Best small business loans of July 2025

Access to small business funding is a challenge for many business owners. Rate hikes and bank turmoil have led to lenders tightening credit standards and eligibility requirements. This tightened lending environment can make it difficult for startups, bad-credit borrowers and business owners in underserved areas to get approved for small business loans. 

Our experts consider several factors in this category and award higher scores to lenders that offer flexible loan amounts, fast approval and funding and inclusive time in business and annual revenue requirements.

The affordability of a business loan often depends on a business owner's financial profile. A business with high revenue and a flexible budget will likely be able to afford most loan options. Businesses considered high risk, such as startups or those with bad credit, may struggle to find affordable loans with low interest rates and reasonable fees. 

We consider a business loan affordable if the payments are manageable, you have the lowest possible rate based on your creditworthiness and there are minimal fees. Lenders that have lower rates, offer rate or fee discounts and have minimal fees receive higher scores. 

A good customer experience requires a lender to be transparent, efficient and responsive. Reputable lenders that value their customers are easy to communicate with, responsive to your questions and concerns and willing to go the extra mile to make sure you have a positive experience for the life of the loan.

Lenders offering online accounts and applications and a range of customer support availability score higher in this category. 

While the Truth in Lending Act (TILA) protects consumers against unfair or harmful lending practices, it doesn’t apply to business loans. This lack of legal protection makes it harder to get straightforward and upfront information on loan costs when comparison shopping. We score lenders that clearly state their rates and fees, as well as eligibility and credit score requirements, higher than those who do not disclose information.

Loan flexibility is finding a loan to meet your needs, even if you don’t have high annual revenue, several years in business or the best credit score. Loan flexibility can look like lenders that offer multiple lending products, variety in loan terms or unique options to give business owners the opportunity to fund their businesses in a way that works for them.

Lenders scoring high in this category offer varied products and services to cater to all types of borrowers and businesses.

• Business plan and loan proposal (if applicable)
• Business license and operating agreement
• Employer identification number (EIN)
• Recent personal and business tax returns
• Recent bank statements
• Proof of business insurance
• Payroll records
• Lease agreement
• List of accounts payable and accounts receivable
• Business financial statements (i.e., balance sheet, profit and loss statement)

The most common type of business loan among startups and established companies, term loans let you borrow a lump sum to cover business expenses. You then repay the loan over the agreed-on repayment term with interest. Term loans are accessible through most banks and credit unions, and loan amounts range from $1,000 to the millions. 

To qualify for a term loan, you’ll likely have to generate a sizable amount of revenue and provide a personal guarantee to qualify for funding. Plus, you can expect higher borrowing costs if you’re starting out in your business. 

Lines of credit provide access to a pool of funds you can repeatedly draw from up to your credit limit. While a term loan charges interest on the total borrowed amount the moment you receive funds, with a line of credit, you only pay interest on the funds you use. You also have the flexibility to withdraw more funds as you have more credit available, such as after you repay past loans.

There are drawbacks, including the limited draw period or time frame that you get to access the line of credit before it closes. The upside is some lenders allow you to make interest-only payments during the draw period, which can be beneficial if you’re trying to get your company’s cash flow back on track.

Equipment loans let business owners purchase business-related equipment such as machinery, office furniture, tools and computers. This type of loan can be beneficial if you don’t have the funds available to cover the costs of vital resources to keep your business operating efficiently.

Business owners should consider equipment loans for several reasons. Since the equipment acts as collateral for the loan, interest rates tend to be more favorable compared to unsecured term loans. Lenders are also more likely to approve startups and bad credit borrowers, making equipment loans accessible to more business owners.

You can access funding to meet your company’s short-term needs with a merchant cash advance. Funds are disbursed in a lump sum and payable to the lender through a percentage of your daily or weekly sales — typically over a short loan term of one year or less. Lenders use your debit and credit card sales volume to determine the amount you’re eligible to borrow, so bad credit isn’t necessarily a deal-breaker. 

Merchant cash advances are a type of bad credit business loan. Instead of interest rates, it charges factor rates. These typically come with faster repayment terms and may even end up costing more than comparable loans that use interest rates.

Both invoice financing and invoice factoring allow you to borrow against your unpaid receivables. They’re both accessible types of business loans, often open to startups and bad-credit borrowers. To get approved for these loans, lenders are more concerned with the creditworthiness and repayment history of your invoiced clients. 

There’s a key difference between the two. Invoice financing involves receiving an advance of your company’s accounts receivables that you’ll repay the amount borrowed (plus fees) once the client pays you. 

If you choose invoice factoring, you’ll sell the outstanding invoices directly to the lender in exchange for a lump sum of up to 90 percent of what’s owed. The client will pay the lender directly, and any amount that remains after fees are deducted will be distributed to you. 

Backed by the Small Business Administration, SBA loans are loan products featuring competitive rates and generous loan terms to meet the needs of small business owners. They’re accessible through SBA-approved lenders you can locate through the SBA Lender Match Tool, but they come with a few downsides. 

Though the SBA’s intention is to provide small business owners with the funding they need, SBA loans come with an application process that’s challenging to navigate. Plus, it could be several months before the loan proceeds are disbursed to you. 

For more information on SBA loans, check out the following guides:

• SBA loan denied: What to do next
• Best and worst states for SBA 7(a) loans
• How long do you have to wait for SBA loan approval?

These loans are available as SBA-approved microloans or through non-profits, banks and online lenders offering their own microloan programs. With most microloans, you can access up to $50,000 in working capital or startup funding for your business. 

These loans tend to relax eligibility requirements by accepting lower credit scores, making them a more accessible type of loan. Some lenders will also offer mentoring and resources to help your business succeed beyond finances.

You can use a commercial real estate loan to purchase or lease a physical space for your company. Some lenders offer up to $5 million in funding with extended repayment periods and competitive interest rates.

Qualifying may be difficult if you’re starting out or your revenue is on the lower end. Plus, you can expect a lengthy application process.

The total cost of a business loan includes repaying the amount you borrow, plus interest and fees charged by the lender. Annual percentage interest rates (APRs) can start as low as 7 percent for a standard term loan for a business with solid credit, but can get up to 99 percent or higher based on variables with your financial standing. Fees can also differ by the lender. They may include origination or closing fees that add hundreds of dollars to your loan cost.

You could be disqualified from getting a business loan if you don’t meet the lender’s minimum lending requirements. Those usually include a minimum credit score, time in business and revenue threshold. You could also be disqualified if you don’t have enough of a down payment, can't provide collateral or if your finances show a recent decline in revenue.