9 Alternatives for Getting a Small Business Loan Quickly

small business loans for startups

Oftentimes, entrepreneurs don’t think about raising money through small business loans as much as they think about venture funding. Both have their pros and cons, but a bank wouldn’t take equity in your startup or company while financing.

There are many private lenders that are now interested in serving the startup community. And they’ve made the process of availing the loans simpler and quicker.

When seeking the initial funding, don’t just look at angels, seed or venture funding. If you’re confident about generating income in your business, all you need is the right source for getting a small business loan and that’s when Small Business Loans provider comes in picture. Unlike a bank, their application process is quick, easy and transparent.

Related: 20+ creative ways to raise funds for your organisation

These are the new types of lenders who provide small business loans for your capital requirements, cash flows, equipment purchase or any kind of upgradations to your business. These range from short-term loans, to loans for online businesses, to peer2peer loans.

Here’s a list of lenders who provide small business loans to businesses and make lending process less painful:

From Direct Lenders

Direct lenders fund your loan with their own capital, like a traditional bank, but in a quicker way.

#1 Fundation

Fundation is a direct lender that offers up to $150,000 for working capital loans and $500,000 for business expansion loans. Only those customers who are at lowest risk are eligible for larger amounts.

What’s the deal?

  • The range of loan amount is > $20,000 to $500,000
  • Repayment term varies from 1 to 4 years
  • Annual Percentage Rates (APR) range from 7.99 to 29.99%
  • No specific collateral required and no prepayment penalties
  • Fixed payments of principal and interest twice a month
  • Late payment fees apply if payment is not made within 7 days of payment date
  • Loan process time – one to three days.

Who can apply?

  • At least 2 years in business
  • At least 3 employees
  • At least $100,000 of annual revenue
  • Good personal credit

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#2 OnDeck

OnDeck provides term loans up to $500,000 and lines of credit up to $100,000. Launched in 2007, they provide loans in United States and Canada.

What’s the deal?

  • Offers short-term loans up to $250,000 for 3-12 months with interest percentage of 9 to 19%
  • Offers long-term loans up to $500,000 for 15-36 months with interest percentage of 5.99 to 30%
  • Deducts a fixed, daily payment directly from your business bank account each business day
  • One-time fee for processing the loan, 1st loan: 2.5% of loan amount, 2nd loan: 1.25% of loan amount, 3rd+ loan: 0-1.25% of loan amount

Who can apply?

  • You require at least $100,000 in annual revenue
  • One year in business
  • At least one owner with a 500+ personal credit score.

#3 Kabbage

Kabbage provides ongoing access to funds for up to $100,000, which you can draw against your line as often as once a day.

What’s the deal?

  • Credit lines from $2,000 to $100,000 for up to 12 months
  • Take working capital as often as once a day
  • They don’t charge any interest, instead, a loan fees between 1.5 to 12% are assessed
  • Every month, you’ll pay back 1/6 of the total loan amount (for six-month loans) or 1/12 of the loan amount (for 12-month loans) plus the monthly fee
  • No early payment fees.

Who can apply?

  • One year or more in business
  • Over $50,000 a year in revenue.

#4 Fundbox

Fundbox is a short-term lender that advances $100 to $25,000 credit lines based on your outstanding invoices.

What’s the deal?

  • Advances are repaid with a clearing fee over 12 weekly installments
  • The fee is set automatically for each advance
  • No interest charged, no subscription fees, no origination fees
  • Receive 100% of the value of the invoice
  • Charge a fees for each week you have an outstanding balance, approximately 0.5% of the invoice value
  • For example: for a $1,000 invoice, $60 in fees over the 12 week repayment period, which means $5 per week.

Who can apply?

  • US-based businesses and your invoiced customers must also be US-based
  • 3+ months of invoices stored in an accounting software
  • Invoices must be in $USD
  • Should use Freshbooks, Xero, Harvest, Wave, Clio, or Intuit Quickbooks (desktop or online) to create and send invoices.

#5 BlueVine

BlueVine is another provider of working capital financing to small businesses. They offer financing through business line of credit or invoice factoring products.

What’s the deal?

  • Offers credit lines between $5,000 and $250,000 and invoice factoring credit lines go up to $250,000
  • Rates starting at 6.9% for credit lines and $15 for invoice factoring
  • Do not require any minimum volume or have termination fees, and you can fund as many or as few invoices as you like.

Who can apply?

  • Businesses with personal credit scores above 530 for invoice factoring service and above 600 for business line of credit service
  • For business line of credit, business should have revenues of at least $5,000 per month
  • For invoice factoring: the customer should be a business and based in the US or Canada (English speaking provinces), the invoice face value should be higher than $500, due date should be at least 1 week away and payment term must be shorter than 12 weeks.

Peer-to-peer lending

Peer-to-peer lending or P2P lending is the practice of lending money to individuals or businesses through online services that match lenders directly with borrowers.

#6 Funding Circle

Funding Circle, a peer-to-peer online lending marketplace exclusively focused on lending to small businesses. They have expanded in UK, USA, Germany, Spain and the Netherlands.

What’s the deal?

  • Provide loans from $25K to $500K over 1 to 5 years
  • Interest rates between 5.49% and 27.79%, based on the length of the loan and the strength of your credit profile
  • Charge an origination fee on each loan we fund ranging from 1.49% to 4.99%
  • Require a lien on your business assets and a personal guaranty from the primary business owners
  • Origination fee of 1.49 to 4.99%
  • 10% charge on late payments

Who can apply?

  • You will have to check your eligibility on this page. If you are eligible an underwriter will review your application
  • For loans under $300k, 2 years (most recent) business tax returns, 1 year (most recent) personal tax return (including W-2s) and 6 months (most recent) business bank statements are required
  • For loans over $300k, 6 months (most recent) business bank statements, YTD balance sheet and income statement, and Outstanding Business Loans & Credit Worksheet (available upon request) is required.

#7 Lending Club

One of largest online credit marketplace, where businesses can apply for a small business loan for expanding a business, buying inventory, working capital, purchasing equipment, or refinancing.

What’s the deal?

  • Borrow up to $300K at rates starting at 5.9%
  • Apply and receive multiple quotes
  • One-time origination fee from 0.99% – 6.99%
  • Can choose from 1-5 year terms
  • Fixed monthly payments
  • No prepayment penalties

Who can apply?

  • If you are 2 years in business
  • Have at least $75,000 in annual sales
  • No recent bankruptcies or tax liens
  • You own at least 20% of the business and have at least fair or better personal credit.

Offbeat small business loan options

#8 PayPal Working Capital

PayPal Working Capital gives capital to businesses that already process payments through PayPal.

What’s the deal?

  • Maximum loan amount varies based on your sales history, in most cases, your maximum loan amount will be up to 15% of the sales your business processed through PayPal in the past 12 months, up to $85,000.
  • Choose the percentage of your future PayPal sales that you want to go toward repayment of the loan amount and the loan fee
  • A single fixed fee charged that will be based on your business’s PayPal sales history
  • No periodic interest rates
  • You are required to pay at least 10% of your total loan amount (loan + the fixed fee) every 90 days.

Who can apply?

  • Businesses that already process payments through PayPal.

#9 Behalf

Behalf works on an interesting model where they pay your vendors n your behalf, whether you’re buying inventory, accounting services or something else for your business.

What’s the deal?

  • They pay vendors on your behalf within 1-3 days
  • You have to buy a minimum of $300 inventory
  • The credit lines go up to $50,000, but the maximum transaction that you can make to any one Vendor is $25,000
  • Rates of $10-$30 per $1,000 per month
  • Repayment period between 30-180 days.

Who can apply?

  • Any United States-based residents with a registered U.S. business, a U.S. bank account, and a social security number.

Hope this will take care of your financing needs. And if you are looking for any technical support to build and scale your startup, here’s some help.

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Nidhi Shah
 

Nidhi is the head of content marketing at Arkenea, a mobile app consultancy building experience rich apps for startups and businesses.