Do you need better financing? How to choose the best small business loans in the USA in 2022


The covid-19 pandemic response has wreaked havoc and destruction across the United States and around the world in 2020. The immediate closure of small and large businesses was both unprecedented and devastating. Here’s a look at how to choose the best small business loans to help businesses recover.

According to the Journal of Economics and Management Strategy the statistics showed the number of active small business owners in the US fell by 3.3 million, or 22 percent, during the key two-month period between February and April 2020. For example, the study showed that African-American businesses suffered the most; with a 41 percent drop in business, while Latino businesses fell to 32 percent and Asian businesses dropped about 26 percent.

Despite the terrible impact the coronavirus response has had on businesses, there is a brighter side these days as 2022 approaches; small businesses (larger ones too) will feel some relief from the financial burden as the government has released an additional Paycheck Protection Program (PPP) loans and lenders are willing to start lending capital to start-up small businesses and those that already exist.

A recent survey conducted by Capital One Bank found that 67 percent of small business owners expressed some confidence that their businesses would return to the same robust operations and revenues in 2022, before businesses closed during the coronavirus pandemic. About 60 percent of small business owners believe in the future of the US economy will propel them upward.

“People feel much more optimistic about 2022,” Sameer Gulati, The COO of Plastics said. “Things should start to pick up again in the third or fourth quarter.”

Still, for some small business owners, getting back to normal is a daunting task because their businesses have been disproportionately affected by the pandemic. Many small businesses were forced to close down permanently. Still, those who have managed to survive will have more funding options than they did in 2020. This now brings us to what are the best business loans available.

Should entrepreneurs apply for loans from banks, credit unions or use alternative loans in order to continue operating?

Traditional banks vs. Alternative lenders

Which lenders are better for small business owners?

Wells Fargo Loan Balance Example.

The World Wide Web has changed the world we live in today. And in the business world of financing, the Internet has remarkably changed the way small business owners get loans to run their businesses.

Banks and credit unions, also better known in the financial arena as traditional lenders, are not the only funding option for entrepreneurs. There are many alternative lenders, including online lenders, who are willing to provide loans to those who do not qualify for traditional bank or credit union loans.

But what makes traditional loans and alternative loans different? And how can loan applicants determine which one is better for their needs?

Banks and credit unions, as noted, fall into the traditional category. For decades, these two institutions were the only sources of business loans and lines of credit. Of course, there has always been underworld money, such as infamous moneylenders or unregulated hard money lenders. Again, how can an entrepreneur looking for a loan determine which lender suits his needs.

For example, a traditional lender may look for the following information from an applicant:

  • The company is more than five years old
  • Good credit score (700 or higher)
  • Annual income of at least $250,000

Traditional bank lenders may be lenient on one or more of the above requirements. Bank of America business loans typically only require $100,000 in annual revenue. But overall, a borrower needs a well-established business and a good credit score to qualify for traditional loans.

So the question that needs to be answered is, what valuable benefits does a small business owner get by getting a bank loan? Answer: a lower annual percentage rate (APR). Most traditional loans and lines of credit offer APRs in the 3 percent to 8 percent range, which is better than what alternative lenders charge.

Traditional loans help small business owners save a significant amount of money on a specific loan and loan term. In addition, banks and credit unions often have other offerings for businesses, such as bank accounts, business services, and business credit cards.

best small business loans
Best Small Business Loans. Image from youtube screenshot

Alternative lenders

Alternative (online lenders) are new players in the funding game. Non-traditional lenders have only been around for maybe 15-20 years. Some are much less. Alternative loans provide a decent option for small business owners who don’t qualify for traditional bank loans. Online lenders usually have less stringent application requirements, while some have higher requirements.

The lender, called BlueVine, sets the following requirements:

  • The company is at least six months old
  • Credit score average of 530 or higher
  • Minimum annual income of $100,000

The above requirements do not reflect the requirements for all online lenders. And even if potential borrowers meet the requirements, that doesn’t always guarantee a loan, and because the rules vary, it doesn’t mean you’ll get the best loan deal. But as a general rule of thumb, a borrower with a low credit score but established business income is more likely to be able to get a loan from an alternative credit servicer than from a traditional bank.

Another advantage of alternative online loans is that the approval process is faster than with banks. Bank approval can take two to three months depending on the process. take “Cabbage” online lending, Kabbage uses an automated application process to approve a loan within the hour, and if you qualify, Kabbage can fund a loan just as quickly as the approval process.

The difference between alternative loans and bank loans is the interest rate. Alternative loans have higher interest rates, while bank or credit union interest rates are usually much lower. Don’t be surprised if you are granted an online loan and the interest starts at 11-15 percent.


Best Small Business Loans

The bottom line is whether a traditional or alternative loan provides immediate business needs depends on the situation. Small business loans can cover real estate, equipment, payroll, or just about any need. For this guide, LendingTree selected the best small business loans that offer transparent rates and repayment terms, maximum loan amounts of at least $150,000, funding in two weeks or less, and moderate personal credit score and time-in-business requirements. Learn more about the methodology behind these selections here.

Looking for COVID-19 help for your small business? Find resources here.

Credit cards reduced loans in 2020

When pandemic restrictions hit, credit card companies and U.S.-based lenders cut credit limits, suppressing lending. This practice left many small businesses needing credit to keep their operations afloat.

“Sometime in March, the traditional lenders had a massive backlash and pulled back hard. It was extremely difficult to get loans, which increased the rate of business failure,” said Gulati. “It was the first time in the credit card industry that there was a reduction in the number of lines over a period of days and weeks.”

A Business News Daily reporter wrote, “During the recession of 2008 and 2009, it took banks and credit card companies months to respond, but with advances in technology and integration with corporate bank accounts, it’s much easier to see the warning signs in 2020 and respond.”

“We’re starting to see more progressive card issuers increase the number of lines again,” Gulati continued.

The downside post-covid-19 is that enhanced credit may not be for everyone; is primarily for businesses that have remained open during the pandemic, including healthcare, construction, e-commerce and professional services.

Lenders ready to provide loans

“The economy keeps returning to normal after the coronavirus hysteria. Banks, online lenders, credit unions and Fintech are ready to lend cash to small business owners,” he said Lendio CEO Brock Blake. Blake told Business News Daily that despite some restrictions and tighter underwriting for small businesses, lenders are eager to lend. Blake further explained that loans doing well on Lendio are cash flow, asset-backed and Small Business Administration (SBA).

“We expect the SBA to increase the guarantee from about 85% to 90%,” Blake said. “This will increase the confidence of lenders in making an SBA loan.”

As the high volume of liquidity floods the economy, more lenders are motivated to lend to small businesses, which means business owners with good credit scores can get loans at a lower rate. Credit unions and banks will play a vital role in lending cash to business owners, but alternative lenders and Fintech are poised to become “a big fish” providing loans in 2022.

Another note is that investors outside of the stock market aren’t raking in big returns, and with the ongoing decline of the coronavirus, institutions can lend money without worrying about a volatile stock market.

“A lot of money is flooding the non-bank lending market because bond yields are low,” Matthew Gillman says CEO of SMB Compass. “The new year is an exciting one for alternative lenders. There will be a lot of liquidity, but not in the form of bank financing.”

So there you have it. Go for the money.

For more information on SBA loans, click on the link below

Types of 7(a) Loans (

Do you need more information about the difference between classic loans and online loans? Click here: Online or personal loans: which is better? – NerdWallet

NewsBlaze Senior Business Reporter Clarence Walker can be reached at [email protected]


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