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When you’re a new business looking to expand your reach, one of the first issues you’ll run into is funding. Oftentimes, small business owners don’t have the cash themselves to fund an expansion project, and even the most robust crowdfunding platforms can only procure so much working capital.

In these cases, businesses funding options are limited to debt. And while it may be tempting to put it all on the business credit card, you can afford to be picky about which debt you take on. Here are a few of our top picks for small business expansion loans in 2022.

What are the best small business loans in 2022?

When it is time to look for a business loan, here are the three places that you should start first:



Learn MoreOn OnDeck’s Website

OnDeck is first on this list because of its desire to build a longtime partnership with business owners. Running a business usually requires more than just a single loan. You’ll likely need to take out a few loans or open a line of credit. Fortunately, OnDeck offers both options:

  • Loan amounts range from $5,000 to $250,000 and come with repayment terms of up to 24 months.
  • Lines of credit come with limits between $6,000 and $100,000 and a 12-month repayment term that resets each withdrawal.

One of the best things about OnDeck is that you can apply for a loan and receive a decision within the same day. As if that weren’t enough, you can expect to see the funding deposited into your bank account the same day you get approved. 

The downside of OnDeck is that the interest rates start pretty high and range from 29.9% to 97.3% for some financing options. However, repeat borrowers typically receive significant discounts on interest rates and fees over time.

There are a few requirements necessary to apply for OnDeck financing:

  • You need to open a business checking account with OnDeck.
  • A personal credit score of at least 600.
  • No bankruptcies within the last two years.
  • The business must be in operation for at least a year.
  • The company must have annual gross revenue of at least $100,000.

OnDeck has some limitations on the types of industries it will lend to and doesn’t offer any money to a business located in North Dakota, South Dakota, or Nevada.



Learn MoreOn Lendio’s Website

Lendio can be an excellent option for business finances and makes a strong push to be first on this list. 

Lendio isn’t a financial institution by definition. Instead, it’s an online marketplace that connects borrowers with lenders to different banks or online lenders. Through this process, Lendio makes it possible to easily apply for business loan programs, lines of credit, merchant cash advances, invoice factoring, commercial mortgages, equipment financing, and other financing options. 

The downside of Lendio being a marketplace is that there isn’t much information regarding the terms. The interest rates and limits can vary significantly between the lenders and your financial details. 

You could wind up with an exceptional interest rate or an insulting one. There’s just no way to know. The good news is that it only takes about 15 minutes to apply. You would review your offers, accept the one you want, and receive your funds within 24 hours. 

Lendio doesn’t have many requirements as its job merely introduces you to lenders with their qualifications. However, Lendio stipulates a credit score of at least 560 and allows you to be in business for at least six months. It’s possible that using Lendio can result in hard credit inquiries, so make sure that you read the fine print just to be safe.



Learn MoreOn BlueVine’s Website

Bluevine might be third on this list, but the difference is microscopic. Bluevine might be the best for small business owners based on their financing needs. 

The main reason why Bluevine is so low is that it doesn’t offer traditional loans or invoice factoring. Instead, you’ll have to apply for a line of credit that can be used as needed. 

The limit for your business line of credit can range between $6,000 and $250,000, and you’ll have the choice between two loan options:

  • The Flex 6 payment structure requires weekly payments over 26 weeks. After 45 days of payments, you can be eligible for a credit line increase.
  • The Flex 12 payment structure requires monthly payments over 12 months. After 90 days of payments, you can be eligible for a credit line increase.

Along with different payment schedules, there are also varying eligibility requirements for each loan application:

Flex 6:

  • A minimum credit score of at least 600 and a personal guarantee.
  • Must be in business for at least six months.
  • Either $10,000 in monthly cash flow or $120,000 annually.
  • The business must be registered as either an LLC or a corporation.
  • No prior bankruptcies within the previous year.

Flex 12:

  • A personal credit score of at least 650 and a personal guarantee.
  • Must be in business for at least two years.
  • Either $10,000 in monthly revenue or $120,000 in annual revenue.
  • The business must be registered as either an LLC or a corporation. 

The interest rate for a line of credit is much higher than a traditional loan and works a little differently. The estimated APR for a Bluevine line of credit is between 15% and 78%, but that’s just the beginning. There is also a standard fee of 1.7% per week or 7% per month for every line of credit draw.

Bluevine is available in every state in America except for North Dakota, South Dakota, and Vermont. The approval time for your loan can take as little as five minutes after you submit your application. Receiving your funds in a few hours is possible by paying the $15 wire transfer fee. Otherwise, you’ll have to wait for one to three business days to receive them.

How can your business secure good credit?

All of these loan options sound great, but how can you make sure your business qualifies for a loan with good terms? 

While every loan has different requirements, here are a few basic things to keep in mind when applying for loans:

Know your credit score

As a new business, no one expects you to have perfect credit. However, having poor credit can prevent you from qualifying for decent loans. While there are many ways to check your business’ credit score, the same is true across the board: the higher, the better. 

A bad credit score is as follows:

  • Experian: one to 25
  • D&B PAYDEX: zero to 49
  • FICO SBSS: zero to 140

A medium credit score is as follows:

  • Experian: 25 to 75
  • D&B PAYDEX: 50 to 79
  • FICO SBSS: 140 to 180

A good credit score is as follows:

  • Experian: 75 to 100
  • D&B PAYDEX: 80 to 100
  • FICO SBSS: 180 to 300

Whether you’re applying for a microloan or a business startup loan, most potential lenders will view your credit history through the FICO SBSS. In this case, you’ll need at least a 140 to qualify for loans.

Even loans from the U.S. Small Business Administration (SBA) require at least a 140 to qualify. However, SBA 7(a) loans are mainly granted to businesses with a FICO SBSS score of 160. Some banks even draw the line at 180.

So how can you raise your business credit?

By paying attention to these details:

  • Personal credit report. Lenders will take a look at your credit history and project your business’ credit risk based on that report. So, one way to boost your business’ credit score is to pay off personal credit cards and personal loans.
  • Business credit history. While your personal credit affects your FICO SBSS score, your business’ individual credit patterns also play a role. Make sure your business spends responsibly and always pays its accounts receivable on time.
  • Duration of operation. The maximum FICO SBSS score you can get as a brand-new business with no credit history is a 140. Basically, you’ll need to let your business grow a bit before you join the throngs of established businesses requesting financing for expansion.

Have a long-term plan

If you were able to achieve startup financing for your business, then you likely had to present potential investors with your long-term business plan.

Essentially, investors and lenders alike want to know what your long-term plans and goals are because they want to know how risky your business is. A digital advertising firm that eventually hopes to expand into email marketing is a much safer investment than a gourmet popcorn stand that eventually wants to expand into water aerobics.

Be prepared to not only show your long-term plans, but also financial projections, tax returns, and other financial documents.

Know your options

When you think of loans, you may automatically think of banks, credit unions, and SBA loans. While these are good options, they aren’t your only options.

Types of loans like the ones we presented above have much broader application processes, and exist to secure business funding for small businesses that may not meet traditional lenders’ strict expectations. Microlenders and alternative lending agencies provide different types of financing for different business needs.

You can easily negotiate the terms of your loan, and may see more favorable terms if you have a down payment prepared. 

You can also consider alternative methods of financing. You may know friends and family who would be willing to donate to your expansion, and there are plenty of small business grants that can provide small business financing with no interest or principle to worry about.

You can also consider the more traditional types of startup funding like Kickstarter and GoFundMe, which can connect you directly with members of your community that may be interested in funding your expansion.


Take out a loan and grow your business

It’s always an exciting moment when your small business outgrows itself. But while celebrating your growth is fun, securing the funding to successfully scale your business can be stressful, confusing, and even frustrating at times.

Luckily, you have funding options like OnDeck, Lendio, and Bluevine, as well as traditional SBA loans and small business grants. As long as you maintain good credit, keep your long-term vision clear, and carefully consider your options, you’ll find a solution that will work for both you and your business.

For more cutting-edge content about the business world, check out Entrepreneur.com.

Information provided on Entrepreneur Guide is for educational purposes only. Your financial situation is unique and the products and services we review may not be right for your circumstances. We do not offer financial advice, advisory or brokerage services, we do not recommend or advise individuals to buy or sell particular stocks or securities. Performance information may have changed since the time of publication. Past performance is not indicative of future results

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