The 13 Best Commercial Lenders

Where can a business owner even begin their hunt for a small business loans?

If you were searching for financing say, 10 years ago, we’re willing to bet that you’d start at the bank.

But these days, traditional finance institutions aren’t the only players in the game.

There are more alternative and online commercial lenders in the market than ever before—meaning small business owners have a long list of commercial lenders, or business loan providers, to pursue.

Here are the top commercial lenders to consider:

For SBA loans:

• Wells Fargo
• BayFirst

Medium-Term Loans:

• Fundation
• OnDeck Capital

Short-Term Loans:

• LoanBuilder

Equipment Financing

• Currency Capital
• Funding Circle

Invoice Financing

• Fundbox

Line of Credit

• OnDeck Capital

Merchant Cash Advance

• CAN Capital
• Rapid Finance

These days, it’s tough to discuss commercial lenders without alternative lending coming up into conversation. Alternative lending means online, non-bank commercial lenders.

For small business owners today, securing financing from a bank is difficult, because many banks see small businesses as a risky investment, and only want to lend to the best-of-the-best borrowers. Plus, commercial banks say that lending to small businesses takes as much time and effort as lending to bigger, more established businesses—but with a smaller payoff.

And after the 2008 recession, banks started giving even fewer business loans to small business owners in need of capital. The decrease in funding from these commercial lenders left many small business owners in need of financing. Fortunately, a new type of lender stepped in to fill this market need.

Alternative commercial lenders entered the space to provide easier access to business financing. These commercial lenders still give out term loans and lines of credit like banks do, but they also offer small businesses new loan products—like invoice financing, equipment loans, or small business startup loans.

Now that you understand what traditional and alternative lenders are, let’s look at some lender options for your small business.

We’ll start by familiarizing you with the different commercial loan types. Then, we’ll offer up a few different commercial lenders for each type of financing.

Let’s get started.

SBA loans are traditional term loans guaranteed by the government.

By guaranteeing a portion of these loans, the Small Business Administration (SBA) minimizes risk for commercial lenders—and gives business owners access to better loans than they’d otherwise qualify for. You can expect the following ranges of terms with SBA loans:

Loan Amounts: $5,000 to $5 million
Loan Term: Five to 25 years
Interest Rates: Starting at 5%
Speed: As little as 30 days

The SBA has three types of commercial lending programs: the SBA 7(a) program, the CDC/504 program, and the SBA microloan program. Each of these commercial loans has their own distinct terms and uses.

While SBA loans can be easier to qualify for than traditional term loans from a bank, the bar is still high. You need to have strong credit and a profitable business to qualify for the 7(a) or 504 loans. The microloan program has lower requirements but you still need to demonstrate sufficient cash flow.

If you’re trying to get an SBA loan, consider these commercial lenders:

With a traditional term loan, or what we sometimes call a medium-term loan, you’ll be given a lump sum of capital to meet your financing needs. You’ll pay your lender back, plus interest, over a set repayment period. Term loans will typically carry the following ranges of terms:

Loan Amounts: $25,000 to $500,000
Loan Term: One to five years
Interest Rates: 7% to 30%
Speed: As little as two days

If you need a pretty large amount of capital—to meet a variety of financing needs—and you have time to wait for your small business loan, a medium-term loan is a great option for you.

You’ll need to meet commercial lenders’ minimum standards ($75,000 in revenue, 620 credit score, and one year in business), but if you do, you’ll score a loan with a long term and low interest rate.

Here are good commercial lenders for medium-term loans:

Short-term loans are like medium-tern loans, but with shorter repayment terms.

As a result of their short repayment terms, short-term loans will come with less ideal terms, which will usually fall within the following ranges:

Loan Amounts: $2,500 to $250,000
Loan Term: Three to 18 months
Interest Rates: 14% and up
Speed: As little as two days

If you just need a small amount of capital—and you don’t have the time to wait around for it—short-term loans are great financing solutions.

As a business loan for bad credit, a short-term loan is a good option for business owners who don’t qualify for a lot of other financing solutions.

If you need capital to finance the purchase of an expensive piece of equipment, then equipment financing is a perfect option for you.

With an equipment loan, you can finance up to 100% of the equipment you’re buying, and that financing will carry the following terms:

Loan Amounts: Up to 100% of the equipment value
Loan Term: The expected life of the equipment
Interest Rates: 8% to 30%
Speed: As little as two days

If you don’t have the cash on hand to pay for your business’s equipment upfront, this can be an ideal solution.

Plus, equipment loans are collateralized by the equipment itself, which makes them easier loan products for small business owners to qualify for.

If you’re always waiting on your customers to pay your invoices, you should consider invoice financing.

With invoice financing, commercial lenders can advance you cash for your outstanding invoices right away with the following terms:

Loan Amounts: About 50% to 90% of the total invoice amount
Loan Repayment: Typically until your customers pay their invoice
Factor Fees: About 3% plus an additional weekly percentage until invoice is paid
Speed: As little as one day

Invoice financing is a great option for business owners who suffer from cash flow shortages when their customers are slow to pay.

Remember, though, these commercial lenders will collect fees on the remaining part of your invoice value they hold in reserve, meaning you won’t get back the full amount you’re owed by your customers.

With a business line of credit, you’re given access to a pool of funds that you can draw on whenever you want or need to. You’ll only pay interest on what you draw, and once you’ve paid in full, your credit line goes back to its original amount. Here are the terms that business lines of credit typically come with:

Loan Amounts: $10,000 to over $1 million
Loan Term: Six months to five years
Interest Rates: 7% to 25%
Speed: As little as two days

A line of credit is one of the most flexible loan products out there for small business owners—they can just sit there in your back pocket, available for you to use whenever.

With a merchant cash advance, commercial lenders will advance you cash to meet your financing needs.

You’ll pay merchant cash advance companies back by offering them a slice of your daily credit or debit card sales. Merchant cash advances will usually come with the following ranges of terms:

Advance Amounts: $2,500 to $250,000
Repayment: Automatically deducted each day through your merchant account
Factor Fee: 1.14 to 1.18
Speed: One week

Merchant cash advances are attractive to business owners who don’t qualify for other loan products and need capital quickly. But as far as small business loans go, merchant cash advances are expensive loan products. For this reason, they really should only be considered as a last resort.

Now that we’ve given you a variety of different traditional and alternative commercial lenders to choose from, you might be wondering what the difference is, and how do you know which one to work with.

While both alternative and traditional commercial lenders can provide small business loans, there are definitely some marked differences.

Allow us to explain.

Alternative commercial lenders haven’t totally out-competed big banks—commercial banks are still the most common place a business owner will look for a loan.

But, by opening up credit for small business owners who need financing, these alternative commercial lenders play a valuable role in the lending industry.

And when you add the two types of lending together, you get a long list of commercial lenders that can meet your financing needs.

As you can now tell, whatever your business needs, there’s a commercial lender out there who can provide it.

Now that you know what all your options are, all you need to do is apply. It’s in your best interest to apply to several lenders so you can compare terms and find the best solution for your business.

Handling all those business loan applications on your own can be a huge time commitment; however, if you work with an online marketplace like Fundera, one application is all it takes to see your loan options. Plus, our loan specialists will walk you through the process, let you know what documentation is required, and will help you compare your offers.