The best small business loans for $100,000 or less

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Many business owners need financing to start their business idea or expand to new products or a new customer base. But most small businesses don’t need hefty sums to achieve those goals. According to the 2023 Report on Employer Firms, 71 percent of businesses with employees have outstanding business loan debt of $100,000 or less.

You can find small business loans for under $100,000 from nearly any lender. But you may choose a lender based on the loan offer they’re willing to give you or their leniency toward your credit history. For example, traditional banks are more likely to give low-interest loans to those who can qualify, while online lenders tend to be more accessible to borrowers with lower revenue and credit scores.

Here’s a look at seven of the best small business loans for under $100,000, including their loan amount ranges and business requirements.

Best small business loans under $100,000

SBA loans: Best for affordable business loans

SBA loans are business loans partially guaranteed by the Small Business Administration and offered through SBA-approved traditional and online lenders. SBA loans are ideal because they’re offered to businesses that don’t qualify for traditional financing.

The SBA also sets maximum interest rate limits that lenders can charge — currently up to 16.5 percent. These limits top out lower than many business owners would find with alternative business loans. You can choose from several loan programs matched to your business financing needs, including:

• SBA 7(a) loans: Used for general business expenses, loans up to $5 million
• SBA 504 loans: Used for real estate and equipment financing, up to $5.5 million
• SBA CAPLines: SBA-backed business lines of credit to cover expenses from specific work or construction projects or seasonal cost hikes

• How to qualify for SBA business loans

  • For-profit U.S. business
  • Be a small business by SBA size standards
  • Unable to qualify for non-SBA business loans
  • Financially able to repay the SBA loan
  • Meet lender credit, time in business and revenue requirements

SBA Microloans and Community Advantage loans: Best for underserved communities

To close market gaps and serve businesses at a disadvantage for business loans, nonprofit and community-based lenders can provide SBA microloans or Community Advantage loans. These loans can be especially helpful to underserved communities, including women, minorities, immigrants and refugees.

SBA microloans often accept low personal credit scores like 500 or don’t have a credit requirement at all. They stick with small loan sizes maxed out at $50,000 and often require collateral or a personal guarantee stating that you’re held personally responsible for paying back the loan.

• How to qualify for SBA microloans and Community Advantage loans

  • For-profit, U.S.-based business
  • Shows ability to repay the loan
  • Personal credit scores in the 500s or up
  • Live in specific communities like low-income or minority areas
  • Potentially available for mentoring or training

OnDeck: Best for short-term business loans

OnDeck makes a point to offer two short-term business loans — business lines of credit and term loans — to businesses with fair credit and little experience. Small business owners need a personal credit score of 625 and just one year in business to get approved. And both loans offer short terms ranging from 18 to 24 months. While still short, its 24-month terms beat out many lenders that offer maximum loan terms ranging from six to 18 months.

You can also finance loans with starting limits of $5,000 for a term loan and $6,000 for a business line of credit. These low loan limits help business owners cover small expenses that they expect to pay back quickly. The tradeoff to OnDeck’s accessibility is that it charges high interest rates starting at 27.30 percent. Other lenders start in the 8 percent range as long as you have strong credit.

• How to qualify for OnDeck business loans

  • 1 year in business
  • Minimum of $100,000 in annual revenue
  • Minimum personal credit score of 625
  • Business bank account
  • Not in North Dakota

Wells Fargo: Best for bank business lines of credit

Wells Fargo is a force in the banking and business loan industry, particularly when offering business lines of credit. Its unsecured BusinessLine line of credit offers limits between $10,000 and $150,000 to businesses with two years of experience. If you’re a startup with strong credit, you could qualify for an SBA-guaranteed business line of credit up to $50,000.

Both the BusinessLine or SBA-backed Small Business Advantage line of credit immediately enroll you in Wells Fargo’s business rewards program. They come with a Mastercard to directly access money from available credit.

Outside these two options, well-established businesses with revenue from $2 million can get its Prime Line of Credit. This line offers credit limits as high as $1 million. While the Prime Line of Credit offers higher limits than the norm, its other two options provide less than the usual $250,000 for a line of credit.

• How to qualify for Wells Fargo business lines of credit

  • Personal credit score of 680 or higher
  • Startups can qualify for (SBA-backed) Small Business Advantage Line of Credit
  • Its other credit lines need at least two years in business
  • Collateral or personal guarantee required

Fundible: Best for bad credit business loans

Fundible combines attractive loan options, features and accessible requirements all in one spot, either through direct lending or partners. The lender seeks to find financing even for business owners with personal credit scores in the 450 to 500 range, according to a Fundible spokesperson.

To get a bad credit business loan, Fundible offers several types of loans, including equipment financing or invoice financing options up to $10 million, bridge loans up to $1 million or its business line of credit for up to $500,000. Starting rates are low, but make sure to check with several lenders to make sure you’re getting the most affordable loan.

Fundible’s credit criteria is relaxed even by online lending standards. Most online lenders require a minimum personal credit score of 600, and traditional lenders stick to a minimum of 670 and up.

• How to qualify for Fundible business loans

  Minimum criteria:

  • 450 personal credit score
  • 6 months in business
  • $100,000 in annual revenue

  Ideal criteria:

  • 600 personal credit score
  • $200,000 to $250,000 in annual revenue

SMB Compass: Best for low-interest business loans for good credit

SMB Compass has a lineup of business loans provided to businesses at varying stages — but its best interest rates are reserved for strong credit borrowers. For example, its term loans start charging interest at 6.99 percent, and you can get loans anywhere from $25,000 to $5 million with terms up to 25 years. Business lines of credit start at a similar 7.99 percent interest rate with credit limits from $10,000 to $5 million.

While not unheard of, these low-interest business loans aren’t usual in the online space, with many lenders starting interest rates in the double digits.

But each loan has different minimum credit and lending requirements. Term loans require personal credit scores of 680, six months in business and $500,000 in annual revenue. A line of credit requires a 600 credit score, $100,000 in annual revenue and two years in business.

• How to qualify for SMB Compass business loans

  Requirements vary by loan type, but its minimum criteria is:

  • 6 months in business
  • $100,000 in annual revenue
  • Personal credit score of 600

Accion Opportunity Fund: Best for low-interest business loans for bad credit

Accion Opportunity Fund creates opportunities to fund small businesses that struggle to qualify for loans from traditional lenders — and it does so with low-interest loans. Small business owners can now get loan amounts of up to $250,000 with APRs from 8.49.

As a nonprofit, it aims to strengthen small businesses through free mentoring and online education. It welcomes minority business owners, including individuals with only an Individual Taxpayer Identification Number.

• How to qualify for Accion Opportunity Fund business loans

  Accion Opportunity Fund focuses on lending to businesses that don’t qualify for traditional business loans. The lender proudly approves people of color, women and low-to-moderate income business owners, which make up 90 percent of its clientele. The lender states it looks at more than just your credit score and doesn’t state a credit score requirement. But if you have a low credit score, you may need to have consistent cash flow and several years in business.
  
  The lender states it looks at more than just your credit score and is willing to consider small business owners with credit scores of 550 and above. But if you have a low credit score, you’ll need to have consistent cash flow and several years in business.

Credibly: Best for working capital

Credibly’s specialty is working capital loans provided directly through the fintech lender, though you can get other loans through its lending network. You can tap its working capital loan to borrow up to $600,000 with quick repayments from six to 24 months. Another choice is its merchant cash advance (MCA), which you repay based on your future expected debit or credit card sales. Its terms range from three to 24 months.

But the downside is that Credibly charges factor rates instead of interest, a fee that gets applied to the entire loan. Interest rates get charged on the principal amount as you go, so you can avoid interest by paying off the loan early.

• How to qualify for Credibly business loans

  • At least 3 months in business
  • Personal credit score of 500
  • $15,000 in monthly revenue ($180,000 annually)
  • Business bank account showing revenue
  • No bankruptcies within 3 years

Is it hard to qualify for a $100,000 business loan?

Some lenders make it difficult to qualify for a $100,000 business loan. Traditional lenders like banks and credit unions prefer applicants with good-to-excellent credit, at least two years in business and an annual revenue of around $150,000 to $250,000. Online lenders have less strict requirements than traditional lenders. They may approve loans for companies with only six months of operation if they meet the lender’s credit score and revenue criteria. Most lenders also ask for collateral to help secure the loan or ask you to provide a personal guarantee. But to improve your chances of approval, it helps to provide good financial standing and collateral.

What are the credit score requirements for a $100,000 business loan?

Credit score requirements for bank loans and online lenders vary. You’ll usually need a credit score of at least 680 to qualify for a bank loan. But online lenders are typically more lenient: Some may approve loans for individuals with a credit score as low as 500, though most look for a personal credit score in the 600 range.

How to get a business loan for $100,000 or less

To get approved for a business loan for $100,000 or less, lenders want to see that your business can successfully handle the loan you’re applying for. Follow these steps to help you avoid getting denied a business loan.

Choose a business loan related to your funding need

First, consider how you plan to use the funding so you can match that purpose to the right loan. Because different loans have different lending requirements, the type of loan can affect your odds of approval. Also, consider the kinds of assets you have and how you might use those to acquire a business loan.

Here’s a look at the different types of loans you might choose:

• Business lines of credit: Reusable form of funding that you can withdraw from repeatedly, typically with lenient requirements like a year in business and $100,000 in annual revenue
• Equipment loans: A loan secured by the equipment being financed as collateral, making it easier to qualify for and get lower interest rates
• Term loans: A loan with a set repayment schedule used for a defined purpose
• Asset-based or accounts receivable financing: A loan secured by assets like real estate, unpaid invoices or even intellectual property
• Merchant cash advances: An alternative business loan approved based on debit or credit card sales, usually used as a last resort when you can’t secure traditional financing

Find the lender with the best loan offer

Once you choose the loan that best matches the reason for your business financing, you can compare the best small business loans. Search for lenders offering low-interest loans, long repayment terms and any desirable features, such as having no prepayment penalty for paying the loan off early.

Most online lenders let you prequalify to see your loan offer without a hard pull on your credit. Also, consider lenders with excellent customer experience, providing personal loan specialists to help you choose a loan and complete your application.

Prove that you meet financial requirements

Every lender you compare will have different financial requirements for business loans for $100,000 or less. At this funding amount, online lenders may keep the requirements light, such as requiring one year in business or $100,000 in annual revenue.

Lenders are looking for plenty of revenue to show that you can handle repayments. You can submit an in-depth business plan to improve your chances of success. That way, lenders see how you strategically plan to grow and how much revenue you expect to make in the near future.

Fit payments in your budget

Getting approved for your small business loan is only one part of your business financing journey. Before signing the loan agreement, make sure you can manage payments and fit the loan amount into your business budget.

You can use a business loan calculator to estimate payments even before you apply. Then, keep tabs on your overall budget and debt obligations and adjust your expenses as your business revenue rises and dips seasonally.

Alternatives to business loans under $100,000

It’s not in every business’s best interest to get a conventional loan, and not everyone will qualify. Here are some alternatives to consider.

Business credit cards

Business credit cards can provide a recurring source of funds for expenses under $100,000. You don’t even need a formal business structure to apply, though the best business credit cards need strong credit.

Compared to business loans, business credit cards are better for building business credit since you’re more likely to meet its less strict eligibility requirements. You may be able to qualify with little to no business revenue and can earn cash back or travel rewards. You can also avoid interest charges if you pay your balance in full each month.

Business grants

A business grant is a chance to get free funding for your business. But you have to compete with other qualified businesses when applying. You have a better chance of getting awarded the grant if you narrow down to grants within your industry or demographic — that way you’re competing with fewer businesses.

For example, many nonprofits or private organizations offer grants to minority business owners. Other groups with business grants aim specifically at a community:

Crowdfunding

You can also raise business funding through a crowdfunding campaign. Crowdfunding is fundraising money with no strings attached or with a small gift awarded to individuals who donate or invest in your business. You start by raising awareness about your business and funding needs through a crowdfunding platform like Kickstarter, Indiegogo or SeedInvest.

In an investing format, investors may want to see the progress the financing has allowed your business to make. Some platforms like Kiva mesh crowdfunding with peer-to-peer lending, letting you finance a business loan through individual investors. Kiva doesn’t charge interest for its loans, but other platforms might.

Bottom line

Business loans for under $100,000 can fund a variety of projects, including expanding your products or services or buying new equipment. This loan amount is common with lenders. To find the best small business loan for you, think through the type of funding and qualities you need from the lender so you can narrow down your options.

For example, if you plan to pay off the loan quickly, you might want a short-term business loan or a loan with no prepayment penalty. You should also consider how much of a payment your business can manage to request a reasonable loan amount.

Frequently asked questions

• How hard is it to get a $100,000 business loan?

  Business loans of $100,000 or less are sizable, so lenders will want to see ample proof that you can repay the loan. Minimum requirements for loans of this size can vary but may be relaxed, such as requiring a low annual revenue of around $100,000. Lenders may look at your business’s debt service coverage ratio (DSCR) to compare your annual net income versus debt payments. They often look for a DSCR of 1.25 or higher, showing plenty of revenue well above your debts.

• What credit score do you need to get a $100,000 business loan?

  Many fintech lenders accept personal credit scores of 600 and possibly lower for business loans under $100,000. But you typically need strong credit with traditional lenders, such as credit scores of 670 or higher. Some banks provide startup or credit-building business loans. For example, Bank of America’s cash-secured business line of credit approves limits as low as $1,000. You need a $1,000 security deposit, but startups with as little as $50,000 in annual revenue are welcome.

• How can I get $100,000 to start a business?

  There are several ways to get $100,000 to start a business. If you have a great idea and a sound business plan, you may be able to attract investors. You may also want to consider taking out a small business loan. Depending on your credit score and the type of loan, there are many lenders that offer startup business loans. If you have trouble getting a business loan, the U.S. Small Business Administration offers low-cost SBA loans to help businesses get up and running.

• Is it hard to get a $50,000 business loan?

  Getting approved for a $50,000 business loan is easier compared to larger business loans. This loan size can be considered a microloan. Small loans pose less risk to the lender since they stand to lose less if you fail to make payments. While lenders may relax requirements when applying, they still expect to see that your business can comfortably manage the loan.