LLC Loans: 5 Ways to Finance Your Limited Liability Company
Last updated Dec. 18, 2024
Looking to fund your limited liability company (LLC)? Whether you’re just starting out or have been in business for a few years, there are a variety of loan options available to you.
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Best LLC Business Loans
Bank loans
Best for: Established LLCs with excellent credit
Estimated APR: 6.5% to 12.5%
Min. credit score: 700+
SBA loans
Best for: Long-term, affordable financing if you’re unable to get a bank loan
Estimated APR: 11% to 16% (variable based on the Prime rate)
Min. credit score: 690+
Online term loans
Best for: Fast access to funding; newer LLCs
Estimated APR: 6% to 99%
Min. credit score: 570+
Business lines of credit
Best for: Working capital needs; seasonal LLCs
Estimated APR: 10% to 99%
Min. credit score: 600+
Invoice financing
Best for: LLCs with capital tied up in unpaid invoices
Estimated APR: 10% to 79%
Min. credit score: Often no set minimum
Can an LLC Get a Bank Loan?
Bank loans are one of the best ways to fund any business. Banks offer the most ideal loan amounts and terms, and often the lowest interest rates.
To borrow money from a bank, however, your LLC will have to meet top qualifications. Banks require that you have excellent credit and strong business financials. Many also want to see that you have at least two or more years in business.
Additionally, banks have lengthy application and approval processes with extensive documentation. So these LLC loans are not your best choice for fast financing.
Nevertheless, if you can access a bank loan, it will be the most affordable form of funding for your LLC.
Where an LLC Can Get a Bank Loan
Big banks like Bank of America, Chase, Citibank, U.S. Bank, and Wells Fargo all issue small business loans.
If you have a relationship with your community or local bank, however, your best bet is to start by working with them to see if they can help you get financing for your LLC.
Can an LLC Get an SBA Loan?
If you can’t qualify for a bank loan, an SBA loan is likely the best alternative for long-term, low-rate financing. Guaranteed by the SBA and issued by lending partners (like banks and credit unions), SBA loans can be used for a variety of business purposes.
The most popular SBA loan program, the 7(a) loan program, offers loans of up to $5 million with terms of up to 25 years. Interest rates typically range from ~11% to ~16%, although rates vary based on the market Prime Rate, in addition to your business’s qualifications.
Like bank loans, SBA loans are slow to fund and require strong qualifications. Many SBA lenders want to see at least two years in business and credit scores of 690 or higher.
If you’re looking for an LLC startup loan, however, the SBA microloan program may offer greater flexibility.
Where an LLC Can Get an SBA Loan
Most SBA lenders are banks and credit unions. Hundreds of banks across the U.S. participate in the 7(a) loan program, including well-known institutions like Bank of America, Chase, and Wells Fargo.
The SBA also publishes a report of its 7(a) and 504 lenders and related data, which is regularly updated. You can filter the report to see the banks with the highest approval counts, among other criteria. This lender report includes more regional options like Huntington National Bank, as well as online banks like Live Oak Bank.
Online Term Loans for an LLC
Online term loans are one of the most versatile options for financing your LLC. These loans can have repayment terms as short as three months and as long as five years.
Online loans are quick to fund and offer streamlined applications, often with minimal documentation. Online lenders also have more flexible requirements—meaning new LLCs and even those with bad credit may be able to qualify.
The better your qualifications, however, the better interest rates you’ll be able to receive. And although rates can start as low as 6% on these LLC business loans, they can reach as high as 99%.
Where an LLC Can Get an Online Term Loan
If you have strong credit and at least one to two years in business, online lenders like iBusiness Funding and Altbanq are worthwhile options for affordable LLC loans—and fund faster than bank or SBA loans.
For less established businesses and/or owners with poor credit scores, you might consider lenders like Fora Financial and National Funding. These online lenders offer short-term loans and can work with newer LLCs, those that have been operating for at least six months.
Business Lines of Credit for an LLC
A business line of credit works differently from a traditional term loan. With a business line of credit, you receive access to a pool of funds and can draw from it when you need funding.
You only pay interest on the funds you draw—and in most cases, once you’ve repaid what you’ve borrowed—your line resets to the original amount. Business line of credit amounts can range from $1,000 up to $5 million. Repayment terms typically fall between six and 24 months.
Lines of credit are ideal for working capital needs, as well as emergency funds. If you run a seasonal LLC, this might be a great type of financing to keep in your back pocket.
Where an LLC Can Get a Business Line of Credit
Some banks and SBA lenders offer business lines of credit, and these products have similar qualifications and application processes to standard bank loans. Online lenders also provide lines of credit—with more flexible requirements and faster access to funds.
That said, if you can qualify, a business line of credit from a bank will almost always offer more affordable interest rates.
Invoice Financing for an LLC
For LLCs that have capital tied up in unpaid invoices, invoice financing is a fast and simple way to alleviate cash flow issues. With invoice financing, you’ll receive an advance of capital in exchange for your unpaid invoices—up to 90% of the value of the invoices—and receive the remaining amount (minus fees) when the invoices are paid.
Because invoice financing is self-securing (the invoices themselves serve as collateral), this type of LLC business loan is often easier to qualify for compared with other forms of funding.
Invoice financing is ideal for business-to-business companies, as well as seasonal businesses, and can be a particularly affordable solution if your customers pay their invoices on time. Fees often range from 1% to 5% of the total value of the invoice—and are charged for each week it takes the customer to pay.
Where an LLC Can Get Invoice Financing
A range of online lenders offer invoice financing, with simple applications and fast funding times. Some companies to explore include AltLINE and FundThrough.
How to Get an LLC Business Loan
To get a loan for your LLC, you can follow these simple steps:
- Decide which of these types of financing is best suited for your needs. Think about how much capital you need, what you need the funding for, and how much debt you can afford.
- Evaluate your eligibility. Consider your credit score, time in business, and annual revenue—as well as other key business financials.
- Search for the right lender. You’ll want to find a reputable lender that both offers the product you want and has requirements you think you can meet.
- Gather the necessary documents to submit your loan application. Typically, you’ll need to provide basic information about yourself, your business, as well as business bank statements, financial statements, and tax documents.
- Submit your application. The lender will review your application and follow up with questions if necessary. Once the underwriting process is complete and you’re approved, you’ll receive a loan agreement to review and sign. Read it carefully and thoroughly before signing it.
Use our guide for more information on how to get a business loan.
Fundera Can Help
Curious to see what business loans your LLC qualifies for? Fill out one simple application with Fundera, and we’ll show you your loan options. This won’t impact your credit score, and there’s no obligation to get your funding through one of our partners.
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