Unanticipated expenditures like a key piece of equipment failing or a truck breaking down are a part of doing business. As a small business owner, access to fast working capital can be key to survival when a cash flow crunch hits out of the blue.
Traditional banks and institutions used to the only source of funding. While the interest rates offered by banks are competitive, the process is long, full of paperwork, and has high credit score requirements. Most small business owners have a hard time getting approved by a traditional bank.
To solve this financing problem, alternative lenders and brokers have broken onto the scene with online business loan offerings. In this guide, we’ll explore five of the top online lending companies that provide fast funding with high approval rates and low credit score requirements.
If you have an American Express business credit card, the company provides no collateral funds up to $50,000 to pre-approved members. The interest rates are fixed and thus have no variable APR. The time to get the cash disbursed to your account can take up to 5 business days. Depending on your credit score and other factors, the APR on loans offered by AMEX can range from 7% to 20%.
Pros: Easy process for existing card members, monthly payment terms.
Cons: Medium to high credit score requirements, not available to business owners who don’t have an American Express business credit card.
Clarify Capital is one of the top tier small business lenders in the United States. This alternative lender offers a marketplace of 75+ financing partners in combination with friendly funding advisors that walk you through the process. Interest rates offered by Clarify are competitive and the terms are flexible. There is no collateral needed to secure a term loan and it’s easy to get approved. The company offers $10,000 to $750,000 in working capital with term lengths of up to 2 years.
Pros: Low interest rates, fully serviced by dedicated advisors who help you secure quick funding and flexible terms.
Cons: Only available to businesses in the United States or Canada.
Funding Circle is a peer-to-peer lender that operates in the US, UK, Germany, and the Netherlands. P2P marketplaces like theirs allow private investors to lend money to small to medium-sized companies. Initially targeting the UK market, FundingCircle’s business model is to charge borrowers an origination fee on each funded deal and charge the investors a servicing fee on the unpaid balances of outstanding business loans. You must have a minimum credit score of 620 to apply for a loan on their platform with interest rates ranging between 7.49% to 19.49% for 2 year term lengths.
Pros: Quick application process, transparent terms.
Cons: Collateral is required via a lien on assets and a personal guarantee from the business owner, 5% penalty on late payments.
Kiva is a non-profit lender that provides funding to women and underserved minorities. The funds are crowdfunded by individuals instead of a financial institution with a maximum loan amount of $20,000. Kiva is a great option if you fit their criteria and don’t need a large sum of money to temporarily supplement your cash-flow. Unlike crowdfunding platforms like Kickstarter, you do have to pay the loan back, but with a 0% interest rate. You read that correctly, 0% APR. If a business owner is in a rural or remote community, Kiva partners with NGOs and social projects to provide the microloan.
Pros: 0% interest rate, serves under-represented demographics, no credit score requirements.
Cons: Maximum $20,000 in funding, not as quick as traditional lenders.
BlueVine is an alternative lender that focuses on founders with credit scores of less than 630. They offer term loans, business line of credit, and invoice financing with interest rates between 15% to 88%. The rates are high due to the low credit score requirements, thus making the company a last-resort option if you get rejected by other lenders on this list. The approval rates are high and the process from application to funding is short. You can get financed within one business day of starting their online application.
Pros: Low credit score requirements, fast approval.
Cons: High interest rates, confusing income verification process (based on the reviews from TrustPilot), customer support is not as hands-on as other lenders.