Small businesses typically struggle to find financing to expand and launch new products or projects because of their lack of established historical performance or adequate collateral. A promising trend that offers an alternative to traditional bank financing for many small businesses is utilizing online resources to obtain loan funds.

Traditionally, there are two options for small businesses in regard to financing. Small businesses can either borrow funds, also known as debt financing, or they can sell ownership interest in exchange for capital, which is known as equity financing. Of the two, debt financing is the more common path, since it is often difficult for small businesses to attract equity investors. Also, debt financing allows the small business owner to retain complete control of the business. However, debt financing can create problems, because it creates an additional financial burden on the fledgling business.

Tightened credit restrictions, among other factors in the wake of the 2008 financial crisis, have made it significantly more difficult for many small businesses to obtain financing, at least by going down the traditional path of simply approaching local banks for loans. However, alternative avenues of financing for small businesses have been created, most of them primarily accessible through the Internet.

The Lending Club

The Lending Club utilizes a peer-to-peer lending method that has been very successful. It offers small businesses loans up to $300,000, with competitive fixed interest rates which, as of 2015, start at around 5.9%. The loans come with a one-time origination fee that falls somewhere between 0.99 and 5.99%. The Lending Club offers loan terms from one year to five years. Small businesses can pay off their loans early, at any time, without penalty or fees. This allows a small business the flexibility to retire debt as its profitability allows. Upon approval, the funds are deposited into the business's bank within a few days.

The Lending Club extends loans to a variety of businesses, including retailers, contractors, health and wellness providers, and manufacturers. Loan requirements include having been in business a minimum of two years, generating at least $75,000 in yearly sales, having no tax liens or recent bankruptcies, and the business owners owning a minimum of 20% of the business.

SmartBiz SBA Loans

SmartBiz allows small businesses to obtain Small Business Administration (SBA) loans in amounts from $5,000 to $350,000. Where SBA loan processes usually take several months to complete, SmartBiz provides businesses the ability to prequalify for a loan in approximately five minutes and to be pre-approved in about 30 minutes. After completing the application process, a small business can receive its loan in as little as one week, depending upon the amount of the loan. SmartBiz's streamlining and expediting of the traditional SBA loan process can be a significant assist for small businesses.

QuickBooks Financing

QuickBooks Financing is dedicated to helping small businesses find funding that suits their needs. It serves essentially as a search engine that matches businesses to appropriate lenders. A small business simply needs to input basic information into a QuickBooks account and wait for the search results to provide a list of vetted potential loan providers.


Kabbage is one of the most unique funding sources for small businesses. It provides tools for small businesses beyond just financing resources. Kabbage uses a creative platform that small business owners can use to assess how their businesses are performing, along with ideas on how they can successfully develop or expand their businesses.

Kabbage allows businesses to apply for loans, create websites, get connected with vetted funders, and potentially secure future funding for further expansion and future projects. In evaluating the creditworthiness of applicants, Kabbage goes beyond just considering credit scores, factoring in, when applicable, a company's amount of eBay (NASDAQ: EBAY) or similar business, and the amount of money that flows through its PayPal (NASDAQ: PYPL) account.

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