Small Business Loans

According to the Federal Reserve’s 2022 Small Business Credit Survey:

• A business loan or line of credit was the most sought after source of financing.
• The majority of business owners applied for business loans, SBA loans and SBA lines of credit.
• Business owners with a personal credit score over 720 (low risk) were more likely to apply with a large or small bank over other types of lenders.
• Finance companies and small banks had higher approval rates compared to online lenders and large banks.
• The two biggest challenges applicants faced with online lenders were high business loan interest rates and unfavorable repayment terms.
• The two biggest challenges applicants faced with large and small banks were difficult application process and long wait for credit decision and funding.

A business loan can help small business owners in a variety of ways, including starting or growing a business and covering day-to-day operational costs. But there are a number of advantages and disadvantages that you’ll have to consider to see if it’s right for you. For more information, check out:

• Pros and cons of a business bank loan
• Pros and cons of SBA loans
• Pros and cons of bad credit business loans
• Pros and cons of alternative business lending

Business loans are easy to get if you have excellent credit. But rising interest rates and the recent bank crisis have led to a tightening of credit. This makes it harder for some businesses to get loans, especially business owners with bad credit. 

Alternative online lenders tend to have relaxed eligibility requirements, but you will find higher rates and fees and lower loan amounts compared to business loans from traditional banks and credit unions. Our guide on how to get a business loan can walk you through the basics. And for specific guidance based on your business situation, check out:   

• How to get a startup business loan
• How to get a business loan with bad credit
• How to get an LLC loan

This depends on your needs and current business situation. The right type of business loan can come down to factors like how long you’ve been in business, how quickly you need funds or how much time you need to pay back the loan. Some business loans are better suited for startups or business owners with bad credit, while others will appeal to established businesses with a long and successful track record. 

Some business loans can be used to cover just about any business-related expense. Other business loans are for specific purposes. For example, equipment financing only covers business-related equipment like restaurant ovens, construction machinery or semi trucks.