Compare Business Loans

Compare business loans from a range of leading national lenders so you can find the best deal

Last updated by Zaving Editorial Team, on April 4th, 2024

Starting or growing a business often requires access to financing, which is why it's vital to compare business loans. A well-chosen business loan can be the catalyst that propels your business to new heights. However, with countless loan options available, finding the right one for your unique needs can sometimes feel overwhelming. That's where zaving comes in!

Our comprehensive comparison platform helps you navigate the complex world of business loans, ensuring you make the best decisions for your company's future. In this ultimate guide, we'll cover essential aspects of business loans, answer common questions, and help you discover the perfect financing solution for your business.

What are business loans?

Business loans are a type of financing specifically designed to support businesses in meeting their financial needs, such as purchasing equipment, expanding operations, or covering day-to-day expenses. These loans are provided by various sources, including traditional banks, online lenders, and government-backed organizations such as the Small Business Administration (SBA).

Understanding the different types of business loans

There are numerous types of business loans, each designed to address different business needs and circumstances. Some of the most common business loan options include:

  1. Term loans: These are traditional loans with fixed terms and repayment schedules. Businesses receive a lump sum upfront and repay the loan over time with interest.
  2. Lines of credit: A business line of credit provides a flexible borrowing option, allowing businesses to draw funds as needed and repay them over time, with interest only on the amount borrowed.
  3. SBA loans: Loans backed by the U.S. Small Business Administration (SBA) offer favorable terms and interest rates for small businesses that might not qualify for traditional loans. The most popular SBA loans include the 7(a) loan, 504 loan, and microloan programs.
  4. Equipment financing: This type of loan is used specifically for purchasing equipment, with the equipment itself serving as collateral.
  5. Invoice financing: Businesses can access immediate cash by selling their outstanding invoices to a lender at a discounted rate, providing working capital while waiting for clients to pay.
  6. Merchant cash advances: This financing option provides businesses with an upfront cash advance in exchange for a percentage of future credit card sales.

Steps to take to evaluate and apply for a business loan

Before applying for a business loan, it's essential to evaluate your business's financial situation, creditworthiness, and financing needs. Here's a step-by-step guide to help you through the process:

Assess your business's financial health:

Review your financial statements, credit history, and business plan to determine your company's borrowing capacity and financing requirements.

Research loan options:

Familiarize yourself with the various types of business loans and identify which option best aligns with your business's needs and goals.

Compare business lenders and loan offers:

Use zaving's comparison platform to explore loan options from multiple lenders, comparing interest rates, fees, repayment terms, and other features.

Prepare your application:

Gather the necessary documentation, such as financial statements, tax returns, and business plans, and ensure your application is thorough and accurate.

Submit your application:

Once you've chosen the right loan for your business, submit your application to the lender and await their decision.

How do I determine the right type of business loan for my needs?

To determine the right type of business loan, consider factors such as your business's financial health, creditworthiness, and specific financing needs. For example, if your business requires a large, one-time investment for expansion, a term loan may be the best option. If you need ongoing access to funds for working capital, a line of credit may be more suitable. It's essential to evaluate each loan type and compare offers from multiple lenders using Zaving's comparison platform to make an informed decision.

What are the eligibility requirements for business loans?

Eligibility requirements for business loans vary depending on the lender and loan type. Common criteria include:

  • Time in business: Most lenders require businesses to be operational for a minimum period, often at least one or two years, to establish a track record.
  • Credit score: A strong personal and business credit score can improve your chances of securing a loan with favorable terms.
  • Annual revenue: Lenders typically require businesses to meet a minimum annual revenue threshold to ensure they can repay the loan.
  • Collateral: Some loans may require collateral, such as property or equipment, to secure the loan.

It's essential to review the specific eligibility requirements for each loan and lender to determine which options are available to your business.

How long does it take to secure a business loan?

The time it takes to secure a business loan depends on the type of loan and the lender. Traditional term loans from banks may take several weeks or even months to process, while online lenders often have faster approval times, ranging from a few hours to a few days. SBA loans, known for their favorable terms, typically have a longer approval process, often taking several weeks or months. Ensure you account for the time it takes to secure financing when planning your business's financial strategy.

Can I get a business loan with bad credit?

Getting a business loan with bad credit can be tough, but it's not impossible. Traditional lenders have strict credit requirements, but alternative lenders like online lenders and microlenders may be more open to working with businesses that have less-than-perfect credit. Some loan options, like secured loans or merchant cash advances, might be more available to business owners with poor credit. However, it's important to note that loans for businesses with bad credit usually have higher interest rates and less favorable terms. Despite the challenges, exploring these alternative options can provide opportunities for businesses to secure the funding they need to grow and thrive. It's essential to carefully consider the terms and costs associated with any loan before making a decision.

Are there specific business loans for women or minority-owned businesses?

Yes, there are business loan programs and resources specifically designed to support women and minority-owned businesses. The SBA offers several programs and resources for these groups, such as the Women-Owned Small Business (WOSB) Federal Contracting Program and the 8(a) Business Development Program. Additionally, many private organizations, nonprofits, and microlenders provide financing options tailored to women and minority-owned businesses.

What is the difference between a secured and unsecured business loan?

A secured business loan requires collateral, such as property, equipment, or inventory, which the lender can claim if the borrower defaults on the loan. Secured loans typically offer lower interest rates and larger borrowing amounts due to the reduced risk for the lender. On the other hand, an unsecured business loan does not require collateral, making it a more accessible option for businesses with limited assets. However, unsecured loans often come with higher interest rates and smaller borrowing amounts due to the increased risk for the lender.

Got further questions about business loans?

Can I use a personal loan for business purposes?

While it's possible to use a personal loan for business purposes, it's generally not recommended. Personal loans often have lower borrowing limits and may not offer the same tax benefits as business loans. Additionally, using a personal loan for business expenses can make it difficult to separate personal and business finances, potentially complicating your financial management.

Can I have multiple business loans at once?

It's possible to have multiple business loans at once, but it's essential to carefully consider your business's ability to manage and repay multiple loans simultaneously. Taking on too much debt can strain your business's cash flow and negatively impact its financial health.

What is the average interest rate for a business loan?

he average interest rate for a business loan varies depending on factors such as the lender, loan type, borrowing amount, and the borrower's creditworthiness. Interest rates can range from as low as 2-3% for SBA loans to 18% or higher for alternative lenders and high-risk borrowers. To get the best interest rate for your business loan, compare offers from multiple lenders using Zaving's comparison platform.

Are business loans tax-deductible?

The interest paid on business loans is typically tax-deductible as a business expense. However, the principal repayment portion is not tax-deductible. It's essential to consult with a tax professional or accountant to understand the specific tax implications of your business loan.

How do I improve my chances of getting approved for a business loan?

To improve your chances of securing a business loan, focus on maintaining a strong personal and business credit score, keeping accurate financial records, and developing a solid business plan. Additionally, research the specific requirements of each lender and loan type to ensure you meet the eligibility criteria before applying.

What are the typical repayment terms for business loans?

Repayment terms for business loans vary based on factors such as the lender, loan type, and borrowing amount. Term loans typically have repayment periods ranging from one to ten years, while lines of credit may have revolving repayment terms. SBA loans often have longer repayment terms, with some extending up to 25 years for real estate purchases.

How do I calculate my monthly business loan payment?

To calculate your monthly business loan payment, you'll need to know the loan amount, interest rate, and repayment term. You can use an online business loan calculator or consult with your lender to determine your monthly payment amount.

Can I negotiate the terms of my business loan?

While it's not always possible to negotiate the terms of a business loan, some lenders may be open to discussing adjustments to interest rates, fees, or repayment schedules. It's essential to research and compare offers from multiple lenders to ensure you secure the best possible terms for your business loan.

Do I need a business plan to apply for a business loan?

Many lenders require a detailed business plan when applying for a business loan, especially for startups or businesses without an established financial history. A well-prepared business plan demonstrates your understanding of your industry, market, and financial projections, increasing your chances of securing financing.

Can I get a business loan to start a business?

Securing a business loan to start a business can be challenging, as most lenders prefer to work with established businesses with a proven track record. However, some financing options, such as SBA loans, personal loans, or loans from friends and family, may be more accessible for startups. Additionally, many entrepreneurs turn to alternative funding sources, such as crowdfunding or grants, to finance their new ventures.

Are there any fees associated with business loans?

Business loan fees vary by lender and loan type but may include origination fees, application fees, late payment fees, or prepayment penalties. It's essential to review the terms of each loan offer carefully to understand any associated fees and factor them into your decision-making process.

Is it better to get a business loan from a bank or an alternative lender?

The choice between a traditional bank or an alternative lender for a business loan depends on your business's specific needs and circumstances. Banks often offer lower interest rates and longer repayment terms but may have stricter eligibility requirements. Alternative lenders, such as online lenders, may have more flexible eligibility criteria and faster approval processes but may come with higher interest rates and fees. Comparing loan offers from multiple sources using Zaving's comparison platform can help you determine the best option for your business.