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Frequently Asked Questions
How to Get a Small Business Loan
Every day Main Street business owners wrestle with the challenges of finding the cash they need to run a successful business. With all the options available, you’d think it would be a lot more simple than it is. Part of the challenge is that most small business owners aren’t finance experts. Popular television shows like ABC’s Shark Tank, the increasing popularity of crowdfunding, and the obstacles associated with getting a loan at the bank make it confusing for a lot of small business owners.
Finding a Small Business Loan vs. Finding an Investor
There are basically two ways to fund a small business:
1. Debt Financing
2. Equity Investment
When people talk about small business loans, they’re talking about debt financing. A visit to the bank or other small business lender results in a loan with repayment terms, an interest rate, and principle. Although there are different types of lenders and small business loans—anything from a traditional loan at the bank to equipment loans, business acquisition loans, merchant cash advance, and ACH loans—lenders consider your credit score, time in business, and collateral to determine whether or not the small business owner will be able to get a loan.
Equity investors aren’t interested in a monthly payment, they’re interested in a piece of the pie. Angel investors, venture capitalists, and other private investors are willing to fund small business for equity. These investors are typically looking for an event—the sale of your business or an IPO are good examples of such an event. That’s when they get their return. For example, if a small business owner were to take $500,000 in exchange for 40 percent interest in his or her business, the equity investor would take 40 percent of the proceeds from the future sale or Initial Public Offering in lieu of a monthly payment.
What Kind of Small Business Loan is Right For You?
With all the options for a small business loan it can be difficult to know which loan is right for your small business. Since few (only about 10 percent) of small business owners find a loan at their local bank, they need to understand all the other options. Banks and alternative lenders offer a myriad of interest rates and terms and the same is true for non-bank alternative lenders who offer specialized financing designed for small business owners. Click HERE to learn more about the different small business loan types available.
Lendio helps business owners like you find financing
Rob Scott, Small Business Owner
"With Lendio's great options, we can take our business to the next level."
Oyla Losina, Small Business Owner
"The whole process was effortless and in four days we had the money in our bank account."
I want a small business loan, where do I start?
Research. Find out all of your loan options, identify the pros and cons of both. You can check our Loan Types page, or our blog for more information on the many different kinds of business loans.
Interest is money paid regularly at a particular rate for the use of money lent. So if the interest rate on the loan is set at 13% annual, that means you’ll pay 13% of the unpaid money on top of the loan.
Something pledged as security for repayment of a loan, to be forfeited in the event of a default. Meaning, if you don’t pay back the loan, they will gain ownership of the collateral.
Can I trust online lenders?
Most alternative lenders are found online. There are many reputable online lenders who have good reputations and provide valuable services. Like any online service, it is important to exercise caution as some online lenders are better than others. Again, do your research.
How does Lendio find me small business loans?
Lendio makes small business loans simple. Our technology instantly matches entrepreneurs and small business owners with thousands of small business loans, startup loans, lines of credit, and other business financing options.
With so many options for loans and lenders, many business owners get swamped with choosing among hundreds of loan types and thousands of banks and lenders. To find the ideal loan that they can qualify for — with the best interest rate, the right amount of funding, and the best terms — can be extremely difficult.
From hundreds of types of business loans, lines of credit, P2P lending, credit unions, and more, business owners can waste a lot of time, money and resources to find the right loan — and in the end, their small business loans are often rejected.
That has changed with Lendio’s proprietary technology. We’ll instantly search through thousands of banks and loan types to match you with the best small business loans for you. You’ll save time, resources, money, and you will get your funding faster than ever before.
Sign up today and in minutes be matched with the perfect small business loan.