Businesses use loans for many of the same reasons as consumers—to cover gaps in short term financing, to pay for daily expenses and to purchase property. Most small business loans can be used for general business expenses, but there are also specific business debt products like the commercial real estate loan, which is similar to the consumer's mortgage, and the business line of credit, which is like a credit card. There are more complex financing products like invoice factoring and advances for businesses with particular needs.
Small business loans can be a helpful tool for owners looking to expand their inventory, buy new office space or otherwise scale or finance their business. The loan amounts for small businesses can range from a few thousand to over a million dollars. If you're considering taking on debt to finance your business, you should compare lenders and loan types to see whose loan program best fits your specific needs.
Most online lenders require that business owners have a minimum credit score around 500 to 600 and have been in business for a certain period of time, usually a year or two, in order to be eligible. Traditional banks like to see that borrowers have minimum credit scores of 680 or higher. The standards for being considered a small business vary by industry, though businesses with less than 500 employees usually fall into the small business category.Apply