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Best SBA Lenders For Small Businesses

SBA lenders are perfect for organizations that need a cash boost to expand, or fund a new initiative. However, there are several different types of SBA loans and the application process can be a little confusing for newbies.

Financially Reviewed by Gordon Scott CMT on 7/20/2021

At a glance SBA loans are a good option for people seeking low-interest rates, and longer repayment terms. Both startups and established businesses are able to apply for this type of loan. In the majority of cases, you’ll be applying to a direct lender, but you can also find SBA options on loan marketplaces. We’ve pulled together a list of the best SBA lenders to help get you started. 

The Best SBA Lenders for Small Businesses in 2021

Our experts combed the industry to find the top SBA loan providers and summarized the best in the table below. You can apply for SBA funding at both banks and alternate lenders; however, we’ve only covered online lenders below. We’ve found the process much faster and smoother when applying online as opposed to traditional brick-and-mortar lenders. 

Company

Max/Min Loan

Loan Rates

Special Requirements

Common Uses

Fora Financial 

Fora Financial review

Loan amounts from $5,000 to $500,000

 

10% APR up to 50% APR.

Credit score of at least 500, at least 6 months in business.

merchant cash advances (MCAs) and short-term small business loans

Credibly

Credibly review

No minimum stated, but borrowing limits can reach $20 million on SBA real estate loans

5% - 8%

A minimum credit score of 620 and above

No bankruptcies or foreclosures in the previous three years

On offer are SBA loans for debt consolidation, working capital, equipment purchase, and real estate

Lendio

Lendio Review

No minimum stated. Maximum of $5 million

Prime rate of 3.25%  plus an additional undisclosed amount


No maximum disclosed

Loans over $325,000 require collateral

Can be used for buying land, construction costs, refinancing, and more

Kapitus

Kapitus review

No minimum stated. Maximum of $5 million

From 6.25%

Minimum of two years in business and a credit score of 685 and above

Used as all-purpose financing

SmartBiz

SmartBiz review

$30,000 to $5 million

4.75% to 7%

Minimum of two years in business and a credit score of 640 and above

Funding can be used for debt refinancing, working capital, or commercial real estate

Fundera

Fundera review

No minimum stated. Maximum of $5 million

5.5% - 13%

Some SBA loans may require collateral

You can use your funding for general business expenses, purchase of fixed assets, and startups

Funding Circle

Funding Circle review

$25,000 to $500,000

All loans start from 6%

You must have been operating a minimum of two years and a minimum annual revenue of $400,000

Only SBA 7 (a) loans are on offer

The Best SBA Loan Providers Small Businesses Explained

We’ve covered some of the top SBA lenders in our table above. In this section, we go into each one in a little more detail so you know what to expect when you apply. 

1. Fora Financial - Best for Merchant Cash Advances 

Fora Financial is an alternative online lender that provides small business loans and merchant cash advances to startup or expanding businesses. In comparison to other online lenders, it offers a broad range of funding amounts and has some great advantages such as affordable rates and early payoff discounts.  

Pros

Cons

  • Fast approval and application
  • Discounts for early payoffs
  • Financing consideration for businesses with credit scores that are moderate
  • Factor rates can be relatively expensive
  • Origination fees might be high
  • High monthly revenue is needed to qualify

Fora Financial Features

Fora Financial boasts lenient credit requirements, yet you will have to meet its monthly sales and minimum time in business requirements. For merchant cash advances, you will have to make a minimum of $5,000 in credit card sales every month. Small business loans are not connected to your credit card receipts, so you are able to earn any variation of payment types, provided you make over $12,000 per month in total. 

Our thoughts

Fora Financial is a top means of funding if you have sufficient monthly revenue to make the repayments and to meet their application criteria.

2. Credibly - Best for Equipment Financing

Credibly has focused its service on helping those with bad credit and while eligibility criteria for SBA loans are usually fairly strict, the platform does its best to help customers out. 

ProsCons
  • Discounts for paying early
  • Simple application process
  • Workarounds for those with bad credit
  • Financing built around business growth
  • An origination fee of 2.5%
  • Long approval times

Credibly Features

Credibly has the highest borrowing limit on our list, extending to an impressive $20 million for those looking for real estate loans. Plus, those with bad credit may find they can access funding by offering up assets to secure the loan. Rates are kept very low, between 5% - 8%, but it can take some time to receive your funding, sometimes up to three months.

Our thoughts

Credibly is one of the more flexible lenders on our list, and while it’s still quite tough to get an SBA loan, it’s worth contacting the customer service team to discuss your options. Read full Credibly review.

3. Lendio- Best for Construction Loans

Lendio is a business loan marketplace that matches you to SBA providers right across the country. It currently has more than 300 partner organizations which greatly increases your chances of being approved. 

ProsCons
  • Most types of SBA loan are offered
  • More than 300 partner lenders with different eligibility criteria
  • Startups are welcome
  • More lenient borrower qualifications than the banks
  • Fast prequalification
  • Loans can take up to two months to disburse
  • Interest rates aren’t disclosed before you apply

Lendio Features

Lendio covers most types of SBA loans for small businesses and allows borrowers to access funding up to an impressive $5 million. Terms range between 10 - 30 years and the majority of loans under $325,000 will be offered unsecured. Anything above this amount and you’ll usually need some kind of collateral.

With so many partner lenders, Lendio is reluctant to disclose any information on rates, however, all loan products will start at the prime rate of 3.25% and it’ll be at the discretion of each lender what additional rates are charged. 

Our thoughts

Lendio is an excellent first stop for anyone looking for an SBA loan. Applications are welcome from those with bad credit and only a soft pull will be made to your rating when you apply. It’s worth submitting an application to see what kinds of loans you’ll be eligible for, and with 300 lenders to choose from you’re sure to find something that works. Read full Lendio review

4. Kapitus - Best for Industry-Specific Loans

Kapitus, formerly known as Strategic Funding, underwent a complete rebrand and business model overhaul in 2018. It’s now built a reputation as a reliable business lender. It serves a wide range of industries and offers two types of SBA loans: An SBA 7 (a) and an SBA express loan. 

ProsCons
  • Fast application process
  • Generous borrowing limits
  • Lengthy terms
  • No restrictions to lending purpose
  • Good credit needed - Minimum score of 685
  • There are no startup loans

Kapitus Features

Kapitus offers low starting rates at just 6.25%, generous borrowing limits, up to $5 million, and terms up to 25 years. We really like that they have the option to apply for an SBA express loan too, which Kapitus is usually able to fund within 14 days, making it much quicker than other platforms. 

Our thoughts

If you have a good credit score, 685 or above, we’d highly recommend Kapitus. There’s an excellent chance you’ll get a reasonable rate, and the fast funding process can help you out in a pinch. However, startups and those with poor credit will need to look elsewhere.  Read full Kapitus review.

5. SmartBiz - Best for Debt Refinancing

SmartBiz is our second loan marketplace and it makes the list because it has a simplified SBA application process. The platform has built an extensive network of relationships with SBA lenders across the country which takes a lot of the stress out of your application.

ProsCons
  • Large network of lenders
  • Simplified application process
  • No minimum revenue requirements
  • Three types of SBA loan offered
  • Some lenders have expensive fees
  • High credit rating needed

SmartBiz Features

SmartBiz has some impressive interest rates, starting at just 6%. It’s not surprising either given that the platform has some of the strongest relationships with SBA lenders in the business. It’s nice to see real estate loans are also offered here alongside standard SBA 7 (a) options. Furthermore, borrowing limits between $30,000 and $5 million mean businesses of all sizes are welcome. 

Our thoughts

Eligibility criteria are fairly strict at SmartBiz. You’ll need a credit score of 640 and a minimum of two years in business, but if you’re able to meet these requirements we’d recommend submitting an application to access some great rates and terms. Read full SmartBiz review.

6. Fundera - Best for Startup Loans

Fundera is a loan marketplace that promises access to SBA funding in as little as 14 days. The platform has been operating since 2014 and it’s snapping up more and more market share every year.

ProsCons
  • Speedy and simple application process
  • Multiple types of SBA loan available
  • Long lending terms
  • Strong reputation and good customer support
  • Tough eligibility requirements
  • A small pool of lenders when compared to other marketplaces

Fundera Features

Rates start at a very respectable 5.5% and terms can go up to 25 years. However, you’ll need to have been in business for at least four years, have a credit score of 680, and an annual income of $180,000 which might exclude some businesses.

Our Thoughts

Fundera is an incredibly reliable platform that consistently delivers great service. Its eligibility criteria might be strict, but for those that can meet them, it means a high approval rate. Read full Fundera review.

7. Funding Circle - Best for SBA 7 (a) Loans

Funding Circle has one of the most straightforward applications and approval processes on our list. Borrowing limits aren’t as generous as other providers, but customer service is excellent and you’ll be assigned your own personal SBA loan specialist throughout the process. 

ProsCons
  • Low rates
  • No prepayment penalties
  • A free guide to SBA loans
  • You’re assigned a personal loan advisor
  • The borrowing limit is $500,000
  • Annual revenue of $400,000 required

Funding Circle Features

Funding Circle only offers SBA 7 (a) loans, but there are no restrictions to what you can use your funding for. Plus, rates are low and the application process is straightforward. However, you’ll need to meet some pretty strict criteria to apply, including having a credit score of more than 650, annual revenue of more than $400,000 and to have been in business for two years or more. 

Our thoughts

Despite needing to meet some tough eligibility criteria, Funding Circle is an excellent choice for small businesses. They won’t conduct a harsh inspection of your credit rating if you just wish to take a look, so it’s always worth seeing what you might get. Read full Funding Circle review.

What Are the Different SBA Loan Types?

SBA Loan Program

Max loan amount

Terms

Interest Rates

Best for

SBA 7 (a) Loans

$30,000  - $5 million

Usually between 5 - 25 years

Between 2.25% - 4.75% plus base rate

A wide range of operational expenses like business expansion, inventory, staff wages, and debt consolidation

SBA 504 Loans

Up to $5 million

10 - 25 years

2.75% - 6%

For purchase of specific assets

SBA Microloans

Up to $50,000

Up to six years

8%  - 13%

Small capital expenses

SBA 8(a) Loan

Not disclosed

Up to nine years

Not disclosed

For disadvantaged entrepreneurs only

SBA CAPLines Loan

Up to $5 million

Up to 10 years

From prime rate plus 2.25%

Seasonal businesses, contractors, and builders

SBA Disaster Loans 

Up to $2 million

Up to 30 years

4% - 8%

A business that has suffered physical damage or disaster

SBA Express Loan

Up to $350,000

Up to 25 years

From prime rate plus 4.5%

Organizations that need fast funding, often within 36 hours

SBA Community Advantage Loans

Up to $250,000

Up to 25 years

From prime rate plus 6%

Mission-oriented businesses in areas traditionally underserved by lenders

What is SBA Lending?

Small Business Administration (SBA) loans are a type of small business funding that will be funded by a bank, alternate lender, or a group of lenders. Each loan is partially backed, up to 85%, by the Federal Government. This means less risk for the financial institution providing the loan, so you get lower rates. There are around 14 types of SBA loans available at any one time, each one fulfilling a specific business need.  

Recommended Reading: Commercial Real Estate Loans

SBA Loans for Small Businesses Pros and Cons

Pros

  • Low interest rates - As SBA loans are backed by the government, lenders see this type of borrowing as low risk. This means you’ll usually find much lower rates than other types of business lending
  • Reasonable terms and conditions - Borrowers are often surprised to see just how generous the terms and conditions are with SBA loans. Most can be repaid over a 25 year period and other fees and charges are kept to a minimum
  • Business growth - SBA loans have been designed specifically to provide a boost to local economies. This means that any business looking to grow, hire new staff, purchase equipment, or benefit the local community will be more likely to be approved
  • More consistent cash flow - Many businesses have uneven cash flow through the year or long payment terms on accounts receivable. SBA loans are perfect to cover cash flow issues like covering payroll and other day-to-day expenses until you get paid by your clients

Cons

  • Tougher eligibility requirements - It’s a lot harder to get your hands on an SBA loan than other types of lending. You’ll usually need good to excellent credit, strong financial history, and evidence of high income
  • Lots of paperwork - You’ll need to provide a substantial amount of documentation including tax returns, balance sheets, business plans, and projected revenue. It can take several months to process and approve an SBA loan

How Do SBA Loans Work

The US Small Business Administration Department doesn’t loan you the money itself. Instead, it sets guidelines for SBA loans and private lenders will work within these when assessing your application. 

Up to 85% of the funding will be guaranteed by the federal government, although the exact amount will vary across platforms. Most SBA loans take a lot of paperwork and extra time to process, so we wouldn’t recommend them for anyone that needs emergency funding. 

There are currently 14 different types of SBA loans, each one tailored to specific needs like real estate purchases, fixed assets, or disaster loans. However, the most common type is the SBA 7 (a) which is an all-purpose type of lending that can be used for just about anything you’d like within your operations.  

Recommended Reading: Best Small Business Line of Credit Lenders in 2021

How to Apply for an SBA Loan

You apply for an SBA loan just like you would any other commercial loan product, and most borrowers will submit an online application. It’s a fairly straightforward process and many platforms will be able to present you with various options just a few minutes after you submit your application. 

However, to complete the process, you’re going to need to complete a ton of paperwork, and it could take several months to receive your funding. You should prepare the following documents:

  1. Proof of identity, usually a form of government-issued ID like a driver’s license 
  2. Your personal financial information, including several years of tax returns
  3. Business financial information including
    • Year-end profit and loss statement
    • Year-end balance sheet
    • Reconciliation of net worth
    • Interim balance sheet and profit statement
    • Projected financial statements
  4. Your business certificate or license
  5. Resumes of all principal owners of the business
  6. Business lease information

These are usually requested as a minimum and there might be additional documentation you’ll need to provide. 

Recommended Reading: Best Microloans for Small Businesses

SBA Loan Rates for Small Businesses

SBA loans remain popular because the rates are so much better than you’ll find with other types of borrowing. While other small business funding can run into double-digit interest, the government has set caps on all SBA loans. For example, the most popular type of SBA product, the SBA 7 (a), has rates set at a maximum of 4.75% plus base rate, and many businesses will actually be offered even lower rates than this. 

Another great example is a 504 loan, which is used for real estate lending. Rates are capped at 6% with repayment terms set over 25 years. This is much better than you’d find at a lot of commercial mortgage providers.  

See Our Additional Guides on Business Loan Types

Final Thoughts

While it might take longer to apply for an SBA loan than other forms of commercial lending, we think it’s definitely worth the wait in order to access such amazing rates. Plus, terms are incredibly generous and loan products have been designed to help your business grow. In a lot of cases, lenders will have SBA experts on hand to help guide you to the right loan type and ensure the funding is spent in the most efficient way. 

You might struggle if you have poor credit, or if you only have a short business history, but there are plenty of platforms out there to help you get approved these days and all it takes is a little shopping around.