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If you’re an entrepreneur wanting to grow your small business in 2025, you may be considering a business loan. Business financing can help you purchase new inventory, equipment, or real estate, expand your business, optimize your cash flow, or help consolidate your business’s debt.

In the past, small business lenders were limited to financial institutions like traditional banks and credit unions, or private individual lenders. Today, online lenders are more prominent than ever and may offer the best small business financing options for your business. If you’re looking for a loan for your small business, it’s worth exploring alternative options like online lenders.

In this article:

• The best business lenders and types of loans for small businesses
• What to look for in a private business lender
• How to qualify for small business financing

Best Types of Small Business Loans

Small business owners have access to a wide variety of financing options. Some of the most common are business term loans, U.S. Small Business Administration (SBA) loans, working capital loans, commercial real estate loans, business lines of credit, and merchant cash advances (MCAs). Here’s a closer look at each.

Term loans

Term financing provides a lump sum of money in exchange for monthly payments at a fixed or variable interest rate. Term loans are best for long-term business projects and larger projects that require longer repayment terms. Term loans are often used for equipment financing, buying real estate, or expanding or renovating a business.

While traditional lenders usually offer lower interest rates than online lenders, they tend to have stricter eligibility requirements making term loans from online lenders better for new businesses or business owners with bad credit.

SBA loans

SBA loans are an attractive option for many business owners due to low interest rates, longer terms, and lower fees. By partially guaranteeing loans, the SBA lowers the risk incurred by lenders, incentivizing them to approve more borrowers. The SBA offers loan programs for many business needs, from microloans up to $50,000 to a maximum loan amount of $5.5 million for an SBA 7 or SBA 504 loan.

But while SBA loans are among the best loans for small businesses, they’re also difficult to get. They have stricter eligibility requirements, including an excellent credit history and time in business requirements.

Working capital loans

Working capital is the money your business needs to meet its ongoing obligations, such as payroll, inventory, utilities, and rent. Working capital financing is a short-term loan that can help manage cash flow.

Online lenders often have simpler application processes and faster funding times than traditional lenders. They may be the best business lenders when you need a fast influx of capital to handle a financial emergency or take advantage of a business opportunity.

Commercial real estate loans

A commercial real estate loan can help you purchase or renovate a commercial property. These loans work best when it’s financially feasible for you to own your office building or when your business is highly industry-specific and you need the freedom to renovate. For instance, a dental practice may prefer to own its building.

Business lines of credit

A mix between a business credit card and a term loan, a business line of credit is an accessible loan option for most entrepreneurs. When approved, a borrower has access to a maximum loan amount. However, they only pay interest on withdrawals rather than the full amount.

For example, if you have a max credit line of $30,000 and only draw $10,000 to make a purchase, when you repay the $10,000 plus interest, you’ll have access to the full $30,000 amount again.

Many small business lenders offer business lines of credit with relatively low qualification requirements.

Merchant cash advances

Merchant cash advances (MCAs) are not technically loans since they’re a commercial arrangement between private business lenders (called providers) and borrowers. A business receives a lump sum amount upfront and then repays with a percentage of future credit card or debit card sales.

Rather than repay a cash advance with interest, MCA providers typically charge a factor rate to determine the amount a business will have to repay. For instance, a factor rate of 1.2 on a $10,000 advance will require 10,000 x 1.2, or $12,000 to fulfill the repayment terms.

MCAs often fund very quickly but can cost far more in the long term than traditional loans, making them more of an emergency option. The same goes for cash advance products like invoice factoring and invoice financing that leverage unpaid invoices for upfront cash.

Best Small Business Lenders 2025

With the emergence of online lenders and fintech lenders, there’s more competition in the small business lending space than ever. The FDIC’s 2024 Small Business Lending Survey Report found that fintech lenders and credit unions especially have cut into traditional banks’ market share. That makes it difficult to say which small business lenders are “best,” exactly.

Ultimately, the best business lender for you will meet the following criteria:

1. Offers funding that fits your business’s needs
2. Eligibility requirements that you and your business meet
3. Offers competitive interest rates on loans for small businesses

There are many loan products and small business lenders on the market, so it will require some research to determine the best choice for your business needs. Whether you’re looking to invest in business growth, avoid higher interest rates, finance a specific asset, or something else, the right loan and lender really boils down to your specific situation.

Online Lenders vs. Traditional Lenders

Online lenders and traditional lenders usually excel in different ways, making each a better choice for different businesses and business owners. For instance, the FDIC report found that very few traditional banks offer an entirely online loan application process. That’s an important clarification for many entrepreneurs in the digital age.

Generally speaking, online lenders are better for:

• Business owners with bad credit
• Startups and new business owners
• Business owners that need fast access to capital

Traditional lenders are better for:

• Established businesses looking for the lowest interest rates
• Business owners who need very high loan amounts
• Business owners who expect to need additional funding in the future and want to establish a relationship with a lender

These are not hard and fast rules, but guidelines to help you decide whether a traditional or online lender is better for your business.

The Bottom Line

In today’s digital world, there are many small business lenders available to business owners. Competition is good, of course, but it can make the lending market feel a bit overwhelming. Nonetheless, always do your due diligence on any lender before entering into a loan agreement and ensure that you can meet the repayment terms.

Frequently Asked Questions About Online Lending (FAQ)

Can you get a business loan online?

Yes, you can get a business loan online. Although few traditional lenders offer completely online approval processes, online lenders specialize in providing entirely online loan services.

Where can I find online business loans near me?

Many small, local banks offer loans for small businesses, but online lenders work with businesses all over the country.

How do I choose an online lender?

Choosing a business loan can feel overwhelming, given the many options. When comparing online lenders, you should determine how you’ll use the money, figure out how much you can afford for a monthly payment, and research lender reputations and loan products before applying.

This step-by-step process will help narrow down your options to find the right small business lender for you.

What types of fees are involved in commercial loans?

Commercial loan fees vary between small business loaners and loan type. Typically, traditional lenders and SBA lenders charge larger fees than online lenders, but that’s not always the case. Fees may depend on a borrower’s creditworthiness, the loan amount, the type of business, or several other factors.

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