Where can I get an LLC loan?
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If you’re starting up an LLC or already own one, LLC loans can be a good way to find startup funds, stabilize cash flow, purchase large equipment or expand operations.
All types of small business lenders generally work with LLCs. You can find small business loans from traditional lenders, online lenders or the SBA. Read on to learn more about the pros and cons of each lender type and which one might offer the best LLC loans for your situation.
Traditional lenders include banks and credit unions. Approval can be a challenge: Big banks approved just 14.2 percent of small business loans in February 2023, according to Biz2Credit, which is down from January’s 14.4 percent.
Traditional lender pros
- You’ll often have an office right up the road, which can be a pro for many people. Some 43.5 percent of people used mobile banking services in 2021, which means that over half of people still don’t use mobile services.
- Traditional lenders typically offer lower starting interest rates than alternative and online options.
- With timely repayments, you can build business credit and qualify for better rates. Some banks even offer free business credit score monitoring.
Traditional lender cons
- It’s harder to secure a loan. Even credit unions had a 20 percent approval rate for small business loans in February.
- Documentation requirements are often detailed and extensive. You can learn more about which small business documents you’ll need in our guide.
Who it’s best for
More established businesses may want to look into traditional lenders for LLC loans. Banks and credit unions often require at least two years in business, minimum annual revenue requirements often top $100,000 and you’ll likely need a credit score in the good range. Some traditional lenders do offer lower qualification requirements, though you’ll likely have to secure your loan with collateral.
These include banks that have online lending programs, peer-to-peer lending platforms, and financial service companies, many of which specialize in lending to small businesses or startups that could not receive funding from traditional banks. Alternative lenders, defined as lending organizations not licensed as banks or credit unions, approved 27.9 percent of loan applications in February.
Online lender pros
- Approval is often easier. Some online lenders specialize in working with startups and have fewer requirements.
- Online lenders often focus on speed, advertising same-day approval and fast funds. Traditional lenders can take weeks to months to approve and sending funds.
Online lender cons
- People who prefer working with someone in person may not like this option.
- Most online lenders aren’t household names. You’ll have to do some digging to research lenders’ legitimacy and reputation.
- Rates typically start higher and can top 60 percent, especially if you have weak credit.
Who it’s best for
Startups that need easier approval or businesses that need fast funds.
The U.S. Small Business Administration
You would not apply directly to the SBA, as traditional and online lenders distribute the loans. You can find out more about SBA loans in our guide.
SBA loan pros
- The SBA offers a wide variety of loans for different uses, from more general purpose 7(a) loans to 504 loans for real estate to microloans for small purchases or startups.
- There are fast funding options, like the Export Express program, which responds to applications within 24 hours. SBA Express loans promise approval decisions within 36 hours.
SBA loan cons
- Requirements are stringent. For example, you have to have invested equity in the company and exhausted other funding options.
- Approval times are often lengthy — it can take up to 90 days to receive a response, especially if you’re working with a non-preferred lender.
Who it’s best for
Thanks to their capped rates, SBA loans are a great option for any borrower who can wait out the long funding process — just look for a lender with requirements your business matches.
Where’s the best place to get an LLC loan?
To find the best loan for you:
1. Assess your credit score, annual revenue requirements and time in business to see where you’d qualify.
2. Decide if you want an in-person or online experience.
3. Decide what type of loan you need.
4. Amass a list of lenders that are either online or in-person.
5. Compare eligibility requirements and loan features.
The bottom line
You can either get loans through traditional lenders or online lenders. Both also distribute SBA loans. Traditional lenders tend to have more stringent requirements and take longer to process applications and send funds. However, with online lenders, you don’t have a face-to-face experience. If you want to know more about getting an LLC loan, take a look at our guide.