Getting financing for your small business isn’t a matter of “if” but “when.” Sooner or later, your business is going to need capital, whether it’s to make it through a slow period or to expand.

That’s why, even if you’re not looking to take out a loan right now, it’s smart to look ahead to stay on top of what’s available. There are a lot of small business financing options available to a business owner looking for a small business loan, but do you know the differences between loan types? Are you aware of all the lenders offering them? Can you tell if an online lender or brick-and-mortar bank is better for your situation? 

So many questions go into finding a business lending solution. A good place to start may be identifying those traditional lenders that might be the best for small business loans. Research each to see if they have the bank loans best-suited for your unique growth plans. You may even see a few on this list that are new to you!

Best Banks for Small Business Loans

We at Nav have worked with a lot of lenders over the years, and when it comes to traditional lenders—AKA local and national banks—these consistently come to the top of the list.

• Chase
• Live Oak Bank
• Wells Fargo
• Capital One
• Bank of America

Chase Bank

It shouldn’t surprise you to see Chase leading the pack. It has one of the more robust credit offerings for businesses of all sizes, including those who need working capital, equipment financing, or commercial real estate loans. If big borrowing is your goal, this SBA lender offers plenty of SBA-backed options, including SBA 504 loans, which can connect you with a million or more for that new storefront or manufacturing plant. 

Not ready to go big yet? That’s OK, too. Chase’s line of credit program is a great way to access capital as needed, which you can borrow against as you need it to grow your business. 

Here are your business banking options with Chase Business:

• Checking
• Credit cards
• Lines of credit
• Loans
• Savings and CDs
• Merchant services
• Collections services

Live Oak Bank

Never heard of Live Oak Bank? You’re not alone. This SBA-preferred lender is completely online, with no physical branches to visit. What they do focus on, however, they do very well. Choose from SBA 7(a) loans or 504 loans.

You won’t find a lot of extra business lending programs here, but with SBA preferred status, Live Oak Bank can get you approved and on your way quicker than most. They also handle other government small-business lending programs, such as agricultural loans through the USDA. Don’t ignore what an online bank can do for you!

Here’s what you can get with Live Oak Bank:

• SBA loans (7(a) and 504)
• Agricultural loans
• Commercial loans
• Savings
• CDs

Wells Fargo

One of the big names in business banking, Wells Fargo has been handling consumer and business financial loans for a long time. With a full range of options, including equipment financing, short and medium-term loans, working capital loans, lines of credit, and business credit cards, this bank is perfect for someone who knows they need business financing but aren’t sure where to start. 

Wells Fargo also works with the SBA small business loans program! Extra perks can be found for existing customers; if you already use Wells Fargo for your personal checking account, business checking account, or savings account, it’s worth checking out. 

Wells Fargo has a lot to offer businesses looking for financial services:

• Checking
• Savings and CDs
• Commercial loans
• SBA loans
• Lines of credit
• Commercial real estate loans
• Credit cards
• Healthcare practice financing
• Merchant services
• Payroll services

Capital One

Capital One is a familiar name when it comes to business credit cards. That’s because it offers some startup business options that allow even those with less-than-excellent credit to get access to rewards credit cards with low or no annual fees. 

If you’re looking for a more traditional loan option, however, the bank can help there, too. It partners with the SBA, offering loans for various amounts in almost every industry. Other lending options, including equipment financing and lines of credit, can be just what you need to get to the next level of business. (One other solid perk of Capital One is that it does so much online! It’s ideal for someone who travels and wants a bank that will be everywhere they go.)

Here’s what you can get with Capital One:

• Checking
• Savings
• Escrow
• Credit cards
• Equipment and vehicle loans
• Lines of credit
• SBA loans (7(a) and 504)
• Real estate term loans
• Business installment loans
• Trade credit
• Merchant services

Bank of America

Bank of America has been more aggressively financing small businesses in recent years. With SBA loans and traditional business loans, lines of credit, and credit cards, it’s been giving a variety of solutions to small businesses poised for growth. 

Bank of America values its relationships with customers and is more likely to offer great rates if you have other bank account services with the company. 

Here’s more of what Bank of America offers:

• Checking
• Savings
• Secured and unsecured loans
• Lines of credit
• Credit cards
• Vehicle loan
• Commercial real estate loan
• SBA loans
• Franchise financing
• Payroll services

Types of Business Loans That Banks Offer

Many of the top banks got on our “best of” list because of the variety of funding options they offer. It’s a benefit to business owners to be able to walk into a bank branch, sit down, and spell out their needs in person—and have confidence they will get just the right lending product. 

Looking at the long list of loans, lines of credit, and financing options can be overwhelming, however. We advise getting to know a bit about all the different financing banks are likely to offer; it will make the search process much less stressful.

Term Loans

A business term loan is probably the most straightforward loan option. Term loans have a preset amount and a specific timeframe to repay the funds, with a monthly payment schedule that’s consistent throughout the term of the loan. 

Within this category, in addition to long-term loans like mortgages are what banks call medium-term and short-term loans. As the names suggest, each will give you a different timeframe to repay the loan.

With shorter-term loans, you need to make sure you understand the true dollar cost of the loan, which is not well-represented by APR for loans with a term under 12 months. A good rule of thumb to remember is that the shorter the term, the higher the periodic payment will likely be, but the less accrued interest you’ll likely pay.

Business Lines of Credit

A business line of credit is traditionally a preferred financing option for many small businesses. Rather than getting a lump sum, you can access the credit line as you need it, repay what you’ve borrowed, and access it again. What’s more, you only pay interest on the part of the credit line you use.  

A business line of credit may be a good way to augment occasional cash flow challenges. It has the flexibility of a credit card that you can borrow against whenever you need it. Just stay below your established credit limit, make on-time monthly payments, and watch your personal and business credit scores soar! 

You’ll pay anywhere from 7 to 36% for this type of financing. Just like credit cards, it will depend on your business credit profile, personal credit score, and how big the credit line is.

SBA Loans

The SBA isn’t really a lender but works with SBA-approved lenders. Loans backed by the Small Business Administration vary in length, amount, rate, and intended purpose. The most common SBA loans include the following:

• SBA 7(a) Loan. Consider this for working capital (this is the most flexible SBA loan program). This general-purpose business loan comes in amounts up to $5 million with low rates and origination fees. 
• SBA 504 Loan. This is a good option for purchasing real estate or buying other fixed assets, with an upper limit of $20 million. Like other SBA-guaranteed loans, you’ll need collateral and a personal guarantee for this, as well as excellent credit. If approved, your rates will be considerably low. 
• SBA Microloans. Not every business needs to borrow millions. That’s where these smaller microloans come in. With a loan amount cap of $50,000, these loans are for startups or those just launching that have yet to demonstrate much annual revenue. Not all banks offer these, even if they do participate in other SBA programs. For a young business that can leverage a relatively small amount of borrowed capital into a big result, these loans could be a good fit.
• SBA Express Loans. Like the 7(a) program but need your money fast? You may qualify for an express loan, which gives you a quicker response. Find out if you’re approved in just days instead of months.

With the exception of the Express Loans, which are often approved within a few days, most SBA loans have a lengthy application and approval process that require financial reports, a detailed business plan, cash flow statements, tax returns, and more. They aren’t ideal for anyone needing money in a few days—or even weeks. Expect to spend up to a month or more demonstrating your ability to repay and going through the loan application process. Still, the hassle can be worth it since the interest rate you pay will likely be one of the lowest of all your loan options.

If you want to get started with an SBA loan, find a lender through the SBA LenderMatch program, or contact any of the above banks directly. Most are partners in the SBA programs! 

Equipment Loans

Also known as equipment financing, these loans are self-explanatory. Get help paying for new machinery, manufacturing tools, or even commercial restaurant stoves and fridges. 

The rates on these loans are going to depend on your credit profile, ranging from 8 to 30%, but offer longer repayment terms than some short-term loans. These loans are considered secure since the equipment being financed is also the collateral for the loan.

Long-Term Real Estate Loans

If you’ve got a mortgage for your home, you already know how these work. Business real estate loans are considered long-term financing because they typically include longer repayment terms to help with the higher costs of purchasing real estate. Expect to get lower rates for commercial property purchases, but prepare to need plenty of cash on hand for a down payment. Banks like to see a willingness to invest upfront in the form of a 10-20% down payment; like buying a home, the more you can provide, the better rates you are likely to receive. 

If you find yourself unable to get a more traditional long-term real estate loan that many banks offer, going through the SBA’s 504 loan program may be a good option. The SBA is often willing to work with businesses that haven’t been able to get funding elsewhere but demonstrate a strong annual revenue and have a very good or excellent credit score. 

Traditional Banks vs. Online Lenders

When it comes to getting cash for your business, it may seem that online lenders or other alternative lenders and their simplified loan applications and shorter approval times are too good to be true. In fact, they can be a suitable option for funding, especially if you need a decision in days—or minutes! 

What’s the catch? Unlike traditional bank loans, online lenders use a different set of criteria to evaluate creditworthiness, meaning that if you don’t qualify for a loan at the local bank, an online loan could be an option for you. They are making access to capital easier and faster, but that access will likely come with higher fees and APR—although that isn’t always the case for borrowers with an excellent credit profile.

Instead of taking weeks or months to get a traditional bank loan, an online loan often takes only a day or two, making this faster access to capital worth any additional cost. Be sure you understand the repayment terms of a loan before you sign on the dotted line, no matter where you apply. 

Alternatives to Bank Loans for Small Businesses

If you have bad credit or haven’t been in business long enough to qualify for the options we’ve already discussed, check out alternative business lenders that offer competitive rates with less stringent requirements. There are so many financial institutions you can qualify for financing with!

Business Credit Cards

Business credit cards work a lot like personal credit cards. The perk of business cards over personal cards, however, is that your good repayment history will help you build your business credit profile. Additionally, you can often get free cards for your employees, and their spending can help accumulate points and cash back rewards that you can later redeem for items for your business. 

Expect to pay the same kind of higher rates that personal cards charge, anywhere from 10 to 28%. FYI: the better the rewards, the higher the annual fee tends to be. Shop around to get the best business credit card from your bank, and consider upgrading as your annual revenue grows. 

Merchant Cash Advance

New businesses may not qualify for traditional loans, but if yours can demonstrate steady sales revenue, you may qualify for merchant cash advances. These aren’t loans but instead are an advance on future sales. You’ll repay the advance daily or weekly from your debit and credit card sales.

Secured Business Loans

If you have bad credit and don’t qualify for unsecured business loans, you may be able to take out a secured business loan. In this case, you put down collateral against the loan. Why? If you are unable to pay the loan off, the lender can take that collateral (perhaps equipment or a vehicle) to cover your debt.

What is the Easiest Bank to Get a Small Business Loan With?

There’s no easy answer to this question, as it will depend entirely on what you are looking for and your qualifications. Online lenders are usually more open to those who might not qualify at the bank, although you’ll pay more for your loan.

If you have good credit, you have far more options and will get better loan terms. If your credit could use some work, consider postponing applying for a loan and spending time rebuilding your credit by paying down debt and making on-time payments.

How to Qualify for a Small Business Loan from a Bank

Once you narrow down the list of loan products that you’re interested in, you’ll want to eliminate any you don’t qualify for. Most traditional loans require you to be in business for at least two years and have credit score requirements (SBA loans often want you to have FICO scores of 680 or higher).

You may also need to meet a certain annual revenue, so read the fine print with the lender you’re considering to make sure you meet it.

What You Need To Apply for a Small Business Loan from a Bank

Once you’ve decided which bank or alternative lender you want to apply with and know which type of loan you want, gather what you’ll need for the in-person or online application.

Traditional lenders like banks may want more detailed financial statements, tax returns, and profit and loss statements, while an online lender may just want a few details about what your annual revenues are.

You’ll need to provide details for your business bank account so funds can be deposited once you’re approved for a loan.

Small Business Loans Help You Grow

Smart small business owners do their homework on lending products and the best banks for small business loans in advance of needing the money. Follow suit, and you’re sure to find the best option for your business.