Best Small Business Loans of April 2025
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.
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 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.
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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.
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.
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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.
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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.
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Small-business grants -
Business grants are available from a variety of sources, including federal, state and local governments, private companies and nonprofit organizations.
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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.
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A
personal loan for business -
These loans are usually available in smaller amounts, but they can be used for a variety of purposes and fund within days.
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With a
merchant cash advance -
MCAs are typically fast to fund and easy to qualify for, but they’re one of the most expensive types of business funding, carrying APRs that can reach triple digits
. You should generally consider all other business financing options before turning to a merchant cash advance.
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?
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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.
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Check your qualifications. Consider factors such as your personal credit score, time in business and annual revenue. Bank and SBA lenders likely have the strictest eligibility criteria. Online lenders, on the other hand, may be more flexible.
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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.
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Determine what collateral you can offer. Business loans can be secured or unsecured. A secured business loan requires collateral, such as property or equipment, that the lender can seize if you fail to repay the loan. Putting up collateral is risky, but it can increase the amount lenders let you borrow and get you a lower interest rate. Keep in mind, however, that although you may be able to
get a loan without physical collateral UCC filing in the case of default -
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.
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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.
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:
Personal and business bank statements.
Personal and business income tax returns.
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).
Business licenses.
Legal business formation document (e.g. articles of incorporation, articles of organization).
Description of collateral.
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.
💬 From our experts: Is this the right time to get a business loan?
“At its last three meetings of 2024, the Federal Reserve lowered interest rates (the first such rate cuts since March 2020). At the January and March 2025 meetings, rates remained the same.
When these rate cuts occur, rates on business loans tend to decrease as well. As a result, business owners may be in a better position to consider financing than they have been in the last year. To get the best rate on a business loan, you can build your credit, offer collateral, improve your cash flow and compare multiple financing options.”
Where to get a small business loan
Business loans are available from banks, credit unions, online lenders, nonprofit organizations and community lenders.
Nonprofit and community lenders
Online lending marketplaces
🤓 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
How do small business loans work?
Is it hard to get a business loan?
How can a new business get a loan?
Can I get a business loan for my startup?
What credit score is needed for a small business loan?
How much income do you need to get a business loan?
Annual percentage rates (APRs), loan term and monthly payments are estimated based on analysis of information provided by lenders and publicly available information. All loan information is presented without warranty, and the estimated APR and other terms are not binding in any way. Lenders provide loans with a range of APRs depending on borrowers’ credit and other factors. Keep in mind that only borrowers with excellent credit will qualify for the lowest rate available. Your actual APR will depend on factors like credit score, requested loan amount, loan term and credit history. All loans are subject to credit review and approval.
Last updated on March 27, 2025
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