Need capital to grow your business or finance a big purchase? A small business loan can bridge the gap. But with banks, credit unions, online lenders, and nonprofits offering loans, how do you choose the best option?
This guide breaks down where to get a business loan, lender approval rates, and how to secure the best terms—even with less-than-perfect credit.
Best Places to Get a Small Business Loan (2024 Data)
Not all lenders are equal. Approval rates and loan terms vary drastically:
| Lender Type | Full Approval Rate | Best For |
|---|---|---|
| Small Banks | 54% (Highest) | Established businesses with strong credit. |
| Credit Unions | 47% | Lower fees; community-based lending. |
| Online Lenders | 30% | Fast funding; flexible credit requirements. |
1. Traditional Banks & Credit Unions
Pros:
✔ Lowest interest rates (SBA loans start at ~6%).
✔ Wide loan variety (term loans, lines of credit, equipment financing).
Cons:
✖ Strict credit/income requirements (680+ FICO, 2+ years in business).
Tip: Apply here first if you have strong credit and steady revenue.
2. Online Lenders (FinTechs)
Pros:
✔ Faster approvals (24–72 hours vs. weeks at banks).
✔ Work with lower credit scores (500+ FICO).
Cons:
✖ Higher rates (up to 99% APR for merchant cash advances).
Best for: Startups or urgent funding needs.
3. Nonprofits & SBA Microloans
-
Loan cap: $50,000.
-
Rates: 8–13% (lower than most alternatives).
-
Ideal for: Women, veterans, and underserved entrepreneurs.
Catch: Cannot use for debt repayment or real estate.
How to Choose the Right Lender
Step 1: Assess Your Needs
-
Loan amount: Need >$500K? Banks are your best bet.
-
Credit health: Check your FICO score and revenue (most lenders require $50K+ annual revenue).
Step 2: Compare Lenders
-
Use a business loan calculator to estimate payments.
-
Read Trustpilot/Better Business Bureau reviews to avoid predatory lenders.
Step 3: Prequalify (No Credit Hit)
Many lenders (e.g., Fundera, Lendio) offer prequalification to compare rates without dinging your credit.
3 Loan Hacks for Faster Approval
-
Boost Your Credit – Pay down debts and fix errors on your report.
-
Collateralize – Offer assets (inventory, equipment) to secure better rates.
-
Alternative Options – Consider invoice factoring or revenue-based financing if denied.
Final Checklist Before Applying
✅ Gather documents (tax returns, bank statements, business plan).
✅ Check eligibility (credit score, revenue, time in business).
✅ Compare 3+ lenders—don’t settle for the first offer.
Pro Tip: Banks reject 83% of small business loan applications (Federal Reserve 2024). If denied, try credit unions or SBA-backed loans next.
