If you own a business or plan to start one, small business loans can provide necessary funds. Before starting your loan application, compose a business plan. Bank lenders are unlikely to fund business owners with personal credit scores less than 660, but online lenders tend to have more intuitive approval processes. Although nimble lenders have the capability to approve a loan in minutes, you must present an attractive business track record and repayment history. Keep in mind that many lenders do offer unsecured business loans, but you'll need a good credit score to get approved.
Bank lenders are unlikely to fund business owners with personal credit scores less than 660, but online lenders tend to have more intuitive approval processes.
Start by pulling your credit report from the three credit reporting agencies (CRAs)-Equifax, TransUnion, and Experian at least, one or two months before filling out a small business loan application. Less than perfect credit means you will pay higher small business loan rates, so take review your credit profiles, dispute any errors, and verify the corrections before getting a small business loan.
How to Get the Best Small Business Loan Rates
There are a number of avenues through which you can obtain a small business loan. Getting a business loan should start with a check of your business' credit and, in some cases, your own personal credit as well. When you've checked to make sure you have an accurate credit report you can begin applying. If you have excellent credit and good business history, you might be able to qualify for a bank loan. However, banks can be very selective about loan approvals, even if you are a good candidate. Reputable online small business lenders are another excellent alternative.
...banks can be very selective about loan approvals, even if you are a good candidate.
If your credit is bad enough that you can't qualify with any online lenders, you still have the option of choosing a guaranteed loan through the Small Business Administration.
Compare the Best Business Loan Rates
Now that you've checked and corrected your credit profile, you're ready to compare small business loan rates for fast business loans. We've done some of the legwork for you: the small business loan calculator allows you to enter relevant business data to identify potential lenders best suited to you:
- Consider how much capital you need and how long you need to repay the loan. If you've taken the time to refine your business plan, this information should be at your fingertips.
- Select how long you've been in business from the pull-down menu. In general, lenders are likely to view an existing positive business track record with more enthusiasm than the best ever new business plan.
- Enter your business' annual revenues. If your business is less than a year old, you won't have a full year's revenues to report. Use reasonably projected revenues for the year if you've been in business six to eleven months.
- Provide your credit score and your state of residence. Since you're searching the business loan comparison tool, there's no need to worry. Our small business loan calculator allows you to compare available lenders that match your business' profile without making an application. (No inquiry will appear on your credit reports.)
That's it. If you don't want to submit an application now, we will send prospective lender data-including the lender's name, origination fee (if any), fixed annual percentage rate (APR, minimum and maximum), total repayment amount, and monthly repayment amount estimates until you're ready. Actual costs of the loan will be determined upon approval. When you submit an application, know that your prospective lenders make fast loan decisions. You won't need to visit the financial institution or take a meeting with the bankers.
The Best Small Business Loan Interest Rates and Costs
Getting a business loan involves matching your needs and the cost of money. Our business loan comparison tool makes it easy to compare a short list of lenders that are pre-selected to meet your needs. To identify any lender's cost of funds, review the following details:
1) Origination Fee. Origination fees can increase the cost of your loan. For instance, if your lender offers an attractive fixed APR but adds a whopping origination fee, you must factor the impact of the origination fee into the total cost of the loan. Similarly, check the prepayment penalty, if any, on the loan to calculate your total costs.
2) Fixed Annual Percentage Rate. Your loan APR or factoring fee is an important consideration. Generally speaking, a fixed APR is better than a variable rate loan because you know how much it costs to repay the lender over the loan term. Check the payment structure. Even if you get a fantastic intro rate on a variable loan, you can't predict future interest rates.
3) Total Repayment Amount. If your lender approves a fixed rate APR, you should know the total repayment amount of the loan before you accept the approved loan funds. The total repayment amount of a loan priced at 7 percent APR is less than a loan priced at 30 percent APR. Again, you want to check your credit score and do everything possible to get the best possible APR before you apply.
4) Monthly Repayment Amount. Borrowing money requires repayment of principal plus interest to the lender. A lower APR will also mean a lower monthly repayment amount. A higher APR will require a higher monthly payment.
Types of Small Business Loans
The type of loan you choose should affect the lender you ultimately use. Different small business loan companies may offer products that focus on different loan types.
Here are a number of common types of small business loans:
A loan through the Small Business Administration is guaranteed acceptance but processing time and interest rates may be a drawback.
This is a loan that helps you pay for expensive equipment that your business needs.
Business Line of Credit
This is similar to a loan but the difference is that you typically wouldn't pay interest on any amount that you don't use.
Merchant Cash Advance
This is a very short term loan that advances you money based on invoices you have pending.
Small Business Start Up
These are loans specifically for brand new businesses. Loans to startup businesses are rare and sometimes come with heavy interest.
Short Term Loans
These are loans that are repaid within a few months to a year. Monthly payments may be higher but you might pay less in interest.
This is a loan with a set payment schedule and a variable interest rate.
Business Loan Calculator
Before you choose a small a business lender, you should make sure you can balance a budget including the loan payments. After you've generated a potential loan with our comparison tool, use our business loan calculator to determine your monthly payment.
Your business' strong credit profile is a valuable asset. Use our small business loan comparison tool to identify prospective lenders and loan terms. Unsecured business loans are possible if you can demonstrate healthy business revenues and have good credit. Before applying for any new loan or line of credit, evaluate your credit history. Establish CRA business credit profiles as soon as possible to avoid relying on personal credit history. To build business credit, take out fast business loans and pay on time and as agreed.
Small Business Loan Rate Comparison
MoneySavingPro makes shopping for a loan easy. We research the top online lenders and compile all of the information into an easy to use tool. You don't need to put in any personal information to find the best lender for you.
Simply enter in your credit score, the amount you want to borrow, the length of your ideal term, the state you live in and the purpose of your loan and we instantly compare the top lenders to see what matches your criteria.