Most online lenders can’t compete with the low APRs big banks can offer, but they make it easier for small businesses that might be passed over by big banks to get funding. You’ll still want an interest rate you can handle, transparent terms and fees, and a streamlined application process. Here are all the factors I considered when picking the best small business loans:
- High loan amounts: Online lenders typically don’t offer the sizable, seven-figure loans that a big bank can provide. However, the best lenders still offer loans well into the six figures so that small businesses can get the cash they need.
- Clear eligibility requirements: Though online lenders streamline the application process significantly over traditional banks, it’s still frustrating to start an application only to find out your business doesn’t meet minimum eligibility requirements.
- Competitive APRs: Big banks can typically make small-business loans with single-digit APRs. Term loans available from online lenders may be available at similarly low rates for the best candidates, but double-digit rates of up to 30% are more common. Cash-flow loans with very quick turnarounds may have higher rates.
- Flexible terms: Online lenders often don’t provide the lengthy terms that may be available on big-bank loans, but the best ones do offer some flexibility, ideally up to four or five years.
- Detailed, transparent website: The best lenders have extensive FAQs and clearly detail the cost of borrowing, including potential interest rates and extra fees.
- Quick application and fast turnaround: You can apply for a loan with some of the best online lenders in five minutes, and some lenders can get you funds in only a day or two.
- Reputation: Since online lending is still a relatively new phenomenon, I was not as concerned with the lender’s longevity as usual. However, a significant number of positive reviews, BBB accreditation, and at least a few years in business were pluses.
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