This article is part of a larger series on Business Financing.
The best personal loans for business funding should provide the lowest rates and most flexible terms, and borrowers with lower credit scores should expect higher interest rates. Keep in mind that personal loans use the business owner’s credit and income to determine qualification, and the business owner is personally liable for the debt.
Our top-recommended personal loans for business funding are:
- LightStream: Best overall personal loan for business
- SoFi: Best for business owners with strong credit profiles
- Marcus by Goldman Sachs™: Best for smaller loan amount for good credit borrowers
- Upstart: Best for lower credit borrowers
- LendingClub: Best for peer-to-peer lending
- LendingTree: Best online marketplace for personal loans
LightStream: Best Overall Personal Loan for Business
LightStream is an excellent choice for an unsecured loan that you can use to fund your business. It has excellent interest rates, with APR starting at 4.98% for unsecured loans and going as low as 2.49% on secured loans. With no origination fees or prepayment penalties, the upfront costs involved are among the lowest of any lender on this list.
Borrowers must have at least a 660 credit score to qualify. LightStream promises to fund the same day as the application. Visit its website for more information or to apply.
SoFi: Best for Business Owners With Strong Credit Profiles
There isn’t a whole lot separating SoFi’s personal loan offering from LightStream’s—the terms are almost identical. The only difference is that SoFi requires a 680 minimum credit score to qualify, so subprime borrowers won’t qualify.
Otherwise, SoFi offers an outstanding financing program with loans up to $100,000 for up to seven years. There are no origination fees or prepayment penalties, and almost all loans signed by 7 p.m. Eastern time on a business day fund the same day. Visit SoFi’s website to get the application process started.
Marcus by Goldman Sachs™: Best for Smaller Loan Amount for Good Credit Borrowers
Marcus by Goldman Sachs™ is another solid personal loan option that compares well to both LightStream and SoFi. The only areas where Marcus falls short are a smaller maximum loan amount, shorter repayment term, and longer funding speed than the top two on our list. Otherwise, it’s an excellent product.
Marcus promises loans of up to $40,000 for up to six years. While the company doesn’t specify a minimum credit score on its website, borrowers should expect to need at least a 660 credit score to qualify, with best rates reserved for borrowers with a 700 credit score or higher. You can apply on the Marcus website with approval within 24 hours and funding within three days. Stop by the Marcus by Goldman Sachs™ website for more information or to apply.
Upstart: Best for Lower Credit Borrowers
The first three lenders listed in this article are for strong credit borrowers. For lower credit borrowers, Upstart and LendingClub (the next on this list) are good options. However, there are two advantages Upstart has over Lending Club. The first is no origination fees, and the second is that the low-end APR of 3.50% is competitive to the three lenders on our list for good credit borrowers. Otherwise, the two lenders are very similar in their offerings.
Upstart offers loans of up to $50,000 for up to five years, and borrowers must have a credit score of at least 600 to qualify. You can begin the application process on Upstart’s website, with funding within 24 hours after signing the loan documents. Check out Upstart’s website for more information or to apply.
LendingClub: Best for Peer-to-Peer Lending
LendingClub is a different type of lender than the others listed above in this article. It’s a peer-to-peer lending company, meaning that investors fund the requested loans on its website and is another good choice for borrowers with subprime credit scores. However, the minimum APR for LendingClub is 7.04%, due in part to the 3% to 6% origination fee tacked on to the loan.
Funding speed is slower with LendingClub because it relies on investors to fund loans as opposed to a bank. Most loans are funded within 48 hours, but it’s not unusual for it to take up to seven days. You can apply and submit all documents directly through the company’s website, so go to LendingClub’s website to begin the application process.
LendingTree: Best Online Marketplace for Personal Loans
If you want to shop around when considering a personal loan for business funding, LendingTree is an excellent place to start. It isn’t a direct lender but rather a marketplace where your application can be shopped around for the best rates and terms.
Terms and rates will vary depending on the lender and your credit profile. Borrowers with credit scores of 670 or better will likely get the best rates. LendingTree also offers different marketplaces for other loans, including mortgages, credit cards, and automobiles. Visit its website to get started.
How We Evaluated Best Personal Loans for Business Funding
When compiling the list of the best personal loans for business funding, we considered the interest rates, terms, maximum loan amounts, and credit score required for each lender. We also considered funding speed and the ease of the application process in our rankings.
For more information on what to expect when applying, check out our article on how to get a small business loan.
Alternatives to Personal Business Loans
For business owners who would rather not use personal funds for their business, many alternatives are available. Many of the options listed below are business loans, not personal loans like those discussed in this article. Qualifying for funding under the business’s name may be preferable to putting your personal money into the business.
Listed below are some of the alternatives available for startup business financing:
- Rollover for business startup (ROBS): Best for business owners willing to invest retirement funds of $50,000 or more
- Small Business Administration (SBA) loan: Best for businesses with good credit and a solid business plan that don’t need funds quickly
- Home equity loan (HEL) or home equity line of credit (HELOC): Best for borrowers with equity in their primary residence and a strong credit profile
- Business credit cards: Best for borrowers good at repaying debt that want quick access to funds
- Equipment financing: Best for businesses where a major startup cost is purchasing equipment with a long life
For some business owners, especially those running a startup, using personal funds to finance their business may be the best option. While it’s true that this puts you and your personal credit at risk should the loan default, many business loans require personal guarantees as well, which put you at the same risk. If you have a strong credit profile, LightStream, SoFi, and Marcus by Goldman Sachs™ are all excellent choices for personal loans for business funding.
Remember to consult your financial expert before taking on personal debt to determine the best course of action for your business. Determine what level of debt is required to adequately fund your business while not damaging your monthly cash flow with loan payments.