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6 Best Alternative Business Loans: Faster & Easier

Alternative business lenders offer fast funding and flexible loan options but can be more expensive than traditional loans.

Alternative lenders offer a streamlined loan process that allows businesses to access funds more quickly and without such stringent qualifications. Plus, alternative lending opens up a wide variety of loan types that traditional banks and credit unions don’t offer. Compare some of the best alternative lending options to find one that’s right for your business.

Best alternative business loans

Best for comparing lenders and loan types

Lendio business loans

4.8
★★★★★

Finder score

Go to site Read review
Loan amount$1,000 – $10,000,000
APRVaries by lender
Min. Credit Score500

Best for no interest microloans

Kiva business loans

3.7
★★★★★

Finder score

Go to site
on Businessloans.com's secure site
Loan amount$1,000 – $15,000
APR0%

Best for invoice factoring

FundThrough Invoice Factoring and Financing

4.5
★★★★★

Finder score

Go to site
on Businessloans.com's secure site
Read review
Loan Amount$500 to $10M
Fee for Terms2.75% to 8.25%

Best for equipment financing

National Funding business loans

4.6
★★★★★

Finder score

Go to site
Loan amountUp to $150,000
APRNot stated
Min. Credit Score600

Best for business lines of credit

Bluevine business lines of credit

4.3
★★★★★

Finder score

Read review
Loan amountUp to $250,000
APRAs low as 7.8%
Min. Credit Score 625

Best for merchant cash advance

Credibly business financing

3.8
★★★★★

Finder score

Read review
Loan amount$5,000 to $600,000
Starting Factor Rate1.11
Min. Credit Score500

Methodology: How we chose these lenders

Finder’s business loan experts analyzed dozens of alternative lenders offering multiple loan types. We ultimately chose lenders with competitive rates, fast funding, flexible loan terms and a variety of loan types.

Some of the criteria we used to evaluate lenders include:

  • Interest rates
  • Additional fees
  • Loan amounts
  • Loan terms
  • Repayment plans
  • Turnaround times
  • Credit score requirements
  • Time in business requirements
  • Revenue requirements
  • Reputation of the lender

How to compare alternative business loans

Consider these factors when choosing an alternative business loan lender.

  • Rates. You’ll find a wide range of interest rates between lenders — or fees, depending on the loan type — so be sure to explore the best deals on business loans.
  • Additional fees. Some alternative lenders charge fees on top of fees, which adds to the loan’s cost. To save money, you may want to seek out loans with minimal fees.
  • Turnaround times. By and large, alternative loans have relatively quick funding —some as soon as the same day — but other options may take a little longer. No doc loans tend to offer the quickest turnaround since they further simplify the application process.
  • Loan terms. In general, alternative loans have shorter terms than bank loans, but some offer terms of up to 10 years.
  • Repayment schedules. Some loan types in this space may require weekly or even daily repayments. Carefully consider whether your budget can handle a fairly rigorous repayment schedule.
  • Lender requirements. Alternative business loan lenders typically have more lenient requirements to qualify. But it’s still a good idea to research the minimum credit score, revenue and time in business requirements to make sure you fit the criteria.

What is an alternative business loan and how does it work?

Alternative loans are basically any type of business lending not offered by traditional brick-and-mortar banks or credit unions. They usually operate online and typically don’t have any physical locations. Other characteristics of alternative loans include less stringent requirements to qualify, faster funding and — sometimes — higher interest rates than banks.

Alternative loan types include term loans, lines of credit and other loans that most regular banks offer. But, the term also encompasses less traditional loans like invoice factoring, merchant cash advances and crowdfunding. And, like with traditional lenders, alternative loans may be secured or unsecured.

When you apply for an alternative loan, you’ll typically complete the application online and submit any required documentation electronically. You may even give the lender access to your bank accounts, which can practically eliminate the need for paperwork.

Alternative loan lenders tend to rely on sophisticated underwriting algorithms to determine loan approval, which also speeds up the process. Once you’re approved and funded, you’ll pay it back, plus interest and fees, like a traditional loan. However, you may have to agree to automatic repayments, which may be weekly or even daily, depending on the loan type.

Perks of alternative business loans

Here’s a few benefits of going with an alternative business loan:

  • Fast and easy application process. Compared to traditional loans from banks and credit unions, alternative loans and lenders typically offer a much easier and quicker application that can be completed online.
  • More lenient eligibility requirements. Alternative business loans typically consider other eligibility factors and have less strict requirements to qualify – such as lower time in business or credit score requirements compared to banks and traditional loans.
  • Funding as soon as the same day. Because they generally operate online, and often use underwriting algorithms to determine approval, these loans often offer funds much faster.

Drawbacks of alternative business loans

Weigh the pitfalls carefully before going with an alternative business loan:

  • May be more expensive. This is by far the biggest drawback to alternative loans and lenders. Because they offer more lenient requirements, speedy access and convenience they often buffer the added risk with higher rates. Expect to pay more with an alternative lender or loan than you would with more traditional forms of financing.
  • Shorter terms, generally. Alternative types of business loans tend to be short-term loans, so you’ll have less time to pay down your balance.
  • May require daily or weekly repayments. Many types of alternative loans, such as revenue-based loans require more frequent loan payments compared to the traditional monthly loan payment.
  • Not all loan options build business credit. If you’re looking to build your business credit while borrowing, be sure to read the fine print when comparing alternative loans. Some alternative lenders don’t report timely payment to the credit bureaus.
  • Limited customer support. Depending on which lender you work with, you may have limited access to customer support, especially with smaller alternative lenders. Alternatively, more traditional lenders like banks and credit unions generally have a brick and mortar location where you can get in-person assistance when needed.

Compare other alternative business loans

Consider these lenders that also offer alternative business loans at competitive rates and for a range of credit types.

Name Product USFBL Filter Values Min. Amount Max. Amount APR Requirements
Olympus Business Capital
Finder Score: 4.4 / 5: ★★★★★
Olympus Business Capital logo
$500
$250,000
Not stated
Been in business for 6 months registered with the state, active and open bank account in business name, have $10,000 of revenue each month
No credit needed. Funding up to $250,000 with a variety of finance options to best fit your business needs.
Go to site
Lendio business loans
Finder Score: 4.8 / 5: ★★★★★
Lendio logo
$1,000
$10,000,000
Varies by lender
Operate business in US or Canada for 6 months or more, have a business bank account, minimum 520 personal credit score, at least $8,000 in monthly revenue.
Submit one simple application to potentially get offers from a network of over 75 legit business lenders.
Fundera business loans
Finder Score: 4.9 / 5: ★★★★★
Fundera logo
$2,500
$5,000,000
Varies based on lenders
$60,000+ of annual revenue, 550+ personal credit score, in business for 6+ months
Get connected with short-term funding, SBA loans, lines of credit and more.
Fora Financial business loans
Finder Score: 4.5 / 5: ★★★★★
Fora Financial logo
$5,000
$1,500,000
Varies
6+ months in business, $25,000+ gross monthly sales, no open bankruptcies
Get qualified for funding in minutes for up to $1,500,000 without affecting your credit score. Best for companies with at least six figures in annual revenue.
National Funding business loans
Finder Score: 4.6 / 5: ★★★★★
National Funding logo
$5,000
$500,000
Undisclosed
In business 6+ months and make at least $250,000 in annual sales. Other loan types have additional requirements.
Working capital loans and equipment financing, some high-risk industries may be eligible.
Go to site
American Express® Business Line of Credit
Finder Score: 4.4 / 5: ★★★★★
American Express logo
$2,000
$250,000
N/A
Minimum FICO score of at least 660 at the time of application, have started your business at least a year ago, and an average monthly revenue of at least $3,000
Access lines of credit for your small business even if you aren't currently an Amex customer.
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Types of business loans

The following are some of your options for traditional and alternative business loans.

TypeTypical loan amountsTypical term lengthsBest for
SBA Loans$13,000 to $5 millionUp to 25 yearsEstablished businesses with decent credit that don’t qualify for other types of funding
Equipment financingUp to 100% of the cost of the equipment3 to 10 yearsBusinesses that need heavy equipment or other expensive machinery
Term loansUp to $2 million1 to 10 yearsBusinesses with good credit looking for large loan amounts and predictable monthly payments
Business lines of credit$2,000 to $250,0006 months to 5 yearsBusinesses looking for immediate short-term funding or want a renewable lending source
Microloans$500 to $50,000Up to 6 yearsStartup businesses or women- or minority-owned firms
Invoice factoring70% to 90% of unpaid invoices1 to 3 monthsB2B companies with a lot of outstanding invoices
Invoice financing70% to 80% of unpaid invoices1 to 3 monthsB2B companies with a lot of outstanding invoices
Merchant cash advance$5,000 to $200,0003 to 12 monthsRetail businesses or others that have a lot of credit card sales

How to qualify for an alternative business loan

Alternative lenders typically look at your credit score, monthly or annual revenue and how long you’ve been in business.

  • Revenue. Most lenders want to see at least $10,000 in monthly revenue, but some may require more or less than that.
  • Credit score. Alternative lenders typically have more lenient credit requirements than banks, but most require at least 600 or more. However, some lenders will accept lower scores, and certain loans require no credit check at all.
  • Time in business. In most cases, you’ll need to be in business for at least six months to qualify for alternative loans, but some lenders may be more flexible if you meet other criteria.
  • Business checking account. You need an active business checking account to qualify for alternative business loans. Lenders typically require it to verify your banking activity, deposit your loan proceeds or take out automatic repayments.

How to apply for an alternative business loan

Doing your research and coming to the table prepared will help ensure your success in achieving loan approval.

  1. Determine your need. Define your purpose for the loan and how much you’ll need to achieve that goal.
  2. Assess your budget. Calculating your loan payments can help you decide the loan term that makes the most sense.
  3. Check your credit. Knowing your credit score can help guide you toward lenders that work with borrowers in your credit range.
  4. Compare lenders. Consider interest rates, fees and loan terms from multiple lenders to find the best deal. You should also research the lender’s requirements to make sure you meet its qualifications.
  5. Gather your documents. Alternative lenders may not require as much documentation as traditional banks, but you should still be prepared to submit tax returns, bank statements or other financial documents.
  6. Apply. Once you’ve found the right lender, you’ll most likely apply online and submit the required documents. With alternative loans, you could receive a decision in just a few minutes and funding within a day or two.

Frequently asked questions

What’s the minimum credit score to qualify for alternative business loans?

The minimum credit score to qualify depends on the loan type. For lending options like term loans and business lines of credit, you may need a credit score of at least 600 or more to qualify. Other alternative loans, such as MCAs, invoice financing or invoice factoring, may not care about your score if you meet other requirements.

Why avoid alternative lenders?

If you want to get the best rate — and your business meets the required qualifications — going to a bank for a loan may make more sense. You may also want to avoid alternative lenders if you prefer a more personalized experience because they operate pretty much entirely online.

Can I get an alternative business loan if I’m self-employed?

Many alternative lenders consider income from self-employment when determining loan approval. But you’ll still need to prove your income and may have to submit a few years of tax returns to qualify and meet other criteria. If you have trouble qualifying for a business loan, it might be easier to get a personal loan to fund your business instead.

Megan B. Shepherd's headshot
To make sure you get accurate and helpful information, this guide has been edited by Megan B. Shepherd as part of our fact-checking process.
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Written by

Writer

Lacey Stark is a freelance personal finance writer for Finder, specializing in banking, loans, investing, estate planning, and more. She has 20 years of experience writing and editing for magazines, newspapers, and online publications. A word nerd from childhood, Lacey officially got her start reporting on live sporting events and moved on to cover topics such as construction, technology, and travel before finding her niche in personal finance. Originally from New England, she received her bachelor’s degree from the University of Denver and completed a postgraduate journalism program at Metropolitan State University also in Denver. She currently lives in Chicagoland with her dog Chunk and likes to read and play golf. See full bio

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