For small-business owners who need cash quickly or have a hard time getting a bank loan, online lenders can provide necessary capital. NerdWallet evaluates lenders according to the needs and qualifications of entrepreneurs.
We’ve organized funding options by financing type: term loan, line of credit and invoice factoring. Some lenders have more than one product type so they are featured in multiple sections.
Explore options below to see what type of loan is best for you:
Term loans: solid option for long-term, large investments.
Lines of credit: flexible financing for short-term expenses.
Invoice factoring: fill cash-flow gap using unpaid customer invoices.
For full lender reviews, click here.
Term loans
If you’re looking for a lump sum of cash you can repay over a fixed period, term loans are right for you. Because you can pay them off over a longer period, term loans are usually the better choice for larger investments and long-term growth. Generally, term loans have lower rates than lines of credit, but some may require collateral.
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Lines of credit
If you’re looking for financing flexibility, a line of credit is a better option. You draw on the line — up to a specified amount — as needed and pay interest only on the money you’ve borrowed. Lines of credit are a better choice for short-term expenses. Although the annual percentage rate may be slightly higher than for term loans, lines of credit provide the flexibility to take out money only when you need it.
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Invoice factoring
Invoice factoring is a way to get immediate cash by borrowing against your unpaid customer invoices, which can help you fill cash-flow gaps while you wait for customers to pay. This type of financing is only for companies that sell goods and services to other businesses and, therefore, have invoices. Typically, invoice factoring costs are higher than with term loans and lines of credit.
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Full lender reviews
SmartBiz: Faster way of applying for an SBA loan. Least expensive online financing option. Requirements are stringent.
Funding Circle: Term loans for growth. Rates are lower compared with other online lenders. Your firm must be in good shape.
Lending Club: Term loan and line of credit with less stringent requirements than banks. Must be in business at least two years.
Dealstruck: Three types of financing for short- and long-term needs. Easy application. Your firm must at least be breaking even.
Fundation: Term loans for growth with competitive rates. You must have at least three employees and $100,000 in annual revenue.
Lighter Capital: Good for fast-growing tech companies. Rates are competitive and repayment based on monthly revenue.
StreetShares: Solid choice for military veterans, businesses at one-year mark. Loan amounts are limited.
BlueVine: Good for B2B businesses that deal with unpaid invoices and cash flow needs. You must have dependable customers.
Fundbox: Great no-credit-check option if you have unpaid invoices. Your must use a Fundbox-compatible online accounting system.
OnDeck: Quick, easy funding but rates may be high. Good if you need money fast and your personal finances aren’t stellar.
Kabbage: Line of credit for urgent working capital needs. Minimal application requirements but can be pricey.
Also: Startups under 1 year can opt for a Prosper personal loan. Loan size tops out at $35,000; APR is higher than that of banks.
This post was updated July 13, 2016. It was originally published Dec. 9, 2015.
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