Best small business loans for 2026

Key Takeaways

Small-business loans are available in various forms, including term loans, lines of credit, and revenue-based financing. These options can provide the capital needed to grow or sustain a business. Lenders often require a personal guarantee, which means your personal assets could be at risk if you fail to repay the loan. When considering a small-business loan, it’s essential to understand the different types of loans, eligibility requirements, and repayment terms.

Understanding Small Business Loan Options in 2026

There are several types of small-business loans that business owners can consider:

• Term Loans: These loans function similarly to other installment loans, where you make payments on a set schedule and finish repaying the debt within a set period. Some lenders offer two-year terms, while others may have five-year terms.
• Lines of Credit: A revolving line of credit allows you to access funds for a finite period. Repayment terms can vary, with some lenders requiring daily or weekly payments rather than monthly payments.
• SBA Loans: The Small Business Administration (SBA) backs these loans, which typically have longer terms than those offered by online lenders. However, eligibility requirements are often stricter, and funding can take longer.
• Invoice Financing: This type of loan is based on your outstanding invoices, allowing you to receive financing to cover your business expenses.
• Invoice Factoring: A provider gives you a lump sum based on a percentage of your outstanding invoices and is responsible for collecting payment. Once the invoices are paid, you receive the remaining amount minus fees.
• Equipment Financing: This loan is secured by business equipment, such as machinery or computer systems. If you default, the lender can repossess the equipment.
• Commercial Real Estate Loans: These loans are used to purchase property for business purposes. The property becomes collateral, and the lender can repossess it if you default.

Requirements for a Business Loan in 2026

When applying for a business loan, lenders typically look for the following:

• Time in Business: Most lenders require that you have been in business for at least one or two years before they will provide funding. Some lenders may have less stringent requirements.
• Annual Revenue: A minimum threshold for annual revenue usually applies. Some lenders express this as monthly revenue, especially if they accept applications from companies that have been in business for less than a year.
• Personal Credit Score: Many lenders have a minimum credit score requirement, typically in the low 600s.
• Business Credit Score: Some lenders review your business credit profile, which is separate from your personal credit. You generally need a higher score to qualify if the lender checks your business credit.
• Industry: A lender might specialize in providing financing to businesses in a specific industry. Additionally, some industries, such as gambling, might be excluded from financing.
• Business Debts: Lenders also consider how much debt you have. You might not qualify if your business has a high debt-to-asset ratio.

Pros and Cons of a Small-Business Loan In 2026

There are several advantages and disadvantages to consider when taking out a small-business loan:

Pros:
* Capital to meet business needs: Use the loan for various purposes, including payroll, inventory, rent, equipment, and other business-related costs.
* Maintain company ownership: With a business loan, you don’t promise a portion of your profits as you do with equity financing. You maintain full company ownership and control.
* Can build a separate credit profile for your business: Some lenders report to business credit agencies, providing a way for your company to establish a separate profile and score.

Cons:
* Repayment costs: Debt typically has costs in the form of interest charges and/or fees, increasing overall expenses.
* Increases your business debt burden: Your business loan is reported on your balance sheet, which can affect your business’s financial stability and cash flow.
* Can impact your personal credit if you default: Many business lenders require a personal guarantee, meaning the creditor can come after your personal assets if you default on the debt. Additionally, a default might be reported on your personal credit report.

How to Compare Small Business Loans in 2026

When comparing small-business loans, consider the following factors:

• Rates: Comparing business loan interest rates can be challenging because many lenders use a factor rate, which is expressed as a decimal instead of a percentage.
• Eligibility Requirements: You often need to demonstrate that you’ve been in business for a set period and generate a certain amount of revenue.
• Repayment Terms: Most business loans are short term, meaning you must repay them within two years. Some lines of credit require repayment in as little as 12 months.
• Funding Amount: Verify that the lenders you compare can meet your capital needs. Some lenders offer as much as $1.5 million, while others might offer only $250,000.
• Reports to Business Credit Bureau: If you hope to build your business credit separate from your personal credit, you need a business credit report. A lender that reports to a business credit bureau can help you establish a credit history that can qualify you for more funding at better rates later.

How to Get a Small-Business Loan in 2026

Before you apply for a business loan, ensure you have the required information available. You’re likely to receive a quicker decision and faster funding when everything is ready to go.

• Business Information: Know how long your business has been active, its annual and monthly revenue, and your employer identification number. If you have a business bank account, have that information readily available.
• Bank Statements: Many small-business loan lenders require at least three months of business bank statements.
• Tax Return Information: If you have Schedule K-1 (Form 1065) documents, have them available, along with your personal tax return.
• Personal Information: As with any loan, you need your Social Security number, address, phone number, and other identifying information.

If your business lender offers a phone number you can call to connect with a specialist, use it to determine the additional documentation you might need.

Once you’re approved, provide your business bank account information to receive the funds and begin repaying the loan.

Alternatives to Small-Business Loans in 2026

You don’t need to get a business loan to fund your small business or expand your offerings. If you can’t qualify for a business loan or if you’re concerned about the cost, consider these options:

• Small-Business Credit Card: In some cases, you might be able to get a business credit card before qualifying for a loan. Consider using a business credit card for smaller purchases and recurring bills.
• Crowdfunding: See if you can get people in your network to help you fund your business. By offering non-monetary incentives, such as a product, you might be able to raise enough money to take your small business to the next level.
• Friends and Family: Consider whether you can borrow what you need from a friend or family member or if they’re willing to provide the capital for your business idea or expansion.
• Personal Loan: In some cases, you might be able to access better terms with a personal loan. Costs might be lower, and you could have a longer repayment period with smaller monthly obligations, especially if you have good credit.

How Buy Side Chooses the Best Small-Business Loans in 2026

Buy Side evaluated 34 small-business lenders, focusing on key areas such as affordability, loan options, underwriting requirements, transparency, and customer experience. Advertisers and partners don’t influence our methodology or ratings, as our research and editorial team maintains independence in using data-driven processes. We assessed each lender based on characteristics business owners might find appealing, such as offering traditional business loan products, discounts, application guidance, bad-credit options, and solutions for short-term funding needs. We focused on lenders with at least $1 billion funded that have been in business for five years or more. We also verified that the traditional and online lenders offer loans in most states. Learn more about how Buy Side rates the best small-business loans using data-driven methodologies.

We weighted five factors to come up with our business loan ratings.