Best Small Business Loans of January 2025

What is a business loan?
A business loan is a loan designed specifically for business purposes. With a small business loan, you borrow money from a lender and pay it back over time, with interest.
Business loans can be used to cover startup costs, purchase inventory or equipment, manage cash flow and expand your operations, among other uses.
Types of small business loans
Small business loan options can include SBA loans, bank loans, term loans, business lines of credit and equipment financing. The best business loan for you will depend on a variety of factors such as:
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Why you need funding.
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How fast you need access to capital.
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How much capital you need.
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Your business’s qualifications.
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Total cost of debt.
SBA loans
SBA loans are small business loans partially guaranteed by the U.S. Small Business Administration, a government agency, and issued by participating lenders, such as banks and credit unions. SBA loans offer low interest rates and long repayment terms.
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Loan amounts: $30,000 to $5 million.
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Approximate APR range:
10.5
% to
14
%
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Best for: Large one-time and longer-term investments, purchasing real estate or equipment, buying existing businesses and refinancing debt.
Business term loans
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Loan amounts: Up to $1 million.
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Approximate APR range: 6% to 99%.
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Best for: Working capital, large one-time investments, expanding your business.
Business lines of credit
A business line of credit provides access to flexible cash. Similar to a credit card, lenders give you access to a specific amount of credit (say, $100,000), but you don’t make payments or get charged interest until you tap into the funds.
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Credit line range: $1,000 to $250,000.
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Approximate APR range: 10% to 99%.
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Best for: Managing cash flow, handling unexpected expenses and financing short-term business needs.
Compare financing and apply
We’ll start with a brief questionnaire to better understand the unique needs of your business. Once we uncover your personalized matches, our team will consult you on the process moving forward.

See Your Loan Options
Equipment financing
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Loan amounts: Up to 100% of the value of the equipment, plus soft costs (e.g. installation, delivery, warranties).
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Approximate APR range: 4% to 45%.
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Best for: Purchasing machinery and equipment.
Microloans
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Loan amounts: Up to $50,000.
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Approximate APR range: 8% to 30%.
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Best for: Smaller business investments, covering day-to-day expenses, working capital needs.
Additional business funding options
If you don’t think you can qualify for a traditional loan — or simply want to explore all of your options — you might consider one of these products to finance your business. Many of these business funding options have flexible requirements and can be a good choice for newer companies.
Invoice factoring and invoice financing
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Invoice factoring turns business owners’ unpaid invoices into immediate cash. You sell the invoices to a factoring company, which is paid when it collects from your customers.
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If you prefer to maintain control over your invoices, invoice financing is an alternative to factoring.
Personal loans
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A personal loan for business allows you to get funding based on your personal credit score and income instead of your business history.
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These loans are usually available in smaller amounts, but they can be used for a variety of purposes and fund within days.
Business credit cards
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Although credit card limits tend to be smaller than a line of credit, a business credit card may offer rewards, such as cash back or travel points.
Small-business grants
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Small-business grants provide a free alternative to debt funding — offering access to capital that doesn’t need to be repaid.Â
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Business grants are available from a variety of sources, including federal, state and local governments, private companies and nonprofit organizations.
Friends and family loans
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These loans are typically informal; they don’t require an application process or credit check. Creating a written loan agreement, however, can help preserve your personal relationship — just in case things don’t go as planned.
How do I qualify for a business loan?
Lenders have different underwriting guidelines, but they generally consider similar factors, including your personal credit score, time in business and business finances.

Personal credit scoreBusiness lenders use your personal credit score to assess your ability to manage and pay your debts. You can get your credit score online or check your credit score on NerdWallet for free. In general, the higher your personal credit score, the more likely you are to qualify for business funding. A strong personal credit score can also help you qualify for lower interest rates and longer repayment terms.

Time in businessLenders use your time in business as a quick measure of success. The longer you’ve been operating, the more likely you are to have money to repay your debts. Most traditional lenders will want you to have at least two years in business. Online lenders, on the other hand, may only require a minimum of six months in operation.

Business financesLenders want to see evidence of stable cash flow to ensure that you can repay a loan. When applying for a loan, you’ll likely need to provide business bank statements, tax returns and financial statements. If you haven’t been operating for very long, it can be helpful to provide sales forecasts that illustrate the potential revenue your business will generate.
How do I get a loan for my small business?
Decide which loan option is right for your needs. If you want to finance a large purchase or business expansion, for example, you might consider a traditional term loan, whereas if you need funds for day-to-day expenses, you might prefer a business line of credit.
Estimate what payments you can afford. Look carefully at your business’s financials — especially cash flow — and evaluate how much you can afford to apply toward loan repayments each month. Your total income should be at least 1.25 times your total expenses, including your new repayment amount.
Compare small-business lenders. The best loan for your small business is typically the one that offers you the best terms. But other factors, like funding speed or customer service, may matter to your business and different financing sources may be better in certain instances than others.
Apply for a business loan. Of the loans you qualify for, choose the one with the lowest APR and best terms for you — as long as you’re able to handle the loan’s regular payments — and submit your business loan application.
đź“‹ Business loan application checklist
The documentation that you need to provide for your loan application can vary from lender to lender. Banks and SBA lenders often require more paperwork compared to online lenders. In any case, you may need to submit:
âś… Personal and business bank statements.
âś… Personal and business income tax returns.
âś… Business financial documents, such as profit and loss statements, balance sheets and cash flow statements.
✅ A photo of your driver’s license (or other official identification).
âś… Business licenses.
âś… Legal business formation document (e.g. articles of incorporation, articles of organization).
âś… Description of collateral.
âś… Legal contracts and agreements.
As you complete your application, double check all requirements and ensure everything is accurate. Providing incorrect or outdated information can slow down the underwriting process. It may be helpful, therefore, to have a business advisor or mentor review your application before submitting.
đź’¬ From our experts: Is this the right time to get a business loan?
“At its last three meetings, the Federal Reserve lowered interest rates (the first such rate cuts since March 2020). At the January 2025 meeting, rates are widely expected to remain the same.

Where to get a small business loan
Business loans are available from banks, credit unions, online lenders, nonprofit organizations and community lenders.
To qualify for a bank loan, you’ll need to meet strict eligibility criteria. You’ll likely need multiple years in business, good credit and strong revenue. You may also need to provide collateral.
Banks that offer small business loans:
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Bank of America.
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Wells Fargo.
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Chase.
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U.S. Bank.
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PNC Bank.
Online lenders tend to offer faster funding times and more flexible qualification requirements compared to traditional lenders. As a result, however, online loans typically have higher interest rates and shorter repayment terms.
Nonprofit and community organizations typically focus their lending efforts on traditionally underserved businesses, such as those located in rural areas and those owned by women, veterans and minority groups. These lenders often have flexible qualification requirements and are willing to work with startups or borrowers with poor or no credit.
Nonprofit lenders tend to issue smaller loan amounts, but can still provide competitive interest rates. In addition to business loans, these organizations usually offer educational resources and support, such as business coaching, training and networking.
Online lending marketplaces can help you compare multiple business loan options and find the right fit for your needs. You usually submit a simple application to the company, providing basic information about your business. You then receive a list of lender matches, based on the available partners in the marketplace’s network.
The marketplace may offer dedicated advisors to walk you through your options and help you make the best choice. Once you’ve made a decision, the marketplace may pass you off directly to the lender — or, in some cases, they’ll support you through the application process.
🤓 Nerdy Tip: Protect your business from predatory lenders and loan scams
Predatory lenders may target small-business owners looking for funding, especially those who are having trouble qualifying for traditional loan options. You can protect yourself by watching out for red flags, such as promises of guaranteed approval, aggressive sales tactics and loan features that seem “too good to be true.”
Frequently asked questions about small business loans
The stronger your qualifications, the easier it is to get a business loan. Although requirements vary by lender, it’s helpful to have good credit, strong finances and multiple years in business to access a variety of financing options. Startups and borrowers with bad credit may have a more difficult time getting a business loan.
Compared to bank loans, private business loans tend to offer more flexible qualification requirements and streamlined application processes.
If you have good personal credit, strong finances and at least one year in operation, you should turn to a bank to get a new business loan. Traditional lenders will offer the most competitive rates and terms. Banks don’t typically give loans to start a business, however.
It may be more difficult for startups to qualify for traditional small business loans. Banks and credit unions often require that you have at least two years in business to access financing.
To qualify for an SBA loan, you typically need a good personal credit score (690 or higher), though some SBA loan programs are available to business owners with bad credit.
Many lenders require a minimum annual revenue, which can range anywhere from $50,000 to $250,000, for business loans and lines of credit. If your revenue isn’t high enough to qualify for those loan products, consider looking into business credit cards or SBA microloans.
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