The best personal loans for business funding should have low rates, flexible loan terms, and fast funding speeds. Some providers may have more flexibility in qualification requirements, such as lower income or credit score requirements. However, while getting those approvals can be easier, they may come at the cost of higher rates.
Here are the six best personal business loans:
- Upstart: Best overall for low starting rates and credit score requirement
- LightStream: Best for borrowers with excellent credit
- LendingClub: Best for peer-to-peer (P2P) lending
- SoFi: Best for easier qualification requirements on larger loan amounts
- Discover: Best for low monthly payments
- Rocket Loans: Best for fast funding with lower credit score requirement
Best Personal Loans at a Glance
Estimated Starting Annual Percentage Rate (APR) | Maximum Repayment Term | Maximum Loan Amount | Minimum Credit Score | Application to Funding Speed | |
---|---|---|---|---|---|
4.6% | 5 years | $50,000 | None | 1 business day | |
8.49% | 7 years | $100,000 | 680 | Same day | |
9.57% | 5 years | $40,000 | Not stated | 1 to 7 days | |
10% | 7 years | $100,000 | 660 | Same day | |
6.99% | 7 years | $40,000 | 660 | 24 hours | |
9.116% | 5 years | $45,000 | 640 | Same day | |
Upstart: Best Overall for Low Starting Rates and Credit Score Requirement
Rates & Terms | |
Estimated APR | 4.6% to 35.99% |
Loan Amount | $1,000 to $50,000 |
Repayment Term | 3 or 5 years |
Repayment Schedule | Monthly |
Origination Fee | 0% to 12% |
Prepayment Penalty | None |
Allowable Uses | No stated restrictions |
Funding Speed | As fast as one business day |
Qualifications | |
Credit Score | None |
Minimum Income |
|
Upstart is our pick as the best overall provider for its competitive rates and easy requirements. Compared to other lenders on our list, it can provide the lowest rates and is the only one without a minimum credit score requirement.
While it can work with almost any credit score, it does look at certain aspects of your credit history in evaluating your application. You must not have any current delinquent accounts and public records or bankruptcies within the past 12 months. You must also have fewer than six hard inquiries on your credit report, although inquiries related to student loans, auto loans, and mortgages can be excluded.
If you meet the eligibility criteria, you can get up to $50,000 in funding, with rates as low as 4.6%. There are no prepayment penalties, so you can also choose to pay off your loan more quickly to save on interest charges.
One potential downside is that Upstart has limited options for the length of your loan. Your only two options will be a three- or five-year term. This may also depend on your DTI ratio. For most states, this provider allows up to a 50% DTI. However, a 45% maximum will apply if you live in Connecticut, Maryland, New York, or Vermont.
With Upstart, you can check your rate online in less than 5 minutes with no impact to your credit score. This provider can also offer fast funding as it states that 99% of personal loan funds are disbursed within one business day of signing your loan agreement.
LightStream: Best for Borrowers With Excellent Credit
Rates & Terms | |
Estimated APR | 8.49% to 24.49% and up |
Loan Amount | $5,000 to $100,000 |
Repayment Term | 3 to 7 years |
Repayment Schedule | Monthly |
Origination Fee | None |
Prepayment Penalty | None |
Allowable Uses | Loans must not be used for educational purposes |
Funding Speed | As fast as the same day |
Qualifications | |
Credit Score | Varies, but 680 minimum is recommended |
Minimum Income | Varies |
To get approved with LightStream, you’ll need to have good to excellent credit. It’s recommended that you have a score of 680 or higher, which is the highest in our guide. However, borrowers who qualify can get competitive rates, loan terms, and fast funding speeds.
However, LightStream considers more than just your credit score. It will also review things like how long you’ve had credit, available assets, and how much debt you carry. Having strengths in multiple areas can help offset a lower score and improve your chances of getting approved.
LightStream’s personal loans carry no fees. There are no origination fees and prepayment penalties, so you can save interest by paying off the loan early. The provider also has a virtually paperless application process that it says can be done from even a smartphone or tablet.
To get the lowest advertised rate of 8.49%, you’ll need excellent credit and sign up for automatic payments. Applications can be completed on the LightStream website, with funds that can be made available as soon as the same day that you apply.
LendingClub: Best for P2P Lending
Rates & Terms | |
Estimated APR | 9.57% to 36.00% |
Loan Amount | $1,000 to $40,000 |
Repayment Term | 3 to 5 years |
Repayment Schedule | Monthly |
Origination Fee | Up to 6% |
Prepayment Penalty | None |
Allowable Uses | Loans must not be used for education, investing, or illegal activity |
Funding Speed | Typically 1 to 7 days |
Qualifications | |
Credit Score | Undisclosed |
Minimum Income | Varies |
LendingClub is a P2P lender, meaning its loans are funded by investors. Rates start as low as 9.57%, and you can get up to $40,000 in funds to be repaid over three or five years. This provider charges no prepayment penalties, so you have the option to pay off the loan more quickly if neither of those two loan terms is ideal for you.
One downside is that the provider’s funding speed is not as quick as other lenders listed here. In some cases, funding can take up to seven or more days. It also does not publicly share the minimum credit score requirement, so you may not know what you can qualify for until after you apply. However, it has consistently received positive reviews from customers, so it’s still an excellent option.
You can submit an application from the LendingClub website in a matter of minutes. You can then choose a loan offer depending on the combination of rates and payment options you prefer. If additional documents are needed for verification, you’ll be notified. Otherwise, funds can be sent directly to you or your creditors if you are approved.
SoFi: Best for Easier Qualification Requirements for Larger Loan Amounts
Rates & Terms | |
Estimated APR | 10% to 30% |
Loan Amount | $5,000 to $100,000 |
Repayment Term | 2 to 7 years |
Repayment Schedule | Monthly |
Origination Fee | None |
Prepayment Penalty | None |
Allowable Uses | No stated restrictions |
Funding Speed | As fast as the same day |
Qualifications | |
Credit Score | Varies, but 660 minimum is recommended |
Minimum Income | Varies, but $45,000 annually is recommended |
SoFi offers the largest amount of financing, making it a good option if you need a large loan amount with easy credit requirements. By working with this provider, you can get up to $100,000 in financing with a minimum credit score requirement of 660.
One unique aspect of getting a loan through SoFi is its unemployment protection program. This provides the flexibility to modify your loan payments if you become unemployed. The program can also provide assistance in finding a new job. To be eligible, you must be a SoFi member in good standing for at least nine months and be unemployed through no fault of your own.
Rates typically range from 10% to 30%, although SoFi states that the average APR is around 14.84%. Rate reductions of 0.25% are available for members who sign up for automatic payments.
Other qualification requirements include earning an annual income of at least $45,000, although the exact figure can vary depending on your DTI ratio. If you’re having difficulty qualifying on your own, SoFi accepts co-signers who live with you.
To see what rate you can get, visit the SoFi website. You can view rates and loan options in under one minute with no impact on your credit score and no obligation to accept a loan offer.
Discover: Best for Low Monthly Payments
Rates & Terms | |
Estimated APR | 6.99% to 24.99% |
Loan Amount | Up to $40,000 |
Repayment Term | 3 to 7 years |
Repayment Schedule | Monthly |
Origination Fee | None |
Prepayment Penalty | None |
Allowable Uses | No stated restrictions |
Funding Speed | As fast as the next business day |
Qualifications | |
Credit Score | Undisclosed, but 660 minimum is recommended |
Minimum Income | $25,000 annually |
If you’re looking for low monthly payments, Discover is a good option. This is because it has the longest repayment term and some of the lowest rates on our list.
Rates can start as low as 6.99% for well-qualified borrowers. You can select repayment terms from three to seven years on a loan amount of up to $40,000. To be eligible, it’s recommended that you have a credit score of at least 660. You’ll also need to have an annual household income of $25,000.
It’s important to note, however, that meeting the minimum criteria does not guarantee an approval. Additionally, this provider’s lowest rates will require you to exceed the minimum requirements. If your DTI is high or you have a lower credit score, you could see rates as high as 24.99%.
A standout feature with Discover is the fact that it offers a 30-day guarantee. If you decide you no longer need the loan within that time frame, you can return the funds you received, and the provider will cancel the loan with no interest charges.
To apply, you can visit the Discover website. If approved, you can receive funds as soon as the next business day.
Rocket Loans: Best for Fast Funding With Lower Credit Score Requirement
Rates & Terms | |
Estimated APR | 9.116% to 29.99% |
Loan Amount | $2,000 to $45,000 |
Repayment Term | 3 or 5 years |
Repayment Schedule | Monthly |
Origination Fee | Up to 9% |
Prepayment Penalty | None |
Allowable Uses | No stated restrictions |
Funding Speed | As fast as same day |
Qualifications | |
Credit Score | 640, but can vary |
Minimum Income | Varies |
If you need funds fast, Rocket Loans can offer same-day funding. While other providers in our guide also offer fast funding speeds, Rocket Loans has the lowest credit score requirement, making it our pick as the best provider for borrowers seeking fast funding.
In general, you’ll need a credit score of at least 640 to be eligible for financing. The minimum income you’ll need is dependent on how much debt you’re carrying, as Rocket Loans considers your DTI as a key factor in whether you will get approved. If you are eligible for financing, you can get up to $45,000 in funds with a repayment term of either 36 or 60 months.
To learn more, you can visit the Rocket Loans website, where you can also get prequalified in under one minute. Prequalifying with this provider allows you to see your available loan options without impacting your credit score.
How We Chose the Best Personal Loans for Business Funding
Providers for the best personal loan for business funding were selected using the following criteria:
- Interest rates and estimated APR
- Available loan amount and repayment terms
- Loan fees such as prepayment penalties and late fees
- Qualification requirements such as credit score, income, and DTI
- Application, approval, and funding speed
- Customer reviews and ratings
Pros & Cons of Using Personal Loans for Business
PROS | CONS |
---|---|
Can be easier to get, especially for startups or businesses with low cash flow | Have limited flexibility in loan terms, such as repayment length and loan amount |
Offer faster funding speeds | Can impact personal credit score negatively due to missed payments |
Have fewer restrictions on allowable use of funds | Does not help build business credit history |
Alternatives To Personal Loans
Depending on your goals and business circumstances, getting a personal loan may not give you the most beneficial rates or loan terms. Using a personal loan also carries risks, which we cover in our article on how to put personal money into a business. If you can’t qualify for a personal loan, here are some alternatives to consider:
- Small business line of credit: This is a revolving line of credit that allows you to draw funds on an as-needed basis, making it a good option for covering unexpected expenses or temporary shortages in cash flow. View our recommendations for the best small business lines of credit.
- Business credit card: This is also a revolving line of credit that allows you to make purchases directly with the card. Many providers also allow you to earn rewards, which can effectively reduce your business expenses. Our list of the leading small business credit cards may help you find a card that fits the bill.
- Startup business loan: Getting a business loan as a new company can be difficult because of the high failure rate of startups. However, there are several other types of loans that can offer funding to newer businesses. Check out our guide to startup business loans, which covers the best ways to fund your startup.
The process of getting a small business loan can be very different from that of a personal loan. To learn more about the steps involved and how you can improve your chances of getting approved, read our guide on how to get a small business loan.
Frequently Asked Questions (FAQs)
Yes. Most personal loans have few restrictions on how you may use the funds. Out of the providers we’ve selected in our guide, the most restrictive uses typically prohibit funds to be used for illegal activity or educational purposes.
The answer to this question depends on your goals and business circumstances. Personal loans rely more heavily on your personal qualifications rather than that of your business, so they can be easier to get. However, business loans tend to have more flexible loan terms such as rates, repayment terms, and loan amounts.
Personal loans can be more expensive than business loans. However, it can vary on a case-by-case basis. We recommend shopping rates with multiple lenders and considering different types of loans to find the most cost-effective solution for your needs.
Bottom Line
Getting a personal loan for business purposes can be easier compared to a business loan, especially if you are a startup or otherwise cannot qualify for a business loan. However, there are pros and cons to consider when using personal funds for your company. Our comparison of business loans vs personal loans can provide you with more insights as to which option is best for you.