Compare the Top Business Loan Lenders

With so many business loan options out there, honing in on the right loan for your business needs can be a daunting task. That's where we come in! We compare top online lenders and collect valuable information to assist you in finding a business loan provider that best fits your business needs.

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Business Loans: What You Need To Know

It’s not unusual to need a business loan to cover expenses you can’t handle with your current budget. Seasons and circumstances change, impacting daily cash flow and your ability to support continued growth. Before approaching a lender, educate yourself on the types of loans available, the terms you can expect, and what documentation will be required to determine eligibility.

 

Applying for a Business Loan: Common Reasons

Whether you’re just starting out or you have an established company with a strong history, there are many reasons why you may wish to apply for a business loan. Loans provide money for:

  • Funding startup costs

  • Paying off bills from a recent launch

  • Paying employees during slow seasons

  • Covering accounts payable when cash flow is slow

  • Stocking up on inventory in anticipation of a holiday rush

  • Launching new products

  • Running seasonal marketing campaigns

  • Purchasing new equipment to improve business performance

  • Covering emergency expenses

  • Planning for future improvements or expansions

It’s important to have a clear understanding of how you’re going to use the money you obtain from a business loan. Banks aren’t interested in lending to companies with only vague notions of how the funding is going to be put to work. They want to ensure that their investment creates growth within a company so that they can be assured of repayment.

 

How Do Business Loans Work?

Acquiring a business loan can be more difficult than obtaining funding for other purposes. Business loans represent a big risk to lenders because of the volatility of the consumer market. Although marketing analytics are making it easier to predict customer behavior, many unknown variables still affect business cash flow and profits. This is another reason why banks want to know exactly what you plan to do with the loan should your application be approved.

 

When applying for a loan, you’ll discuss terms, interest rates, and other details with the lender. It can be a long process requiring a lot of detailed financial information from both personal and company accounts, and you’ll likely need to speak with more than one lender to find the right fit.

Remember, a loan is a binding agreement for a given period of time, and once you sign the documentation, you’re committed to paying the money back according to the agreed-upon terms. Make sure you know exactly what you’re getting into before the loan is finalized.

 

Questions to Ask About Business Loans

Because of the time and expense involved, consider whether you actually need a business loan and if it will benefit your company before applying. If you determine that a loan is necessary, prepare a list of questions to bring along when you compare loans from different lenders. Your list should help you narrow down your choices to banks and other lending institutions offering options closely aligned with your business needs. You may want to ask:

  • If the lender has experience lending to your type of business

  • How much the lender typically loans to businesses of similar size

  • Who is in charge of application review and approval

  • What documentation is required to apply for a loan

  • How long a typical application-and-approval process lasts

  • Whether interest rates are fixed or variable

  • If there’s a penalty for paying the balance off early

 

What Are the Types of Business Loans?

Lenders offer a variety of loans for businesses depending on what the money is going to be used for and how companies are able to guarantee payment.

  • Secured loans require collateral to back up the amount of the loan, meaning you could lose what you put up if you fail to pay in full.

  • Unsecured loans are granted to companies with solid credit ratings and may offer lower interest rates than secured loans.

  • Lines of credit work like a credit card, allowing you to borrow against a set amount as needed and only requiring interest payments on the money you use.

  • Merchant cash advances are based on your volume of monthly credit card sales and are paid back using a percentage of each future sale.

  • Accounts receivable loans use outstanding invoices as collateral to help pay off short-term debts.

  • Equipment loans are granted specifically for the purchase of new equipment, using what you purchase as collateral.

  • Construction loans provide funding to expand your existing location or build a new facility, and the building is considered collateral.

Each loan type has a specific payment structure, term length, and interest rate. Some are more difficult to qualify for than others, and most require you to present detailed paperwork when applying.

 

How to Apply for a Business Loan

Once you decide what type of loan you need, your lender will request certain documents and financial records to determine if your business qualifies. These documents may include:

  • A business plan showing your intentions for the loan

  • Tax returns for your business

  • Three to five years of company revenue figures

  • Personal and business credit information

  • Personal and business bank statements

  • Cash flow history and future projections

  • Business licenses and certificates

  • Current profit and loss statements

  • Detailed resumes of key executive staff members

  • Franchise, partnership, and other legal agreements

The lender will review this information along with your application. However, before taking the time to gather such an extensive amount of paperwork, review the specifics of the loan one more time. Ask questions about anything you still don’t understand, and be ready to move on to another lender if something doesn’t sound right. If the cost of the loan is more than the benefit you’ll get from it, you’re better off seeking alternative options.

 

A business loan can give your company the boost it needs to make it through a difficult time or fund growth to catapult you to future success. Talk to a variety of lenders before making your final decision to find the terms and conditions compatible with your financial situation. Structure your budget so that you stay on top of loan payments to ensure your business winds up stronger and more profitable once the balance is paid off.

 

On this page, you’ll find a list of some of the highest-rated lenders in the industry. Check out their reviews, compare their features, and find the lender that’s best suited to meet the needs of your business.