Best Small Business Loans in 2020: Lenders with the Lowest Rates

6 min readFeb 25, 2020


We analyzed 960 lending companies to identify the top 5 alternative lenders.

Entrepreneurs are in great shape when it comes to raising capital in 2020. According to the SBA, 75% of small business owners are able to secure funding through alternative lenders, business credit cards, angel investors, and venture capitalists.

The crucial thing you need to navigate is deciding who to take the funding from. Taking money from the wrong lender can be a mistake that’ll cost you tremendously over the loan term.

We analyzed 960 different lending companies to identify who is most committed to helping small businesses succeed. These five lenders are the most trustworthy, offer the best interest rates and terms, and have the highest loan approval rates.

Without further ado, here are the cream of the crop:

1. Clarify Capital

Clarify went above and beyond to get things handled. I’m very big on customer service, and the communication and transparency throughout the process made me believe there’s good customer service still out there. I was dealing with 2 other lenders but Clarify made me confident they can beat any offer, and they did! By a long shot. — Matt C. (verified TrustPilot review)

Winning the #1 spot is New York-based Clarify Capital. They are renowned for their family-style customer service, low APRs, and highest approval rates. They checked all the right boxes in our study with a 98% satisfaction rate from merchants who have securing financing from Clarify.

Founded by Michael Baynes and Bryan Gerson, lending industry veterans who wanted to bring transparency to the small business loans process.

“We started the company with a singular vision: Help small business owners pursue the American dream and achieve success. Everything we do always has to be aligned with that mission” says Michael Baynes, co-founder and CEO.

Why Clarify Capital for Business Loans?
They have a zero-friction loan process that is quick and simple. Applicants get a dedicated concierge assigned to them that handles all the nuances of securing funding. This saves you time to focus on running your business while Clarify does all the legwork on the application. They also had the lowest interest rates and transparent terms out of all lenders we reviewed.

Loans Offered: Business line of credit, term loans, SBA loans, invoice factoring, equipment financing.

Maximum Loan Amount: $2,000,000

Approval Requirements: Minimum $10K per month in revenue, at least 6 months in business, credit score over 550.

Overall Score: 10/10

2. American Express

American Express recently bursted into the small business lending space by offering up to $50,000 in unsecured debt for eligible business card holders. With a streamlined process that offers quick funding, financing from AMEX comes in handy for unexpected working capital needs.

Why American Express for Business Loans?
Competitive APR and longer term length. You can get approved and funded within 3–5 days. There are no origination fees or prepayment penalties. The downside is the cap on the maximum amount you can borrow. $50,000 might be okay for handling day to day expenses and small equipment purchases, but larger business needs require a traditional term loan.

Loans Offered: Unsecured short term loan, business credit cards.

Maximum Loan Amount: $50,000

Approval Requirements: Must be an existing American Express Business Card holder for at least one year. Must be pre-approved by AMEX to begin application process.

Overall Score: 9.8/10

3. Kabbage

You might have already seen Kabbage in commercials on TV or received their physical mail pitching their loan products. They are an alternative lender that offers quick working capital to small businesses. Kabbage is a good fit for people with bad credit scores looking for short repayment terms of 12 months or less.

Why Kabbage for Business Loans?
If you have a lower than average credit history / score, Kabbage’s underwriters will focus on your cash flow and accounting data for approval. They provide a fast decision and applicants get funded within a few days. On the downside, Kabbage’s annual interest rates are higher than Clarify Capital or American Express, ranging between 24% — 99%. There is also a fee structure that you need to pay back each month which adds another 1%–10% on top of your principal.

Loans Offered: Business line of credit, secured business loans, unsecured term loans.

Maximum Loan Amount: $250,000

Approval Requirements: Over 12 months in business, $50,000 minimum annual revenue, 550 minimum credit score.

Overall Score: 9.5/10

4. OnDeck

OnDeck was one of the first lender to adopt fully digital applications back in 2007. The core products offered by the company are short-term loans and revolving lines of credit. Similar to Kabbage, OnDeck has lax credit score requirements that allow for people with 600+ credit rating to get approved for a line of credit.

Why OnDeck for Business Loans?
If your personal credit score is 500+, you can likely get approved for their short term loan. Their revolving line of credit has a higher credit requirement of 600+. They are the fastest funding option, with approval times of under 24 hours. The speed comes at a cost, however, with annual percentage rates between 12% and 99.4%.

Loans Offered: Unsecured and secured short term loans, revolving business line of credit

Maximum Loan Amount: $500,000

Approval Requirements: 500+ for term loans, 600+ for revolving line of credit, annual revenue over $100,000, business should have been operational for at least one year.

Overall Score: 9.4/10

5. FundingCircle

The only peer-to-peer business lender to make the list, FundingCircle connects small business owners with individual investors for financing. While their process is slower than other lenders on the list, it’s still faster than getting an SBA loan.

Why FundingCircle for Business Loans?
Faster financing process than a traditional bank loan or SBA-approved loan. They offer competitive rates that range from 11% to 36% (lower than Kabbage and OnDeck). There are no prepayment penalties if you want to reconcile the remainder faster than the term length. On the downside, Funding Circle is not for startups or businesses less than a year in operation.

Loans Offered: Business expansion loan, unsecured short-term loans.

Maximum Loan Amount: $500,000

Approval Requirements: Must have been profitable for past 2 years, over $150,000 in annual recurring revenue, must be a registered limited liability corporation or incorporated, over 620 credit score.

Overall Score: 9.1/10