Most types of lenders offer $20,000 business loans. Whether you need a long-term loan, a business cash advance or a line of credit, $20K loans come in a variety of options. You won’t necessarily need perfect credit to qualify, but you’ll need to meet time in business, credit and revenue requirements, which vary depending on the lender you work with.
Compare all your options before applying to find the best $20,000 business loan for your company’s needs.
You can get a $20,000 business loan with most types of lenders. Typically online lenders offer the most options when it comes to loans of this amount.
Community banks and nonprofits like community development financial institutions (CDFIs) or microlenders also offer loans of this size. These tend to offer lower rates than you'll find online and provide guidance to help grow your business.
If you want a $20,000 business loan to start a business, community banks and microlenders sometimes offer programs that can fund a business through its first few months.
A personal loan from a lender like Upstart can also be a good option for startups with good credit and a source of income outside their new venture.
Check out these lenders that offer business loans for $20K or more.
The Finder Score crunches 12+ types of business loans across 35+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.
To provide a Score, we compare like-for-like loans. So if you're comparing the best business loans for startups loans, you can see how each business loan stacks up against other business loans with the same borrower type, rate type and repayment type.
The application process for a $20,000 business loan varies depending on your business, your personal finances and what you want to fund. But you expect these general steps:
The process of getting a $20K business loan can range from one day to several weeks. Online lenders tend to be the fastest. Banks, CDFIs and microlenders can take longer — especially if it’s your first loan with that institution.
To qualify for a $20,000 business loan, you’ll typically need to meet the following requirements:
The cost of a $20,000 business loan depends on the lender, loan type and the rates and terms you qualify for. For example, term loans could start as low as 6% to 8%, whereas shorter-term funding may start around 10%. But rates could go as high as 60% or more, depending on your credit score and which type of loan you get. Less traditional financing, like merchant cash advances, could reach triple-digit APRs regardless of your credit score.
You may also be charged an origination fee of up to 5% of the loan amount. Some loans, like business lines of credit, could tack on multiple fees, such as maintenance fees, draw fees, annual fees and others. Be aware of the rates and fee structure before signing your loan agreement.
Use our business loan calculator to estimate how much you’ll pay each month based on different rates and loan terms.
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Not all lenders offer $20,000 business loans because they’re on the smaller side, but here are some of the most common types of business loans for companies looking to borrow $20,000.
Term loans are the most common type of business loan, and you can choose from short-term or long-term options. They typically come with fixed interest rates, and you pay them back in equal monthly installments, which can make them easier to budget for. Some lenders don’t offer term loans as small as $20,000, but they’re definitely out there. Plus, if you meet the requirements and have a good credit score, you can find some of the best rates in the business loans marketplace.
A business line of credit is kind of like a credit card, but it gives you easy access to cash. It gives you a revolving line of credit that you can access as needed, up to your approved limit and — in most cases — it replenishes as you pay it back. Plus, you only have to pay interest on the funds you use. But loan terms for business LOCs are typically short and they can come with a lot of additional fees.
Microloans are usually capped at $50,000 and are offered by banks, online lenders and nonprofits — and the SBA has a microloan program too. These types of loans are often awarded to women, veteran or minority-owned businesses, certain nonprofits or businesses in low-income or underserved areas. Microloans typically work like term loans, where you’re offered a lump sum and pay it back in equal monthly installments. But it can have strict requirements or stipulations and funding may not be as fast as some types of business financing.
If you don’t meet the requirements for other types of business financing, a business credit card can be much easier to qualify for. Plus, it often comes with travel points, cashback rewards, low introductory rates or other perks. If you’re a startup business or a sole proprietor, this may be the easiest business financing you can find. But accessing cash is more expensive and your credit limit may be lower than other options.
If your business does a lot of debit and credit card sales, a merchant cash advance is an option for short-term fast funding. Basically, you sell a percentage of your future card sales for a lump sum and then make weekly or daily repayments, including fees — which can be steep.
If you’re an entrepreneur or business owner with income outside your business, you may want to consider using a personal loan to finance your company. This is a common practice, since tons of lenders offer personal loans up to $20,000 or more. Also, this option might make sense if your company doesn’t meet general business loan requirements. But you’ll need a good credit score to qualify for the most competitive rates.
Consider these lenders that offer $20,000 personal loans that could be used to fund your business. Select Compare for up to four providers to see how their APRs, credit score requirements and loan amounts stack up. Select Go to site to get started on your application.
The Finder Score crunches 6+ types of personal loans across 50+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.
You can get a $20,000 business loan with bad credit by applying with a lender that accepts personal credit scores of 580 or below — what FICO considers bad credit.
Some online lenders specialize in bad credit business financing. And some, like merchant cash advances and factoring companies, may not consider your credit score at all. But these are often much pricier than more traditional types of financing.
Many microlenders and CDFIs also offer $20,000 loans to business owners with bad or no credit, often at lower rates than online lenders. Though, you might have to enroll in a training course to qualify.
Some community banks may also be willing to overlook a low credit score for a $20,000 loan if you have an explanation for negative marks on your credit report. You may also be able to qualify if you pledge collateral for the loan.
Smaller banks and online lenders might offer the most options when it comes to $20,000 business loans. And since $20,000 is a relatively low amount for a business loan, you could have an easier time qualifying for a loan if your business is a startup or you have poor credit. Compare top business lenders to be sure you’re getting the best deal for your situation.
Yes, you can get a $20,000 loan backed by the Small Business Administration (SBA). Technically, the SBA doesn’t have a minimum loan amount for any of its programs. But an SBA microloan might be a better choice for a loan of this size. The maximum SBA microloan is $50,000, while the average is around $13,000.
In the scheme of things, a $20K business loan is small and shouldn’t be difficult to get if you have a decent credit score and meet other lender requirements. If you don’t meet the necessary criteria, you may want to consider other sources of funding, like an MCA or personal loan.
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