Easiest Small Business Loans: A Comprehensive Guide
Identifying the Simplest Business Loan for Approval
In the world of business financing, finding the right loan can be a daunting task. However, for those who may not meet the stringent requirements of traditional banks, there are alternatives that offer more flexible terms and faster approval.
Online and Alternative Lenders
Online and alternative lenders have revolutionized the small business loan market by offering easier-to-qualify loans. These lenders prioritise underserved borrowers and often issue loans to nonprofit or community lenders.
The following table outlines some of the most popular online lenders and their key requirements:
| Lender/Type | Credit Score Minimum | Time in Business | Minimum Annual Revenue | Loan Amount Range | Other Key Requirements | |----------------|---------------------|------------------|-----------------------|------------------------------|--------------------------------------| | OnDeck (alternative online lender) | 625 | 12 months | $100,000 | $5,000 to $250,000 | Fair to low credit accepted; daily/weekly payments; fast same-day funding; not available in ND[1] | | BlueVine (line of credit) | 625 | 12 months | $120,000 | Up to $250,000 (credit line) | No monthly fees; interest rates start at 7.8%; weekly payments possible; not available in NV, ND, SD, US territories[4] | | General Online Loans | Flexible | Often less than 12 months | Flexible | Varies | Streamlined application, fast funding (as soon as 24 hours); more lenient on collateral and revenue[2] |
Comparison with Traditional Lenders
| Feature | Traditional Banks | Online/Alternative Lenders | |------------------------|--------------------------------------------|----------------------------------------------| | Credit Requirements | High (often 700+ credit score) | Lower (600-650 often accepted) | | Time in Business | Usually 2+ years | Can be as low as 6-12 months or less | | Annual Revenue | High and stable revenue typically required | More flexible, some lenders accept startups | | Application Process | Lengthy, paperwork-heavy | Simple, often fully online with automated data verification | | Funding Speed | Weeks to months | Same day to a few days | | Interest Rates | Lower rates, often under 10% APR | Higher rates, sometimes over 30% APR | | Payment Terms | Monthly payments | Often daily or weekly payments | | Loan Amounts | Can be very high, up to millions | Typically under $500,000, often max $250,000 |
Benefits of Easier-to-Qualify Loans (Alternative Lenders)
- Fast access to cash, sometimes same-day funding
- Lower barriers to entry for startups or businesses with lower credit scores
- Simpler, faster application process often completed online in minutes
- Opportunity to build business credit through timely repayment on some platforms (e.g., OnDeck)
- Flexible use of funds to meet immediate business needs
Downsides Compared to Traditional Lenders
- Higher interest rates (OnDeck's minimum APR can be over 31%)
- Shorter repayment terms with frequent payments (daily or weekly)
- Sometimes limited loan availability by state
- Smaller maximum loan amounts
Other Types of Easier-to-Qualify Loans
Microloans
Microloans are another type of easier-to-qualify loan, often issued by nonprofit or community lenders and prioritising underserved borrowers. These loans typically have smaller maximum loan amounts and offer business support and training services.
Merchant Cash Advances (MCAs)
MCAs are not loans but an advance of cash repaid using a percentage of debit and credit card sales, plus a fee. MCAs can fund as fast as the same day and physical collateral is not usually required. However, factoring fees can cut into profits and be expensive if customers take a long time to pay.
Invoice Factoring
Invoice factoring advances a percentage of the invoice amount (up to 90%) and assumes responsibility for collecting repayment from customers. Invoice factoring is not a loan but a process of selling outstanding invoices to a factoring company at a discount.
Tips for Qualifying for Easier-to-Qualify Loans
- Submitting correct and up-to-date information is crucial to avoid slowing down the approval process or an automatic rejection.
- It may be beneficial to ask a business advisor to look over your application.
- Offering collateral, providing a down payment, adding a cosigner with a high credit score, and including a well-developed business plan can help improve loan approval odds.
- Researching and comparing multiple small-business lenders can help find a lender that offers the best fit for your needs.
- Using online lending marketplaces like Fundera by NerdWallet can help compare multiple offers at once and get advice on what's best for your business.
In conclusion, online and alternative lenders offer easier-to-qualify loans with flexible qualifications, streamlined applications, and fast approval times. By understanding the benefits and downsides, businesses can make informed decisions about the best financing options for their needs.
- Seeking a personal loan to manage your personal finance can be less complex with alternative financing apps, as they often have lower credit score requirements and easier approval processes compared to traditional banks.
- For those aspiring to start a business, understanding the options in personal-finance and business financing, such as microloans and merchant cash advances, can be advantageous as these offer easier-to-qualify loans and may potentially offer business support and training services.
- When applying for an online loan, it's essential to submit accurate and updated information to expedite the process, and consulting a financial advisor may also prove valuable in finding the most suitable loan package.
- Businesses that prioritize personal-finance management and have a good understanding of potential loan types, such as microloans, merchant cash advances, and invoice factoring, are better positioned to make informed choices that align with their specific financial needs.
