Small Business Loans

When you apply for a small business loan, it’s because you have a financial need, either planned or unexpected. Whether you require additional working capital, want to buy out business partners or are looking to grow and expand your company, a small business loan can help.

There’s no one-size-fits-all business financing solution. Fortunately, small business owners can fund their day-to-day operations and company growth initiatives through various types of business loans and financing products.

Business Term Loans

A business term loan delivers a sum of capital that a business owner pays back, with interest, in equal installments over a set period. 

Term duration can be short (3 months to 2 years), medium (2 years to 5 years) or long (5 years to 25 years). Typically, borrowers pay back a term loan through monthly installments, though short-term loan remittance is more frequent, occurring weekly or daily depending upon the specifics of the loan agreement. 

Business owners can acquire a term loan from banks or alternative online lenders.

• Good for:

  • Longer term investments, such as equipment purchases, building enhancements or business expansion

Business Lines of Credit 

Borrowers gain access to a pool of funds through a business line of credit they can draw from as needed. Interest is charged only on the amount withdrawn. There are fixed and revolving lines of credit. A revolving credit line re-ups as a borrower pays down their balance. 

Lines of credit are available through banks and alternative online lenders. Banks typically offer longer repayment terms than their online counterparts. 

• Good for:

  • Emergencies, cash-flow gaps and short-term projects

SBA Loans

SBA loans are exclusive to small business owners and are serviced by participating banks and alternative lenders. 

The Small Business Administration partially guarantees the loan. Because of this guarantee, the risk for the lender is reduced; thus, the SBA loan program encourages lenders to work with more small business owners.

Interest rates on SBA loans are capped, making them one of the most affordable small business loans available on the market. 

• Good for: 

  • Capital-intensive projects and business owners with good credit

Equipment Financing

Equipment loans and leases are a type of asset-based financing. That is, the item you intend to purchase or lease secures the agreement.

Equipment financing can be obtained from conventional lenders or specialized online providers.

• Good for:

  • The purchase or lease of business machinery, vehicles or equipment

Merchant Cash Advances

Through a merchant cash advance (MCA), a business borrows against its future profits. MCAs are short-term, generally reaching maturity in 12 months or fewer. Payments are withdrawn daily, weekly and sometimes monthly. 

Merchant cash advances can be serviced quickly and have a low barrier to access. Alternative online lenders offer this type of financing. 

• Good for: 

  • Temporary cash-flow gaps and business owners working to improve their credit

Invoice Factoring 

In an invoice factoring agreement, a business sells its accounts receivable balance to a lender. 

A lender then issues an advance (usually up to 80%) of the invoice’s face value. When the customer pays the invoice, the lender releases the remaining invoice balance, minus their fee. How much you incur in fees is tied to how long it takes your customers to pay their invoices. 

Invoice factoring is a form of alternative financing offered by online lenders. 

• Good for: 

  • Businesses with unpaid accounts receivables

Fast Capital 360 helps small business owners find loan offers from alternative lenders across every financial category.

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  Business Line of Credit

  Amount: Up to $250,000
  Interest Rate: Starting at 8%
  Term: 6 months- 2 years
  Speed to Funds: 1 day

• 

  Business Term Loan

  Amount: Up to $250,000
  Interest Rate: Starting at 7%
  Term: 1- 5 years
  Speed to Funds: 1 day

• 

  Short-Term Business Loan

  Amount: Up to $500,000
  Interest Rate: Starting at 10%
  Term: 3-18 months
  Speed to Funds: Same day

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  SBA Loan

  Amount: Up to $5 million
  Interest Rate: Starting at 6.25%
  Term: 5-25 years
  Speed to Funds: 7 days

• 

  Merchant Cash Advance

  Amount: Up to $500,000
  Factor Rate: Starting at 1.10
  Term: 3-24 months
  Speed to Funds: Same day

• 

  Accounts Receivable Financing

  Amount: Up to 80% of invoice value
  Factor Rate: Starting at 1.02
  Term: Until customer pays their invoice
  Speed to Funds: Same day

• 

  Equipment Financing

  Amount: Up to 100% of equipment value
  Interest Rate: Starting at 8%
  Term: 1-5 years
  Speed to Funds: 2 days

• 

  Working Capital Loans

  Amount: Up to $500,000
  Interest Rate: Starting at 7%
  Term: 3 months -5 years
  Speed to Funds: Same day

• 

  Commercial Loans

  Amount: Up to $5 million
  Interest Rate: Starting at 6.25%
  Term: 3 months -25 years
  Speed to Funds: Same day

Follow 3 key steps to identify the best small business loan for you — one that’s right for your specific needs and financial profile.

Step 1: Examine Your Goals

To determine the best types of business loans for you, examine your goals and why your small business needs funding.

Certain types of business loan financing may be better for you than others. For example, if your objective is to purchase seasonal inventory you intend to turn in 90 days, it’s not the best decision to take out a 10-year loan. As a general rule of thumb, debt shouldn’t outlast the life of an investment.

Long-term loans are the better choice for capital-intensive projects, where you may not see an immediate return on your investment. 

• To cover short-term capital needs, consider:

  • Short-term loans
  • Merchant cash advances
  • Business lines of credit
  • Invoice factoring 

  To pay for long-term, capital-intensive projects, consider:

  • Business term loans 
  • SBA loans 
  • Equipment financing 

Step 2: Find the Best Small Business Lenders

When researching the best small business lenders, your selection will likely come down to two variables: your business’s financial profile and how quickly you need funds.

You can apply for a small business loan with one of the following types of lenders.

Conventional Lenders (E.G., Banks and Credit Unions) 

When applying for a small business loan through a bank, applicants go through a multi-step process that can take as long as 6 months.

Business owners are asked to complete an application and meet with a loan officer in person. Sometimes you’re required to present a proposal for how you intend to use the funds – and how it’ll benefit your business.

When applying through a bank, their small business loan qualifications are high. If your credit score is below 660, you’re just starting out or your revenues are modest, your chances of securing a small business loan from a bank or credit union are slim. This challenge may be exasperated due to recent economic challenges. According to a 2020 Federal Reserve Bank of Kansas City survey,  21% of banks are tightening their credit standards. 

Alternative Business Lenders

Alternative business loan providers have simplified and streamlined the application and approval process. Applying for a small business loan online can take minutes. Plus, with alternative business lending, the approval and funding process is shortened from weeks to days. Depending on the type of online small business loan you’re applying for, funds can be deposited the same day you apply.

Alternative lenders are often willing to extend credit to higher risk borrowers in return for higher interest rates and other less favorable terms. If your business is new or you’re working to repair your credit, you could still qualify for funding. 

• Conventional vs. Online Small Business Lenders

  Why consider an online lender over a conventional provider? Here are the advantages and disadvantages of working with both when you’re trying to get business loans:

  
  Conventional Lenders: 

  • Low interest rates and long terms
  • Strict qualification requirements
  • Lengthy and intensive application processes
  • Long time to fund 

  Online Lenders:

  • Higher rates and shorter terms
  • Flexible qualification requirements
  • Streamlined application process
  • Same-day funding

Step 3: Estimate What You Can Afford

The next step to identifying the best small business loan for you is to estimate what you can afford.

Determine how much capital you need to achieve your goals and how much you can afford to pay back. To do this, take a hard look at your cash flow. Compare your cash flow against the loan’s payback requirements and other debt obligations. 

Next, factor in any returns you expect to receive as a result of your investment. This is a great way to make sure you’re not taking out too large (or too small) of a loan.

•  

  Why Fast Capital 360? 

  You know a lot about what it takes to run a successful small business. But if you’re not a finance professional, navigating through different lending products can be confusing, time-consuming and intimidating. You don’t have to go at it alone. 

  Fast Capital 360 has helped businesses compare loan offers and access the capital they need to grow through expert guidance. 

  See My Options

Small business loan requirements will vary depending on the lender and the program. While there’s no guarantee of approval, businesses with a good credit score, an established history and healthy revenues will qualify for the best business loan interest rates.

Credit Score

When you apply for small business loans, lenders use credit scores to determine eligibility. While a credit score of Good, Very Good or Excellent (670 to 800) will qualify you with some of the best small business lenders, there are still programs suitable for business owners with Poor to Fair credit (<580 to 660).

Time in Business

The number of years you have under your belt is another small business loan qualification factor lenders consider. In general, conventional lenders, like banks, prefer offering lending for small businesses that have been in operation for 2 years or longer.

Alternative business lenders offering small business loans online are more lenient when it comes to time in business. If you’ve been in operation for 6 months or more, you’ll qualify for most online lending programs.

Annual Revenue

When applying to get a small business loan, lenders will evaluate your average monthly sales and annual revenue. Funders use this data to determine how much of a loan an applicant qualifies for.

• Fast Capital 360 Minimum Business Loan Qualification Requirements 

  You can secure funding through Fast Capital 360 with the minimum requirements: 

  • 6 months in business
  • $10,000 in monthly revenue 
  • 500+ FICO score 

  Get Started

The decision to take out a business loan can benefit your business. Here’s why a small business loan can be a smart option:

Get Working Capital

Each business, no matter its size, experiences periods where working capital is tight. There are various types of small business loans that can help shorten these stretches without interrupting operations.

Keep Your Equity

Securing a small business loan can allow you to maintain equity and control of your company. In contrast, if you were to secure funding from investors, they might take control of your company, and you may need their permission to make business decisions.

Create Long-Term Growth

To create long-term growth, you have to invest in your business continually. A small business loan can enable you to plan for the future without taking working capital from your day-to-day needs.

Expand

Trying to capitalize on a new market? With a small business loan, you can secure the business capital you need to release new products and services or open a new location. 

The business loan application process will differ from lender to lender and from loan program to program. At a minimum, be prepared to supply personal information as the owner of the business and have the following documentation on hand:

• Financial statements
• Past bank statements
• Business license
• Tax returns (personal and business)
• Other legal documents (e.g., articles of incorporation)
• Proof of collateral 

Depending on the lender and the type of loan, the application and funding process can take a day to several months.

Why Consider an Online Lender? 

While it’s true that loans from online lenders are often more expensive than other forms of conventional financing, alternative loan providers are willing to work with less-qualified applicants. And according to the Federal Reserve Bank, that’s a good portion of small business owners. In its latest credit survey, 57% of small businesses described the financial condition of their business as “poor” to “fair.” 

What’s more, the application process is quick and straightforward, and funding decisions are fast. Instead of waiting weeks for a loan decision from a bank or credit union, online lenders typically take a few hours. This bodes well for small business owners who are time- and cash-constrained. 

Alternative lenders also specialize in short-term financing solutions.

Who Is Fast Capital 360? 

With so many alternative financing options available on the market, it can be challenging to identify the right loan for your business. Fast Capital 360 can help.

As an alternative lending marketplace, we match applicants with loan and financing offers from our network of vetted lenders. All you have to do is fill out a straightforward application, and our expert loan advisors will guide you from there, helping you evaluate which small business loan is best for your business. 

What you need to apply:

• Basic details about you and your business
• Bank connection or 6 months of bank statements

• Complete our simple and secure application.

  Applying is fast, easy — and most importantly — won’t impact your credit.

  See Your Options