The Big Bank vs. Online Lender Showdown: Finding the Best Place to Get a Small Business Loan
January 30, 2026 | Last Updated on: January 30, 2026
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Finding the best place to get a small business loan can feel overwhelming, especially since business owners face many choices. Most lenders you encounter will promise things like fast funding, low rates, or flexible terms that work for you. But the reality is that no single lender is best for every business, so you need to compare your options before choosing. will promise things like fast funding, low rates, or flexible terms that work for you. But the reality is that no single lender is best for every business, so you need to compare your options before choosing. will promise things like fast funding, low rates, or flexible terms that work for you. But the reality is that no single lender is best for every business, so you need to compare your options before choosing.
The best place to get a small business loan depends on factors like your credit score, how quickly you need funds, and how much flexibility you require. Traditional banks and online lenders are two of the most popular options but they each serve different business needs. Understanding these differences will help you secure the most funding with the least friction.
Here's a rundown of how business loans work, compares banks and online lenders, and shows how to choose the best place to get a small business loan for your situation.
What Determines the Best Place to Get a Small Business Loan
The best place to get a small business loan won't be the same for you as it is for every other owner. That's because loan options vary, lenders evaluate risk differently, and borrowers all have different priorities.
Some small business owners need low interest rates and long repayment terms while others need fast access to cash. It's important to analyze what matters most to your business, and what sort of factors you should compare each loan by, to make this decision a bit easier.
Credit score and financial history
Your business and sometimes personal credit score play a major role in the loan approval process. Banks want to see a strong credit history and healthy credit score when evaluating your loan request. This means a long track record, stable financial statements, and a good mix of different kinds of credit.
Online lenders can be more flexible. Many will focus on cash flow and revenue trends rather than your credit score alone. This can make online lenders a better business financing option if you have fair or bad credit or a limited history.
If your credit profile is strong, a bank may be the best place to get a small business loan. If your score needs improving or you could use more time to build your credit history, online loan programs may be more accessible.
How fast you need funding
Timing matters, especially for small businesses facing emergency expenses, big day-to-day bills, or unexpected opportunities. Some businesses can wait several weeks to apply and get funding, but others need credit approval and cash in-hand within days.
Traditional banks typically move slowly, especially with more complex or ongoing programs like SBA loans or a business line of credit. These business loan options often have more involve underwriting, requiring documentation and multiple reviews steps before approval. Online lenders may rely on automated eligibility systems that can speed up funding decisions.
If speed is critical, the best place to get a small business loan may be an online lender. If time allows, waiting for bank financing may expand your business funding options and even reduce costs.
Traditional Banks as a Place to Get a Small Business Loan
Traditional banks remain a popular choice for established businesses. They are often considered an affordable option for qualified entrepreneurs, especially if you already have a relationship with a particular business bank and can qualify for additional products or more competitive rates.
Banks typically prefer the stability and predictability of long-term lending relationships, and you may be able to leverage other accounts (like business savings or real estate assets) to secure the loan you need today.
How bank business loans work
Traditional banks offer things like business term loans, credit lines, credit cards, commercial real estate loans, and loan refinancing. Borrowers are usually asked to submit financial statements, tax returns, and business plans as part of the underwriting process, and approval can sometimes take weeks or longer.
Banks offer several benefits for established businesses looking to borrow money, like flexible repayment terms and large loan amounts. Monthly payments are predictable, especially with fixed rate loans, and interest rates are usually lower than with alternative lending options. These features make banks attractive for long-term investments such as expansion or equipment purchases.
Of course, traditional banks are not always the best place to get a small business loan. One reason? Eligibility requirements can be strict, so startups and newer businesses without strong creditworthiness may struggle to qualify.
Funding timelines can also be slower than with online lenders, so businesses with urgent needs may need to look elsewhere. Some banks require borrowers to visit a local branch to finalize the loan or if they need additional information, which can be annoying if you prefer a digital experience.
SBA loans as a Place to Get a Small Business Loan
Loans backed by the U.S. Small Business Administration (SBA) are often considered one of the best places to get a small business loan for established businesses that can wait a few weeks for funding. Also called SBA loans, this funding option is offered through approved lenders and supported by a government guarantee, which reduces risk for lenders and allows for more favorable terms for qualified applicants (like lower interest rates or higher borrowing limits).
Because of their structure, SBA loans often combine the lower cost of traditional bank financing with broader access to funds.
How SBA business loans work
SBA loans are not issued directly by the government. Instead, they're provided by SBA preferred lenders (like traditional banks) that follow specific guidelines. You can find one near you by searching on SBA.gov. A portion of the loan is guaranteed by the government.
The application process for an SBA loan is detailed. Borrowers typically submit financial statements, tax returns, and business documentation, and approval and funding still takes weeks or longer to complete.
If you can afford to wait, SBA loans offer several advantages compared to other financing options, like lower interest rates and longer repayment terms. There are also higher potential loan amounts. SBA microloans offer up to $50,000 while programs like 7(a) offer up to $5 million for eligible expenses. These features make SBA loans well suited for expansion, refinancing, or long-term investments.
That said, SBA loans are not ideal for every situation. As mentioned, the application process requires a fair amount of time and preparation, and documentation requirements can be strict. Down payments are often required, too, so you may need some cash on-hand to get started. For businesses that need fast access to capital, the funding timeline means that an SBA loan may not be the best place to get a small business loan.
Online Lenders as a Place to Get a Small Business Loan
Online lenders have changed how business financing works. They focus on speed, accessibility, and streamlined online applications.
For many owners, online lenders represent the best place to get a small business loan when time or credit is limited.
How online business lenders operate
Online lenders use digital applications and automated underwriting to collect information on borrowers. Many connect directly to bank accounts or accounting software, which allows for faster lending decisions. Some businesses receive offers within hours.
Beyond a fast application and decision process, online lenders are known for their more flexible qualification criteria. Whether you run a startup or new business, or just have lower credit scores, you can often get approval for fixed or variable-rate loans.
However, unsecured online loans sometimes come with higher interest rates. Repayment periods may be shorter than with SBA or bank loans and, depending on the type of funding you choose (including non-traditional options like merchant cash advances), payments may be required weekly or daily. These factors can strain cash flow if you don't plan carefully.
Choosing the Best Place to Apply for a Small Business Loan
Picking the best place to get a small business loan requires more than comparing rates. The right lender aligns with your goals, cash flow, and risk tolerance.
Match the type of lender to your business goals
Short-term needs favor speed, while long-term business growth favors stability.
If you need working capital quickly, online lenders may be the best place to get a small business loan. If you are financing long-term growth, though, bank and SBA loans sometimes make more sense.
Compare lenders beyond interest rates
While important, your interest rate is only one part of your overall cost. Fees, repayment structure, and flexibility matter just as much.
For example, some lenders charge origination fees and others have down payment requirements. Some charge early prepayment penalties and some have limited repayment terms to choose from.
The best place to get a small business loan balances cost with convenience.
Evaluate customer experience and support
Customer experience is often overlooked but strongly affects loan satisfaction. Questions often arise after funding, so a lender's responsive support really matters, and those that communicate clearly are easier to work with long-term.
The Best Place to Get a Start Up Business Loan
Startups face unique challenges, including a limited operating history (which increases perceived risk). This affects where founders can realistically borrow and the terms they're offered.
Why startups face different borrowing challenges
Banks rely heavily on historical performance, such as credit history and revenue reports. Most startups have limited history or lack this data entirely.
As a result, banks aren't always the best place to get a small business loan when you're a startup. Instead, alternative lenders often fill this gap, especially since some evaluate projected revenue or personal income as a substitute borrowing metric.
While loan costs may be higher with an alternative lender, access matters most when you need funds. For that reason, these options represent some of the best places to get a small business loan for a startup when traditional routes are unavailable.
The Best Place to Get a Small Business Loan When Startup Credit is Limited
Credit challenges can further complicate startup financing, whether you don't have much history to speak of or you've had a few bumps in the road. Still, options exist.
Beyond your credit score, lenders can look at other metrics to evaluable and approve your small business loan request. These often include things like:
- Revenue trends
- Industry risk
- Cash flow projections
- Deposit consistency
Being prepared with clean financial records matters, as does reducing any existing debt you may have. As long as you're able to demonstrate the ability to repay, you'll boost lender confidence and improve the terms you're offered after approval.
Final Thoughts on the Best Place to Get a Small Business Loan
The best place to get a small business loan depends on your business and funding needs, not just the individual lender. Credit strength, time in business, and how quickly you need funds all influence which option makes the most sense for you right now.
Traditional banks (like your everyday member FDIC institutions) can offer lower costs and longer repayment terms for qualified borrowers, whether you want a business loan, line of credit, or plan to refinance existing debt. SBA loans through approved lenders can extend those benefits to businesses that meet strict requirements and can wait through a longer approval process. Online lenders provide speed and flexibility when time or credit is limited.
Understanding the differences between each option helps you choose with confidence. When you match the right lender to your goals, the process becomes simpler, faster, and more affordable for your business.
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FAQs on the Best Place to Get a Small Business Loan
1. What is the best place to get a business startup loan with bad credit?
Online lenders are often more flexible than banks when your business' credit history is limited or poor. Even still, you may be asked to provide a personal guarantee or show additional financial records before you'll get approved.
2. Is a bank or online lender better for first-time business borrowers?
Online lenders may offer easier approval when it comes to taking out a loan as a new small business. Banks often require an established history and revenue, or assets to secure your loan. However, it varies person to person which option is better for them.
3. Where is the fastest place to get a small business loan?
Online lenders may offer the fastest decisions on small business loans. If you have an established relationship with a traditional bank, you might also be able to get approved or a loan or line of credit quickly.
4. What is the best place to apply for small business loan as a startup?
Online lenders are often the best place to get a small business loan when company history is limited. It is important to note that the best place will vary.
5. Can startups qualify for large loan amounts?
Your available small business loan size depends on a number of factors like revenue, cash flow, and industry risk. Startups usually start by taking out smaller loans, then increasing the ask over time as they build up a repayment history and increased business revenue.