What's the best bank to get a business loan?
Banks typically offer competitive interest rates, long repayment terms and large loan amounts. Taking out a small-business loan from a bank can be difficult, however, if you've been in business less than two years, don't have consistent revenue or have fair, poor or no credit.
| Bank | Notable feature | Loan amounts |
|---|---|---|
| Wells Fargo | Active SBA lender. | $5,000 - $5 million |
| U.S. Bank | Friendly to new businesses. | $5,000 - $5 million |
| Citibank | In-person service. | $5,000 - $10 million |
| PNC Bank | Automatic loan payments. | $10,000 - $5 million |
Banks typically offer competitive interest rates, long repayment terms and large loan amounts. Taking out a small-business loan from a bank can be difficult, however, if you've been in business less than two years, don't have consistent revenue or have fair, poor or no credit.
Yes, it can be easier to get an LLC loan. Some lenders won't lend to sole proprietors. Establishing your business as a legal entity can make it easier to access financing and could even help lessen lender bias, as a recent study in the Journal of Marketing Research suggests.
| Lender | NerdWallet Rating▼ | Min. credit score▼ |
|---|---|---|
| Headway Capital - Line of credit See Your Loan Options with Fundera by NerdWallet | 4.7/5 Best for Easy business lines of credit | 625 |
| View Details | ||
| AltLINE - Invoice Factoring Read Review | 4.4/5 Best for Easy invoice factoring | 300 |
| View Details | ||
| Term loan | While banks and credit unions typically require a score of 670 or above, online lenders may only require a score of 500 |
|---|---|
| SBA loan | Lenders offering SBA loans require credit scores between 620 and 680 |
- Best for SBA loans. U.S. Small Business Administration. Max Amount. $50,000. ...
- Best for Quick funding. Headway Capital. Max Amount. $100,000. ...
- Best for Short-term loans. OnDeck. Max Amount. ...
- Best for Bad credit. Fora Financial. Max Amount. ...
- Best for Equipment loans. National Funding. Max Amount.
How much of a business loan you can get depends on your business's annual gross sales, creditworthiness, current debts, the type of financing, and the chosen lender. In general, lenders will only provide loans up to 10% to 30% of your annual revenue to ensure you have the means for repayment.
Securing a $300k loan typically requires a solid credit score, comprehensive financial documentation, and a well-detailed business plan. Lenders will assess your ability to repay, looking at factors like revenue, profit margins, and existing debts.
The typical business loan from a bank or credit union can take weeks or months to process. Fast business loans, on the other hand, may be funded within a week of submitting an application. Some lenders are able to assess and underwrite loans in a matter of hours and fund them within a day.
What credit score does an LLC start with?
This EIN allows your LLC to open bank accounts, apply for loans, and build credit in its own name. An LLC starts with no credit score. Just like an individual, an LLC must build its credit over time by engaging in responsible financial behavior, such as taking out loans and lines of credit and making payments on time.
Can You Borrow Money From Your LLC? Yes, but you'll need to get written approval from the other members of your LLC. The members must also create and legalize a contract outlining the amount of debt, repayment schedule, and repercussions of a default during the LLC's minutes.
SBA Business Loan for New LLC: Your Options. Two primary SBA loan options are available for LLCs and other small businesses in need of financing: the SBA 7(a) loan and SBA 504 loan. Each has specific ways funds can be used, and they offer different loan terms and loan limits.
- National Funding: Best for early payoff discounts.
- QuickBridge: Best for loan variety.
- Funding Circle: Best for flexible repayment terms.
- Fundbox: Best for startups.
- American Express Business Blueprint: Best for low revenue requirements.
Banks offer several types of loans, each designed to meet different business needs. Common types include term loans, lines of credit, equipment financing, and commercial mortgages. Term loans provide a lump sum of cash upfront, with a fixed or variable interest rate over a set period.
Your capacity to repay
You might also need to show business and personal assets, as well as cash reserves. Lenders often want to know about your business's capital assets, such as cash and equipment, and about any funds that others have invested in your business.
A down payment for an SBA 7(a) or 504 loan ranges from 10 percent to 20 percent. For loans from banks, credit unions and alternative lenders, you may see down payment requirements that range from 10 percent to 30 percent — and some lenders that don't require any down payment.
Not all business lenders report loans on your personal credit report. However, all of them will pull a personal credit report to determine if you are eligible for a loan. This is often a stumbling block for small business owners applying for a business loan. Many new business owners start by bootstrapping.
The quickest way to get a business loan is to work with a lender who offers fast business loans. These lenders can typically approve and fund a loan in as little as one to two business days. Online lenders usually offer the fastest lending times.
| Lender | Average small business loan amount |
|---|---|
| Bank loans (small regional bank) | $146,000* |
| SBA 7(a) loans | $479,685 |
| Online loans | $5,000 to $500,000 |
| Short-term loans | $5,000 to $750,000 |
How big of a loan can I get to start a business?
Backed by the US Small Business Administration, SBA loans for startups are designed to help business owners grow their companies and cover expenses like equipment. There are several types of SBA loans with maximum amounts ranging from $50,000 to $5 million. SBA loans are backed by the US Small Business Administration.
For a 5-year term at 8% interest, expect $100k business loan monthly payments around $1,800.
Business loans come with a range of terms, anywhere from three months to 25 years. The type of loan you open will determine what terms you have access to. For example, short-term loans will have shorter term lengths, like three to six months, and SBA loans boast terms of up to 25 years.
You'll generally need a credit score of at least 500 and at least one year in business to qualify. You'll also need to meet minimum monthly revenue requirements and may be required to pledge collateral to back the loan.
Yes, securing a startup business loan is possible even if your venture has no revenue. Lenders may focus on your business plan, market potential, personal credit score, and any collateral you can offer.
