Getting approved for a business loan can feel overwhelming, especially if you’re a startup or have less-than-perfect credit. Luckily, some small-business loans are easier to qualify for than others. Whereas traditional lenders have a high barrier to entry, online and alternative lenders can offer convenient and fast access to capital. In exchange for speed and flexibility, however, these lenders tend to charge higher interest rates.
Here, we’ll break down the easiest business loans to get approved for — and how to choose the right option for your needs.
What makes a business loan easy to get?
Traditional lenders, like banks and credit unions, often require you to have good credit, strong finances and multiple years in business to qualify for funding. These institutions have lengthy application processes and can take anywhere from weeks to months to fund your loan.
The easiest business loans to get, on the other hand, typically have the following characteristics:
🤝 Flexible qualifications: These loans tend to have lenient requirements for time in business, credit score, annual revenue and collateral.
📝 Streamlined applications: These loans generally require less paperwork compared with traditional lenders. Lenders may use artificial intelligence (AI) to help underwrite your application. They may also allow you to connect your financial accounts to their system instead of uploading documents.
🚀 Fast approval times: Lenders may approve and issue funding as fast as the same, or next day.
4 of the easiest business loans to get approved for
Online loans
Best for: Fast funding; borrowers who can’t qualify for more traditional loan options.
Online lenders are nonbank companies that offer funding with flexible business loan requirements. These lenders usually offer simple applications and can issue financing in as little as 24 hours.
Fast approval and funding.
More flexible qualifications than traditional lenders.
Streamlined, online-based application process.
Multiple loan types available (e.g. term loans, lines of credit).
Higher interest rates than bank loans.
Smaller maximum loan amounts.
What you need to qualify:
Although requirements will vary by lender, you may be able to qualify for an online loan with:
Personal credit score: 570+.
Time in business: 3+ months.
Annual revenue: $30,000+.
Physical collateral is not usually required, but the lender may require a personal guarantee and/or UCC lien.
Microloans
Best for: Traditionally underserved businesses; borrowers that need $50,000 or less.
Microloans are small-dollar loans that usually offer up to $50,000. These loans are issued by nonprofit or community lenders, including those that participate in the SBA microloan program.
Lenders may prioritize underserved borrowers, such as minority groups or those located in low-income communities.
More flexible qualification requirements than bank loans.
Microlenders often provide business support and training services.
Small loan amounts may not be enough for certain funding needs.
Slower application and approval process than online lenders.
Limited availability based on location.
May require collateral and/or personal guarantee.
What you need to qualify:
Although requirements will vary by microlender, you may be able to qualify with:
Personal credit score: Some lenders don’t require a minimum, but it can be helpful to have a score of at least 575.
Time in business: Under two years in operation.
Annual revenue: Generating consistent revenue, or, in some cases, a strong business plan with financial projections.
Invoice factoring
Best for: Business-to-business companies with cash tied up in unpaid invoices.
Invoice factoring isn’t technically a loan — instead, you’re selling your outstanding invoices to a factoring company at a discount. In exchange, the factoring company advances you a percentage of your invoice amount (up to 90%) and assumes responsibility for collecting repayment from your customers. Once the company receives that payment, it sends you the difference, minus the agreed-upon fees.
Fast cash and improved cash flow for B2B businesses.
Approval is based on the value of invoices and creditworthiness of your customers, as opposed to your credit or time in business.
Invoices serve as collateral — additional collateral not usually required.
Factoring fees cut into your profits and can be expensive if your customers take a long time to pay.
Only available for B2B businesses.
Lose direct control over your invoices, which may impact customer relationships.
What you need to qualify:
Invoice factoring qualifications may be different from other types of business financing. Factoring companies may not set minimums for personal credit score, time in business and annual revenue, but instead require:
A certain amount of invoices factored per month (i.e. $10,000 per month).
Accounts receivable aging report (which the factoring company will use to evaluate your customers’ payment behaviors).
Merchant cash advances
Best for: Last-resort option; businesses with high volume of credit/debit card sales.
Like invoice factoring, merchant cash advances (MCAs) aren’t actually loans. With an MCA, you receive an advance of cash that you repay using a percentage of your debit and credit card sales, plus a fee.
Approval based largely on sales, as opposed to credit or time in business.
Can often fund as fast as the same day.
Physical collateral is not usually required.
Some providers don’t require a personal guarantee.
Most expensive type of business financing; APRs can reach over 100%.
Frequent payments can eat into cash flow and may create a cycle of debt that’s difficult to break.
Contracts are often confusing with limited transparency from providers.
What you need to qualify:
To get a merchant cash advance, it can be helpful to have:
Personal credit score: 475+ (some MCA companies don’t check your credit score).
Time in business: 3+ months.
Annual revenue: Strong revenue (many providers require $100,000 per year or more).
Tips to increase your business loan approval odds
Whether you’re a new business, have limited credit or simply want to put your best foot forward, these tips can help improve your chances of getting approved for a business loan:
Strengthen your application profile
If you’re concerned that your credit score or time in business will keep you from getting approved, there are other ways you can strengthen your loan application.
Offer collateral. Although you may be putting your assets at risk (if you can’t repay), providing collateral reduces risk for the lender, which may increase your chances of approval.
Provide a down payment. Similar to offering collateral, providing a down payment shows a lender that you have a stake in the game — and may help tip the scales toward approval.
Consider adding a cosigner. A cosigner with a high credit score and strong personal assets can make your profile more attractive to a lender. Keep in mind though, if you default on the loan, the cosigner is on the hook for repayment.
Include a well-developed business plan. Although not always required, providing a business plan with strong financial projections can boost your application profile. A detailed business plan can help convince lenders that you’re well-equipped to run your business and that you’ll be successful in the future.
Choose the right lender
Before you start applying, research and compare multiple small-business lenders to see which ones can best fit your needs. You’ll want a lender that offers the product you’re looking for — and whose requirements you can meet. For example, if you’re a new business with a 600 credit score and limited revenue, you might consider microlenders in your area.
It might also be helpful to use online lending marketplaces, like Fundera by NerdWallet, to compare multiple offers at once and get advice on what’s best for your business.
Don’t rush the paperwork
Once you’re ready to apply, you should organize your paperwork ahead of time and review it carefully. Different lenders will have unique application requirements, so you’ll want to ensure that you’re providing exactly what each lender is asking for.
Submitting incorrect or outdated information can not only slow down the approval process, but may result in an automatic rejection — especially if a lender is using AI to help underwrite your application.
It may also be beneficial to ask a business advisor to look over your application. A second pair of eyes can help catch mistakes or missing information before you submit.
