do you determine which is the right choice for you?
Many entrepreneurs are hesitant to put their businesses in debt for any reason, especially if they’re relatively recently formed startups (either LLC or corporation) or don’t have a ton of business income. While this is certainly understandable and a smart approach to take in many situations, a business loan can help your company reach the next level if used correctly.
Let’s take a look at some of the most common situations in which entrepreneurs turn to small business loans to fund the next step in their company’s life cycle.
Different businesses have widely varying needs for financial lending services. That’s why we’d like you to view this guide less as a “#1 through #5” list and more as a list of five great options that can meet a variety of small business financial needs.
BlueVine is a highly experienced lender, with nearly $10 billion distributed since 2013. BlueVine has two primary options for small business lending: lines of credit and invoice factoring. Invoice factoring is a process in which BlueVine will deposit 90% of your unpaid invoices into an account that you can then repay when the invoices are paid.
Meanwhile, a line of credit is a form of revolving credit that allows you to draw from the account, up to a predetermined amount. As you pay it back, the line of credit continually replenishes itself.
Let’s break them down individually and see which one might be a fit for your company.
Also of note is BlueVine’s offering of business checking accounts that bear significant interest. Currently at 0.6%, you’ll be hard-pressed to find a higher interest rate for a basic checking account.
BlueVine’s biggest claim to fame other than its flexible funding plans is its terrific customer feedback reputation. We found more than 6,700 reviews of its services online, with high average rating scores.
Overall, this company offers a variety of lending options for small businesses, although we will note that new and very small businesses can likely not use BlueVine’s services. Its lending programs require that a business has been operational for at least three months (six months for a line of credit) and bring in at least $10,000 in monthly revenue.
Funding Circle has plenty of experience, with roughly $18 billion loaned since 2010. This company offers a dizzying array of lending options, including term loans, SBA loans, merchant cash advances, working capital, lines of credit, and invoice factoring.
When it comes to term loans, Funding Circle has an appealing offer. You can borrow up to $500,000, although there is a relatively high minimum loan amount of $25,000. You can also choose to repay your loan in as little as six months or as much as five years, with interest rates as low as 4.3%. However, your business must have been operational for at least two years and needs a credit score of at least 620.
Funding Circle also offers lines of credit up to $100,000, with rates starting at 10.99%. To secure a line of credit with Funding Circle, you may need to issue a personal guarantee, depending on your company’s credit history.
While BlueVine has impressive customer feedback, Funding Circle’s is even better. We found more than 11,000 reviews for Funding Circle, and nearly all of them were positive. However, if you need funding quickly, Funding Circle might not be your best option, as it can take them up to two weeks to deliver your funds. Additionally, Funding Circle does not offer lending services for startups or very young businesses.
That said, if you meet their qualifications and like what they have to offer, Funding Circle’s strong interest rates are quite appealing.
Is Funding Circle’s up-to-two-week waiting period too long for your needs? How does receiving your funds the same day sound to you? With OnDeck, same-day funding is a legitimate possibility!
With more than $13 billion loaned to date and some of the fastest approvals and funding processes in the industry, OnDeck clearly has some advantages over its competitors. This company has intriguing offers for both term loans and lines of credit. However, if you think it will take some time to pay back your loan, you may want to avoid the extremely high interest rates offered by OnDeck:
As you can see, there is quite the tradeoff with OnDeck. You’ll get the absolute fastest access to your money we’ve ever seen in this industry, but you’ll pay astronomically high interest rates to get it.
The other general requirements for OnDeck term loans or lines of credit include a business credit score of at least 600, at least one year in business, and at least $100,000 in yearly revenue. OnDeck may also require either a personal guarantee, a business lien, or both.
While OnDeck certainly charges a premium for the lightning-fast funding access they provide, it seems that their customers are more than happy with their experiences. We tracked down more than 3,000 OnDeck reviews, and they maintained an impressive 4.8 out of 5 average score.
If you’ve been frustrated by the lack of options for new businesses, or those without a ton of experience, Fundbox might be the perfect fit for you.
Fundbox has lower requirements for a company’s time in business and its income than the other services in this guide, and it will even bend its own rules a bit to accommodate a broader range of companies. For instance, when it comes to lines of credit, Fundbox says that companies should have “ideally 6+ months in business,” but in no way is this a set-in-stone requirement.
Fundbox doesn’t give a ton of information about its interest rates, but the example it uses on the page for term loans has an 18% APR. This is a great illustration of just how much small business loan interest rates can vary.
More established businesses can get loans from BlueVine and Funding Circle for 5% or lower interest rates, while immediate and same-day financing from OnDeck comes with a 35% APR, and Fundbox falls somewhere in between.
Fundbox has up to $150,000 available to small businesses. Its line of credit requirements include a 12- or 24-week payback period, a 600+ personal credit score, and $100,000 in annual business revenue. Fundbox receives excellent customer feedback (3,000+ reviews, 4.8/5 average score) and makes funding decisions in as little as three minutes.
For new or very small businesses looking for a loan that can help them build business credit, give Fundbox a long look!
Biz2Credit isn’t a traditional lender. In fact, it doesn’t lend money itself at all! Instead, Biz2Credit uses a network of lenders to generate competitive offers for small business loans.
Biz2Credit only works with established businesses, which means that if your company doesn’t generate at least $250,000 in annual revenue, you’re out of luck. Take a look at what Biz2Credit offers for term loans and working capital. As you’ll see, Biz2Credit has much more stringent requirements for term loans than working capital:
It’s worth noting that there appears to be some wiggle room with the credit score and time in business requirements, as Biz2Credit says “most customers” meet these guidelines.
One minor downside of Biz2Credit is that it’s impossible to guess what interest rates you might get because Biz2Credit collects offers from several different lenders. Also, even with some wiggle room, its requirements cut out lots of small businesses. Additionally, Biz2Credit has both underwriting and origination fees that can add hundreds to your total price tag.
That said, Biz2Credit has larger amounts of capital available than most competitors, and it still offers relatively fast funding even with its lending network — most funding decisions can be made within 24 hours and you can access your funds in as little as 72 hours.
Finally, Biz2Credit has excellent customer feedback, with roughly 15,000 reviews available online and hardly any negative feedback to be found. If you suit their requirements, Biz2Credit does have some intriguing advantages.
When it comes to small business loans, the bottom line is that it’s always going to be difficult to secure funding for startups and very small companies. If you do find funding for one of these businesses through a company like FundBox, you’ll likely pay high interest rates and only have access to limited funding.
However, for businesses that have been around for at least a few months and bring in a reasonable amount of revenue, you’ll find a wide variety of lending options to suit your needs. We hope this guide helped you find the right small business loan for your company!
Disclaimer: The content on this page is for information purposes only and does not constitute legal, tax, or accounting advice. If you have specific questions about any of these topics, seek the counsel of a licensed professional.
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