The 7 Best Small Business Loans of 2020

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Small business loans are an integral component of the business world since business owners rely on them to invest in new equipment or supplies, cover payroll, or manage cash flow while they wait for customers or clients to pay. With a small business loan, business owners and entrepreneurs can access a lump sum of cash or a line of credit, which they can use to remain operational and continue growing their business for years to come.

Interestingly, the best small business loans available today are offered by online lenders and not by traditional banks. This is due to the fact that, by and large, online lenders are able to offer the most convenient application and funding processes along with competitive fees and the best loan terms.

Investopedia compared more than 20 of the top small business loans and lenders available today to find options with fast funding, transparent pricing, and the flexibility most small business owners need. Before you apply for a small business loan, read over our comprehensive guide to find out which lender might be ideal for your goals and your funding needs.

The 7 Best Small Business Loans of 2020

Kabbage: Best Overall

Kabbage

 Kabbage

We chose Kabbage as best overall due to its fast funding and flexible payment options. We also chose Kabbage based on its comprehensive package of tools for your small business, including a business checking account and its own mobile app.

Pros
  • Transparent qualification requirements

  • No application fees

  • Multiple small business loan options available

  • Access to a mobile app

  • Business checking available

Cons
  • You need to be in business for one year

  • You must have at least $4,200 in revenue each month (or $50,000 in annual revenue)

Founded in 2009, Kabbage is a technology company that aims to provide cash flow to businesses of all sizes. While there are many online companies that focus on small business lending, we believe Kabbage stands out due to its plethora of small business loan options and its added features and benefits. 

Currently, Kabbage offers a variety of small business loans and options for a line of credit, and this includes both unsecured and secured options. You can also apply for industry-specific loans for trucking, pawnshops, retail, and more. Kabbage prides itself on its easy online application process and fast funding for those who are approved. 

Kabbage lists its requirements to qualify on its website, which makes it easy to know where you stand. You need to have been in business for at least one year to qualify, and you must have at least $4,200 in monthly revenue for at least three months or $50,000 in annual revenue. 

Loan amounts from Kabbage vary depending on the type of loan you apply for. For example, the maximum loan amount for their SBA Express loan is $350,000. However, Kabbage also offers business lines of credit in amounts up to $250,000. Kabbage Funding also offers repayment terms of six, 12, or 18 months depending on your needs. With Kabbage, there are no hidden loan fees or prepayment penalties, either.

Fundbox: Best Revolving Line of Credit

Fundbox

 Fundbox

Fundbox focuses on offering lines of credit for business owners and they make it possible to get prequalified online without a hard inquiry on your credit report. Their focus on business lines of credit makes them an expert on this particular type of small business funding. They offer decisions in minutes as well as funding as soon as the next business day.

Pros
  • Get prequalified online without a hard inquiry on your credit report

  • Get a decision in minutes

  • Only borrow what you need, unlike a small business loan that offers a lump sum

Cons
  • Lines of credit are only available for up to $100,000

  • No option to borrow a lump sum upfront

We chose Fundbox as the lender offering the best revolving line of credit, which allows you to qualify for a specific amount and borrow only what you need. Fundbox was originally founded in 2013 and the company uses technology to facilitate its B2B lines of credit with the goal of helping small businesses achieve significant success.

Lines of credit from Fundbox are only available in amounts up to $100,000, but you can get prequalified online without completing a full loan application. Once you apply, you can get a credit decision within minutes and you’re under no obligation to accept the loan funds. 

Because Fundbox focuses on lines of credit, you get the chance to borrow only as much money as you need. Funds can transfer from your line of credit to your business checking account as soon as the next business day. This provider gives you the option to save money by paying off your balances early and ahead of schedule without any prepayment fees. 

Fundbox lets you see the fees for your line of credit upfront and they’ll automatically debit your bank account to pay your amount due so you won’t have to think about it. You get the option to repay your line of credit over 12 or 24 weeks.

Kiva: Best for Microloans

Kiva

 Kiva

Kiva is the best option for small business owners who only need to borrow a small amount of money. Their microloans currently come with a 0% interest rate, and you can borrow up to $15,000.

Pros
  • Borrow money with no interest

  • Get the chance to market your product to millions of Kiva lenders

  • Repay your loan for up to 36 months

Cons
  • You can only borrow up to $15,000 with Kiva

  • It can take 30 days or longer for your loan to be funded

We chose this lender as the best option for microloans based on the fact that you can borrow money at 0% APR and repay it over three full years. Founded in 2005, Kiva aims to help underserved communities and their members qualify for the small business funding they need to get their dreams off the ground. So far, 1.9 million Kiva lenders have funded more than $1.4 billion in loans to more than 3.7 million borrowers in 76 countries around the globe. 

Interestingly, Kiva is not a bank but is instead a peer-to-peer lending platform. Kiva loans are geared to disadvantaged entrepreneurs, so investors who lend money through the platform get the chance to help people around the world.

In terms of their loan product, Kiva only lets you borrow up to $15,000. You can apply online in 20 to 30 minutes and earn the ability to advertise your funding project on their marketplace within 30 days; you get the chance to repay your loan over 36 months.

Kiva also lists easy requirements to qualify, including U.S. citizenship and being at least 18 years old. To qualify for a Kiva loan, you also have to agree to use your loan for business purposes only.

Fundera: Best for SBA Loans

Fundera

 Fundera

We chose Fundera as the best option for Small Business Administration (SBA) loans due to the fact that it offers the most SBA options, including loans through the popular SBA 7(a) loan program. You can apply for an SBA loan directly on Fundera with your loan funded through a variety of top SBA lenders.

Pros
  • Fundera offers an array of business loans and lines of credit, including loan offers through the SBA

  • Compare loan options through multiple lenders in one place

  • Gauge your ability to qualify without a hard inquiry on your credit report

Cons
  • Fundera is a small business marketplace and not a direct lender, meaning the company won’t actually fund your loan itself

  • Credit score of at least 600 required

  • Collateral required for some SBA loans and loan amounts

Fundera is an excellent option for consumers hoping to qualify for an SBA loan, mostly because it lets you fill out a single application and compare multiple SBA loan options in one place. Founded in 2013, Fundera is a loan marketplace instead of a direct lender. This means the company connects small business owners with the best small business loans and lines of credit on the market today, but it does not lend money itself. 

Because Fundera is a marketplace, it can offer nearly any type of business loan or line of credit available today. This includes loans through the Small Business Administration, which tend to come with flexible repayment terms and affordable interest rates.

Loan amounts and repayment terms vary, but it’s possible to qualify for an SBA loan in amounts up to $5 million. You may also be able to repay your loan over five to 25 years, although it can take two weeks to get your loan funded. Note that SBA loans may require collateral, and that’s especially true for larger loan amounts.

OnDeck: Best for Same-Day Funding

OnDeck

 OnDeck

We chose OnDeck due to the fact they offer small business loans with funding as soon as the same business day. This can be crucial for business owners who need fast access to cash to keep up with business expenses or pay for an important piece of equipment right away.

Pros
  • Funding available as soon as the same business day

  • Borrow up to $250,000 with a small business loan or up to $100,000 with a line of credit

  • OnDeck is transparent about loan details and eligibility requirements

Cons
  • Minimum personal credit score of 600 required

  • Applicants need at least one year in business with a minimum of $100,000 in annual business revenue

Since its founding in 2006, OnDeck has grown to become one of the most prominent small business lenders offering capital on the market today. We chose OnDeck as best for same-day funding due to its easy online application process and rapid approval and fulfillment of your small business loan.

OnDeck makes it easy to qualify for a line of credit in amounts from $6,000 to $100,000 or a small business loan in amounts from $5,000 to $250,000. Repayment terms on small business loans are available for up to 12 months, and you will benefit from transparent pricing and no prepayment penalties. Meanwhile, you can repay one of OnDeck's lines of credit over 12 months, plus you get the benefit of borrowing only what you need. Either option can work for small business owners who need access to capital, and both types of funding let you apply and receive a decision within the day.

OnDeck lists some basic requirements to qualify for a business loan, which include a minimum personal credit score of at least 600. You also need to be in business for at least one year and you need to have a least $100,000 in annual business revenue to qualify.

Lendio: Best Lender Comparison Site

Lendio

 Lendio

We chose Lendio as the best loan comparison site based on the fact they let you compare loan options from more than 75 lenders in one place, more than other marketplace sites. You can also have your loan funded in as little as 24 hours, which can be a major boon for business owners who need cash fast.

Pros
  • Compare loan offers from more than 75 lenders

  • Funding in as little as 24 hours

  • Small business loans, SBA loans, and business lines of credit available

Cons
  • Lendio does not lend money directly

  • Eligibility requirements vary depending on the lender

Lendio is another loan marketplace, so it won't be lending you funds directly, and we believe they shine in this category since they let you compare loan offers with more than 75 lenders in the small business space. Having the chance to have lenders compete for your business is the best way to make sure you get a small business loan with the best rate and terms you can possibly qualify for.

Lendio was originally founded in 2011, yet it has grown dramatically since then. So far, they claim to have funded 216,000 small business loans worth more than $10 billion dollars and they don’t plan to stop anytime soon. 

In terms of their small business loan offering, Lendio lets you borrow between $5,000 and $2 million depending on your needs. You can repay your loan over one to five years, and your interest rate could be as low as 6%. Lendio only requires a 15-minute application to apply, and you can get a decision on the same business day, making it an efficient place to shop for a loan.

BlueVine: Best for Invoice Factoring

BlueVine

 BlueVine

While BlueVine doesn’t offer traditional small business loans, we chose them due to their invoice factoring option, which lets you turn unpaid invoices into collateral you can borrow against.

Pros
  • No recurring loan payments; pay your loan off with invoices as they’re paid by customers

  • Borrow up to $5 million with your unpaid invoices as collateral

  • Approvals as fast as 24 hours

  • Minimum credit score requirement of just 530

Cons
  • Business must be in the B2B space to qualify

  • You need at least $10,000 in monthly revenue and at least three months in business

Founded in 2013, BlueVine has delivered more than $6.5 billion funds to more than 125,000 small business owners so far. However, BlueVine offers a different approach to funding since they offer invoice factoring instead of traditional small business loans. Of all the lenders and funding options we reviewed, we chose BlueVine as best for invoice factoring.

With invoice factoring from BlueVine, you turn unpaid invoices from your customers into cash you can access right away. From there, you use money that is paid to those invoices to repay your loan from BlueVine automatically.

BlueVine lets you borrow up to $5 million against unpaid invoices your business has, and your interest rate can be as low as 0.25% per week. You can also apply with ease online and get approved for funding in as little as 24 hours. 

To qualify for funding with BlueVine, you only need a credit score of 530 or higher. However, your business must have at least $10,000 in monthly revenue and you must have been in business for at least three months. Your business must also operate within the B2B space, meaning your customers are other businesses instead of individual consumers.

What Is a Business Loan?

A business loan is a type of loan business owners take out in order to access funds for inventory, payroll, and other business expenses. Business loans come in many different forms, although traditional small business loans tend to be offered in one lump sum and with a fixed monthly payment and interest rate.

However, there are other types of funding available for small businesses. Lines of credit are a popular option since they let business owners borrow only what they need. Further, invoice factoring can be helpful for some business owners who are short on cash but have plenty of unpaid invoices to use as collateral.

Small business owners can also apply for an SBA loan, which is a type of loan that is backed by the Small Business Administration. While the SBA does not loan money themselves, they connect borrowers with SBA-approved lenders that offer SBA-backed loans with competitive rates and terms. 

Are You Personally Liable for an SBA Loan?

When you apply for an SBA loan, you must provide an unlimited personal guarantee if you own 20% or more of the business. This means that, if you fail to repay the loan because the business fails, you are still on the hook for repaying the entire loan amount. Also note that, in the case of a borrower defaulting, the lender can recover 50% to 85% of the outstanding loan balance from the SBA. 

What Can I Use a Small Business Loan For?

Approved applicants can use their small business loan funds to pay for any ongoing expenses as well as payroll or investments in equipment or inventory. Small business loans are also frequently used as a means to manage or smooth out cash flow in times when expenses exceed income. If you’re a small business owner who needs to buy some equipment but you’re waiting to be paid by a few major clients, for example, it could help you keep up with your expenses and buy equipment while you wait for your invoices to be paid.

Other popular uses of small business loans include raising capital to hire new staff or to launch a new marketing or ad campaign that could help boost revenue. 

How We Chose the Best Small Business Loans

We looked at more than 20 lenders who offer small business loans, small business lines of credit, and unique funding options like invoice factoring. We looked for lenders who offer transparency when it comes to their loan products and eligibility requirements, and we also looked for lenders who post fees and ongoing costs prominently on their websites. 

To find the best small business loans of 2020, we compared loan options and lenders to find companies with excellent ratings and user reviews on websites like Trustpilot. We also looked for lenders who offer high loan amounts and flexible repayment options, as well as the ability to apply and set up loan funding online.

Article Sources

Investopedia requires writers to use primary sources to support their work. These include white papers, government data, original reporting, and interviews with industry experts. We also reference original research from other reputable publishers where appropriate. You can learn more about the standards we follow in producing accurate, unbiased content in our editorial policy .
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  2. Crunchbase. "Fundera." Accessed September 17, 2020.

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  4. U.S. Small Business Administration. "Unconditional Guarantee." Accessed September 17, 2020.

  5. U.S. Small Business Administration. "Improve Your Borrowing Power with a SBA Loan Guarantee." Accessed September 17, 2020.