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Hawai’i First-Time Homebuyer Programs of 2019

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Housing prices in Hawai’i are among the most expensive in the nation, which can make buying your first home in the state extraordinarily difficult. However, Hawai’i’s residents may be able to take advantage of state- and county-level programs designed to make homeownership more accessible.

Most of these programs require homebuyers to have moderate or low income, and applicants must meet the formal definition of first-time homebuyer. That means buyers can’t have owned residential real estate in the past three years.

Hawai’i first-time homebuyer programs

Hawai’i’s first-time homebuyer programs are also considered affordable housing programs. These are programs designed to help residents buy a family home in their local market. The broadest first-time homebuyer programs are administered through Hawai’i Housing Finance and Development Corporation (HHFDC). The HHFDC is the primary agency in charge of developing affordable housing in Hawai’i.

In addition to state-level agencies, first-time buyers in Hawai’i can find local programs administered through local agencies. For example, the Hawai’i Community Development Authority (HCDA) provides affordable housing in the Kaka’ako area. Kaua’i, Maui and Honolulu counties also offer homebuying programs for their residents.

Eligibility for Hawai’i assistance

The exact requirements for financial assistance depend on the program. However, for most first-time homebuyer programs in Hawai’i, buyers must be either low or moderate income buyers (earning less than 140% of the area’s median income). Additionally, buyers may not have owned a home in the last three years.

Reserved Housing program

The Reserved Housing program was created to increase the availability and affordability of homeownership for low- and moderate-income people in Kaka’ako. Under the Reserved Housing program, certain housing developments sell at least three-quarters of their units to people earning less than 140% of Honolulu’s median income. If you qualify to buy a home under the program, your monthly payment will be less than one-third of your monthly income.


  • Homes may be sold at below-market rate.
  • Payments are less than 33% of income.
  • HCDA retains first option to buy back the home during the first 10 years.
  • No more than a 10% down payment required.
  • Interest rate equal to the average interest rate on a 30-year fixed rate mortgage.


To qualify, you must

  • Be prequalified by a project lender.
  • Have sufficient income to qualify for a loan.
  • Earn less than 140% of Honolulu area median income. Median income for 2018 for a two-person household was $76,800 in 2018. That means you must earn less than $107,500 for a two-person household.
  • Have less than 135% of area median income in financial assets (i.e., less than $103,680 for a two-person household in 2018).
  • Occupy the home as your primary residence for 10 years (or give HCDA first option to buy back the property).
  • Have not owned a house in the last three years.

How it works

This program is only available after a qualified housing development is complete. You’ll find out that a specific housing development is accepting applications through an announcement in a widely circulated newspaper (such as the Honolulu Star).

The announcement will include information about the availability of housing and how to apply for the program. You may need to be prequalified for a home mortgage with a specific lender to complete your application.

Once you’ve submitted a completed application, you’ll become eligible for a unit. Housing units are sold to eligible participants on a first-come, first-served basis or through a lottery drawing.

Learn more

Affordable Resale Program

Under the HHFDC Affordable Resale Program, eligible people can purchase a housing unit for below market rate. In exchange for purchasing a low cost housing unit, homeowners share future equity gains with the state of Hawai’i.


  • Housing sold at below market price.
  • Prices range from $250,000 to $500,000.
  • Must share gains in equity with the state of Hawai’i when you sell, rent or transfer the property.
  • State of Hawai’i has the first option to purchase a unit if sold in the first 10 years.


To qualify, you must

  • Be at least 18 years old.
  • Be a resident of Hawai’i.
  • Not own any residential real estate.
  • Have enough income to repay a loan on the property.
  • Earn less than 140% of median income.
  • Occupy the house as your primary residence for 10 years.

How it works

If you want to buy a house in one of the government-sponsored developments, you can learn more through the Locations Hawai’i website. After filling out a short form at the bottom of the webpage, the real estate agency will send you more information and an application for the program.

Learn more

Mortgage Credit Certificate

In Hawai’i, people eligible for the Mortgage Credit Certificate can claim a federal tax credit for 20% of the interest that they pay on their primary home mortgage.


  • 20% of mortgage interest is a tax credit.
  • Credit is available as long as the home is your primary residence


To qualify, you must

  • Meet income requirements (income requirements vary by location and family size).
  • Not have owned a primary residence in the last three years.
  • Apply when you take out a new mortgage.

How it works

MCCs are only available through certain lenders in Hawai’i. When you’re taking out a home mortgage, ask the lender about the Mortgage Certificate Credit. The lender will give you the information you need to apply for the MCC. When you file your taxes, you will need to fill out IRS form 8396 to claim your credit.

Learn more

Honolulu County Down Payment Loan Program

The Honolulu County Down Payment Loan Program is a zero-interest loan that can help first-time homebuyers meet down payment requirements for conventional or FHA mortgages.


  • 0% interest loan.
  • Up to $40,000.
  • Loan to be paid off in equal monthly payments over 20 years.


To qualify, you must

  • Earn less than 80% of Honolulu’s median income. Median income is $74,650 for a two-person household, so you must earn less than $59,720.
  • Be approved for a home mortgage.
  • Be a first-time homebuyer.
  • Occupy the house as your primary residence.
  • Home must be located in Oahu.

How it works

The 0% interest loans are distributed on a first-come, first-served basis. To apply for a down payment loan, you must take homebuyer education class. After you complete the class, you can apply for a home mortgage through a bank or credit union.

When you’re applying for your home mortgage, let the lender know that you’re interested in a down payment loan from the city of Honolulu. The lender must submit your loan file to the city, and the city will approve you for the loan (if you meet the requirements).

Learn more

Kaua’i County Home Buyer Loan Program

Through the Kaua’i Home Buyer Loan program, eligible borrowers can finance up to $450,000 on a low-interest loan with no mortgage insurance.


  • No mortgage insurance.
  • Up to 100% financing.
  • Low interest rate (as low as 3%).
  • Up to $450,000.
  • 30 year amortization with a 15-year balloon.


  • Single-family units only, must be owner occupied.
  • Must not have owned property in the last three years.
  • Must be “mortgage ready.” That means you have sufficient income to purchase a $175,000 condo or $250,000 single-family home, and you have fair credit.
  • Must earn less than 80% of Kaua’i area median income. The median is $70,500 for a family of four, so you must earn less than $56,400.

How it works

Before you can apply for a low-cost mortgage, you must complete a homebuyer education class. After completing the class, you can submit a Kaua‘i Resident Affordable Home Buyer Registration Form. After that, you’ll be added to an affordable housing waitlist. Once you’re on this list, you’ll receive updates about homes that are for sale (or under development). The notifications will also tell you whether you’re eligible to buy the properties.

Learn more

Maui County Home Buyer grant

Each year, Maui County offers grants of up to $30,000 to help first-time buyers cover down payment and closing costs. These grants only have to be repaid when the buyer sells, refinances or moves out of the house.


  • Up to $30,000 grant (no more than 5% of purchase price).
  • Grants must be repaid when homeowner sells, refinances or rents out the property.


In order to qualify you must

  • Be a resident of Maui County.
  • Be at least 18 years old.
  • Earn less than 140% of the Maui median income. The median is currently $113,960, so you must earn less than $159,544.
  • Not have owned a home in the previous three years.
  • Have less than $75,000 in assets (excluding retirement).

How it works

The grants are distributed through a lottery system. To enter the lottery, you must pick up an application from the County’s Housing Division Administration office (2065 Main Street Suite 108, Wailuku).

In addition to filling out the application, you must get a preapproval letter from a mortgage lender. The application and the preapproval letter must be delivered to the Housing Division Administration office (either by mail or hand delivered).

In 2019, the deadline for the grant was January 4, 2019. No information is available yet for the 2020 program.

Learn more

National first-time homebuyer programs

The state and county programs in Hawai’i make buying your first home much more accessible, especially if you’re a low- or moderate-income earner. But these aren’t the only programs available to you. First-time buyers can combine the Hawai’ian programs with national programs to make homebuying even more accessible.

Most of the national programs are loan programs, which can be used to buy some of Hawai’i’s affordable housing units. The loans available on a national level may also be combined with some of Hawai’i’s down payment loans and grants.

This article contains links to LendingTree, our parent company.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Hannah Rounds
Hannah Rounds |

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah here


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Small Business

18 Options for the Best Small Business Loans in 2019

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

Historically, business lending involved a massive time commitment, high costs and a high risk that a business wouldn’t get all the funding it needs. Online lenders have completely changed the business lending landscape, making it possible to get funding in as little as a few days in some cases. That being said, borrowing from one of these newer online lenders means working with a company you may not be familiar with, which may pose some challenges.

If you’re a small business owner looking for a loan, this guide can help you decide which type of loan best suits your needs. It will also help you compare some of the best lenders and small business loan marketplaces, so you can apply with confidence.

18 options for online small business lenders

Start with LendingTree*

LendingTree is an online marketplace for business loans. It has one of the largest networks of lenders in the U.S. Business owners can submit one simple form for business financing, and LendingTree will match the owner with real offers from several lenders. This gives business owners the power to pick the best deal for their business.

  • Financing options include: Term loans, SBA loans, working capital loans, equipment financing, business lines of credit, accounts receivable financing and business credit cards.

*LendingTree is MagnifyMoney’s parent company.


on LendingTree’s secure website

LendingTree is our parent company

National Funding

National Funding is a non-traditional lender that’s been in business since 1999. The company specializes in lending smaller dollar loans (less than $100,000) to businesses that are underserved by banks. National Funding often takes less than a day to underwrite loans. Loans from National Funding are fixed-interest loans, but the company offers discounts of up to 7% to customers that pay off their loans early.

  • Financing options: Short-term loans, equipment financing, merchant cash advances
  • Short-term loans:
    • Four to 24 months
    • daily or weekly payments
    • $5,000-$500,000
  • Equipment financing:
    • Two to five years
    • Monthly payments
    • Up to $150,000
  • Funding in under 24 hours


on National Funding’s secure website

Rapid Finance

Rapid Finance is an alternative business lender that’s been issuing loans for more than a decade. The company has an A+ rating with the Better Business Bureau, and most customers appreciate the company’s quick and thorough customer service. Rapid Finance helps business owners get funding fast, but its loans tend to carry very high-interest rates.

  • Financing options: Short-term loans, unsecured lines of credit
  • Must be in business two years, with at least $5,000 per month in revenue
  • $5,000-$500,000 (lines of credit up to $500,000)
  • Loan terms up to 18 months
  • Interest rates starting from 11.00%` APR (fixed simple interest rates)
  • Funding in three days or less


on Rapid Finance’s secure website


OnDeck is an online business lender and a leader in transparent pricing. It is a member of the Innovative Lending Platform Association, which is an industry coalition that has adopted the SMART Box™ to increase transparency in pricing. OnDeck offers both term loans and lines of credit. Most OnDeck customers will have fair or better personal credit scores (above 600 FICO scores).

  • Financing options: Short-term loans, unsecured Business lines of credit
  • Short-term loans:
    • Three to 12 months
    • Fixed simple interest (you pay all the interest, even if you pay off the loan early)
    • Daily or weekly payments
  • Longer term loans
    • 15 to 36 months
    • Compounding interest rate (you pay less when you pay off the loan early)
    • Daily or weekly payments
  • Lines of credit:
    • Up to $100,000
    • Fixed weekly payments
    • Only pay interest on what you draw
  • Funding in under 24 hours


on OnDeck’s secure website


Started in 2010, Credibly (originally RetailCapital) is a small business lender with a focus on using technology and customer service to make business underwriting easier and better. Credibly focuses on short-term lending, and it differentiates itself by having reasonable interest rates of 6 to 18* month loans.

  • Financing options: Working capital loans and “business expansion loans” (short-term loans with weekly repayment options)
  • Working capital loans
    • 6 to 18  months*
    • $5,000–$400,000
    • Interest expressed as interest rates (not expressed as an APR*)
    • Daily repayments
  • Business expansion loans
    • 6 to 24 months
    • Up to $250,000
    • Interest rates set as a factor fee. Paying off the loan early will not reduce interest payments.
    • Weekly repayments
  • Funding in 48 hours on average

*Excludes the Business Expansion Loans which are 6 to 24 months).


on Credibly’s secure website

All loans through Credibly are originated by WebBank, member FDIC.

Finance Factory

The Finance Factory is a one-stop shop for all things related to business financing. It is an online lending marketplace that matches small business lenders to small business borrowers. Because it is a network, it offers a huge range of business loan products including start-up loans, SBA loans, lines of credit, unsecured business loans and more. Some of the products have very low-interest rate loans (however, the underwriting times aren’t as fast as other lenders).

  • Financing options: Start-up funding, SBA loans, business express loans, revenue-based loans, equipment financing, franchise financing
  • Most loans range from $5,000-$500,000 (revenue-based advances from $10,000 to $1 million)
  • Up to 25 years
  • Funding time varies based on loan type. Some loans can be funded in less than 48 hours, but other loans, like SBA loans, may take a month or two.


on Finance Factory ’s secure website

Seek Capital

Seek Business Capital is a business lending broker that helps business owners navigate the complex business funding world. Seek Capital will use information that you provide to create a funding estimate which is a range of funding amounts, rates, and payback terms that a business owner can expect to procure. Business owners who are happy with the estimate can apply for loans, and Seek Capital will have the loans funded in one to three business weeks. Seek Capital does charge broker fees, so businesses should be careful to compare Seek’s offers and fees with other competitors.

  • Unsecured business loans
  • $5,000-$500,000
  • Same-day loan estimates, three weeks to funding


on Seek Business Capital’s secure website

The Business Backer

Despite major innovations in the world of online business lending, The Business Backer believes that financing is still all about relationships. To help businesses qualify for better interest rates, The Business Backer gives business owners the opportunity to share the story of their business and the circumstances leading them to apply for a loan.

The Business Backer funds some of its own loans, but they also have a network of lending partners. The network means that borrowers can use a single application to apply for multiple types of financing.

  • Financing options include: SBA loans, business line of credit, long-term loans, short-term loans, equipment financing, commercial real estate loans, start-up loans
  • Start-up loans
    • Up to $150,000
  • Short-term loans
    • Up to $200,000
    • Four to 18 months
    • Daily, weekly or monthly payback
    • Fixed interest with early payment discounts available
  • Business line of credit
    • $5,000-$150,000
    • 1- to 3-year terms
  • Funding in as little as 48 hours (though this can vary by loan type)


on The Business Backer’s secure website


LoanMe is a business lender that specializes in lending to businesses that don’t qualify for loans from banks, and businesses with urgent cash needs. Interest rates on loans from LoanMe are higher than those from traditional banks, but terms range from two to ten years. Also, unlike many other lenders, LoanMe uses traditional interest formulas. That means the faster you pay off the loan, the less interest you’ll pay.

  • Funding options: Term loans
  • $3,500 – $250,000
  • Loans from 6 to 120 months with monthly repayments
  • Interest rates from 19.37% – 168.00%
  • Same-day funding available


on LoanMe’s secure website

Elevation Capital

Elevation Capital is a lender that offers alternative loan products (especially unsecured short-term loans) to business with as little as three months of revenue history. Elevation’s unique underwriting style means that business owners with poor credit may be able to qualify for a loan.

  • Financing options: Not available
  • Payback terms: Not available
  • Interest Terms: Not available
  • Up to $500,000 in loans
  • Funding in as little as 24 hours.


on Elevation Capital’s secure website

Reliant Funding

Reliant Funding was founded in 2008, in the midst of the financial crisis. It boasts of over $1 billion in lending to small businesses, and an A+ rating with the Better Business Bureau. Reliant focuses on speed of funding, and underwrites using current business performance rather than personal or business credit history.

  • Term loans ranging from six to 18 months
  • Loans up to $250,000
  • Fixed simple interest rates- (you’ll pay the same amount of interest, no matter how quickly you pay off the loan)
  • Daily payment schedules
  • Same day loan approvals and funding


on Reliant Funding’s secure website


smartbiz is an online marketplace for SBA-guaranteed loans. SBA-guaranteed loans are known for slow turnaround times (with an average of 45 days to funding), but SmartBiz streamlines the process. Their computer algorithm can help determine whether you’re SBA loan-eligible before you complete the complex application. Businesses that qualify can complete their application through the SmartBiz website and may receive funding within seven days of completing their loan application.

  • Funding options: Commercial real estate loans, SBA-guaranteed working capital loans
  • Commercial real estate loans
    • $500,000 – $350,000
    • Terms up to 25 years
    • Interest rates ranging from 6.75%–9.99%
  • Debt refinance and working capital loans
    • $30,000 to $350,000
    • Terms up to 60 months
    • Interest rates ranging from 6.75% – 9.99%
  • Funding as fast as seven days after application is complete (but it may take longer)


on Smartbiz’s secure website

Funding Circle

FundingCircle is one of the nation’s first peer-to-peer (P2P) business lending companies. It specializes in low interest-rate term loans for established businesses. Applications for the loans can take as little as 10 minutes if you have all the required financial documentation ready. Funding Circle is a signatory of the Small Business Borrowers’ Bill of Rights which means that business owners can expect clear and transparent terms from Funding Circle.

  • Funding options: Term business loans
  • Loans from $25,000 – $500,000
  • Terms ranging from 6 to 60 months
  • Interest rates from 4.99%–27.79%
  • No prepayment penalties
  • Funding in five days or less


on FundingCircle’s secure website

Fora Financial

If your business grosses at least $12,000 per month, and you need cash fast, Fora Financial could provide a viable loan solution for you. The company provides unsecured short-term loans with funding in as little as 72 hours. Business owners who are looking into these loans should read the fine print carefully. Fora offers partial discounts for early repayment. Early repayment discounts are not equivalent to the interest savings you would receive if you paid off a traditional loan early. This means that loans from Fora may be substantially more expensive than traditional loans if you pay the loan early.

  • Financing options: Unsecured short-term loans
  • $5,000-$500,000
  • Terms up to 15 months
  • Fixed simple interest with partial discounts for early repayment.
  • Funding in as little as 72 hours


on Fora Financial’s secure website


Lending Club is a P2P lender that specializes in affordable term business loans for business owners that have fair credit (or better). Businesses must have been in business at least 12 months and have revenue in excess of $50,000 annually.

  • Financing options: unsecured term loans, secured term loans
  • Loans above $100,00 require a blanket lien on all business assets
  • Loans from $5,000–$300,000
  • Payback terms from 12 to 60 months
  • Interest rates ranging from 9.77% – 35.71%
  • Funding takes an average of 7 days


on LendingClub’s secure website

Headway Capital

Headway Capital is a lender that specializes in small business lines of credit with fixed simple interest rates. This means that Headway charges interest as soon as the funds are drawn, and businesses pay the funds back through weekly or monthly payments.

The Headway Line of Credit may be a good solution for businesses that cannot qualify for traditional credit lines, but need the flexibility that a line offers. To qualify for a Headway line of credit your business must have been operating for at least 12 months with at least $50,000 in annual revenue.

  • Financing options: Line of credit
  • Credit limits: Up to $50,000
  • Repayment periods: 12 to 24 months
  • Fixed simple interest (interest charged when you withdraw and does not compound over time).
  • Weekly or monthly repayments


on Headway Capital’s secure website

BlueVine Capital

BlueVine Capital is a company that’s creating innovative working capital solutions for small businesses. They currently offer business lines of credit and invoice factoring options that allow businesses to only pay for financing when they need it. Business owners need a 600 credit score to qualify for a business line of credit and a 530 credit score to qualify for an invoice factoring option. Businesses also need at least $10,000 in monthly revenue to qualify for either option.

  • Financing options: Line of credit, invoice factoring
  • Line of credit
    • Weekly payments
    • $5,000-$5 million
    • Interest rates from 6.9%
  • Invoice factoring
    • $20,000- $5 million
    • Invoice due date must be less than 13 weeks
  • Funding within 24 hours for first advance, and faster afterward


on BlueVine’s secure website


StreetShares is a newcomer in the P2P lending space. It specializes in moderate interest rates and fast lending. Military members and veterans are especially valued customers, and StreetShares makes sure to give veterans special treatment.

  • Financing options: Term loans, lines of credit, invoice factoring
  • Term loans
    • Three to 36 months
    • $2,000- $100,000 limits
    • Weekly repayments
    • No prepayment penalties
  • Line of Credit
    • $5,000- $100,000
    • Weekly repayments
    • Three to 36-month paybacks
    • No prepayment penalties
  • Invoice factoring (contract factoring)
    • Advance rates up to 90%
    • Monthly factor fees as low as 1%
  • Funding in as little as a few days


on Street Shares’s secure website

4 ways to use a business loan

Business financing tends to be more complex than consumer finance, so it pays to understand how business lending works.

Businesses typically look for financing during start-up or expansion phases, but businesses may need financing for more mundane reasons. These are a few common reasons businesses seek financing.

Starting a business: More than half of all start-ups use personal savings to start their business, but in many cases personal savings alone aren’t enough to pay for start-up costs. That means many companies need to consider taking out a start-up loan (or finding other means of finance). Antara Dutta, a volunteer mentor and former president of the Delaware chapter of SCORE (the nation’s largest network of volunteer expert business mentors), explained, “Start-up companies need enough money to cover at least twelve months of expenses. It usually takes at least twelve months to get to break even, and we usually say about 18 months to get to the point of earning a profit.”

Managing cash flow: Seasonal businesses may need to seek financing to pay for inventory and materials to complete a project or to stock a store. Other businesses experience a gap between when they pay their bills and when customers pay them. Business owners who cannot cover cash flow needs from personal or business savings may require financing. Invoice factoring or a line of credit may provide the right financing solution for businesses that need to pay bills.

Expanding operations: Businesses looking to expand often need a loan to cover certain costs. Although profitable businesses should consider using business savings, a loan can help a business achieve faster growth. Dutta recommended, “When you’re expanding operations you may be in a good position to refinance any existing debts. Combining debts can allow you to get better terms on all your debts.”

Refinance existing debt: A business that has debt may be able to refinance to cut back on interest or reduce monthly payments. This will strengthen their financial position, and allow for more growth, more profitability or better cash flow.

What to know before you borrow

When it comes to finding the right loan for your business, you’ll have to weigh multiple priorities to find the right loan for your business. These are a few areas business owners should consider when applying for a loan:

Know exactly how much you need to borrow: Whether you’re starting a new business or you’re expanding current operations, you need to explain how much money your business needs, how the business will use the proceeds and how the business will pay back the loan.

Understand the cost of capital: The cost of capital is how much it costs to borrow money. The most common measure for this is APR, although you may see other terms being used. Business owners may struggle to maintain profitability when the cost of capital is too high.

Ask about repayment terms: Unlike most consumer loans, business loans can have a variety of repayment schedules. You may have to make daily, weekly or monthly payments. Be sure you understand how the repayment schedule will affect your cash flow and ability to make timely payments during the repayment period.

Collateral requirements: Business loans may require you to put up certain assets as collateral against the loan. Collateral reduces the lender’s risk because the lender can automatically seize the collateral to recoup their losses. A bank’s collateral requirements aren’t limited to just business assets. Oftentimes, business owners have to use personal assets (like home equity) to guarantee the loan.

“Banks need to know that you’re going to pay them back,” Dutta told MagnifyMoney. “So they might need some collateral, especially for start-ups or high-risk businesses. A lot of times, you’ll have to take out a second mortgage to cover your collateral.”

How much funding you’ll receive: Most start-up companies (69%) who apply for a loan experience a financing shortfall, according to a 2017 small business survey by the Federal Reserve Board of New York. This means the business is approved for a smaller loan than what the company needed. When applying for a loan, it’s important to understand that you may struggle to get enough financing.

How long it will take to get the funds: According to one Harvard Business School working paper, time to funding for business loans ranged from an average of less than five days for short-term lines of credit to more than 45 days for SBA-guaranteed loans. Most online lenders focus on high speed lending, but business owners may have to make sacrifices in other areas (such as cost or repayment terms) to find fast underwriting.

Are pricing and terms transparent? Small business owners often have a tough time comparing prices and payback terms on products from nontraditional (online) lenders. To be sure you’re getting a fair deal, look for clear pricing and terms, including an estimated monthly payment, an APR calculation and whether you face prepayment penalties. If a lender has adopted the SMART Box pricing approach, you can find all this information in your schedule of fees.

Types of small business loans

Small businesses operate in every industry, with revenues ranging from less than $100,000 per year to over $100 million per year. On top of that, business have varying levels of profitability and business credit quality. With such diverse business circumstances, it’s not surprising that there are dozens of business loan options.

These are the most common loans for businesses.

#1 Term loans aka short-term, unsecured, secured and equipment loans

Term loans are an umbrella category of business loans comprised of several different types of loans. In general, a term loan is repaid over a fixed period of time, usually by making even payments on a fixed schedule.

Here are the main types of term loans available to small business owners:

Short-term loans

What they are: Short-term business loans have payback periods ranging from three months to two years. Business owners make fixed payments on the loans until they are paid off.

How they work: After approving a loan, lenders deposit funds directly in a business’s bank account. Then, business owners make regular payments to pay off the loan.

General terms offered: Short-term loans often require daily or weekly payments. Many short-term loans have fixed simple interest rates. This means that you will pay the same amount of interest and fees whether you pay off the loan early or on time. The interest rates on short-term loans can be very high.

Most of the time, short-term loans are not secured by any collateral. However, there are important exceptions to this rule. For example, invoice financing (where invoices serve as collateral) can be set up as a short-term loan arrangement.

Speed: Online lenders specialize in short-term lending, and most can fund loans within 72 hours.

Who should use them: Business owners should be careful when taking out short-term loans. The daily payment schedules may make it difficult to maintain positive cash flow while the loan is being repaid. Short-term loans offer funding fast, but they aren’t a sustainable way to fund a business.

Unsecured term loans:

What they are: Unsecured term business loans are loans that are not backed by any underlying asset like your home. Unsecured business loans may require a personal guarantee, which is a promise to repay the loan regardless of business performance.

How they work: When funding on an unsecured term loan, a lender gives a business owner a lump sum of cash to be used for the business. The lender generally doesn’t restrict how the business uses the loan. In exchange for the upfront cash, the business commits to ongoing payments until the loan is repaid.

General terms offered: Unsecured business loans range from short-term loans (such as the loans explained above), to loans lasting up to several years. They may require business owners to make fixed daily, weekly or monthly payments. Except in the case of short-term loans, business owners will generally save money by paying off unsecured term loans early.

Speed: The time it takes to receive funds depends on the type of lender you work with. Online lenders offer funding in as little as three days, but larger lenders may take a week or more.

Who they are best for: Unsecured loans offer excellent protections for borrowers and are ideal to fund riskier ventures. If the business defaults on payments, the lender will have to go through proper collection channels before collecting any assets from the business owner. However, this protection comes at the cost of higher interest rates.

Secured term business loans

What they are: Secured term business loans are term loans that are directly secured by some collateral. That means if the business fails to pay its loan, the lender can immediately seize the underlying asset. Two in five (42%) business loans are secured by business assets (such as equipment, inventory, buildings or land), but an almost equal number (39%) are secured by personal assets, such as a personal vehicle, cash reserves or home equity, according to the Federal Reserve small business credit survey.

How they work: When business owners take on a secured loan, they receive an upfront sum of cash. The lender may limit how the business can use the cash (for example to purchase equipment). The business will make fixed monthly payments until the loan is paid off.

General terms offered: Most of the time, secured business loans have terms longer than two years. The interest rates on secured loans tend to be lower than rates on unsecured loans.

Speed: Like unsecured term loans, midterm loans tend to take several weeks to fund, but the time for funding will vary by lender.

Who should use them: Secured term loans are riskier for business owners since defaulting could lead to the loss of personal assets. However, they are a good choice for a stable business that has the cash flow to support the new loans.

Equipment loans

What they are: An equipment loan is a loan that’s backed by the equipment you purchase for the business. Business equipment would generally include heavy machinery, vehicles, computer servers, farm equipment and more.

How they work: In general, business owners put 10%-20% down on an equipment purchase, and finance the rest using the equipment loan. The business owner will make monthly payments on the loan (in most cases). If the business defaults on the loan, the lender may repossess the equipment and sell it to recoup its losses.

General terms offered: Down payment requirements generally range from 10% (on an SBA 504 loan) to 20% or more. Payback periods usually range from five to 10 years).

Speed: Business owners who complete an equipment loan application should expect to receive funding in under one week.

Who should use them: Businesses with good credit history are approved for equipment financing more than 90% of the time. If your company needs new equipment, an equipment loan is likely the best way to finance it.

#2 SBA-guaranteed business loans:

What they are: SBA-guaranteed business loans are loans that are partially guaranteed by the Small Business Administration. In most cases, the SBA will reimburse banks up to 85% of the loan value if a business owner defaults on the loan. The SBA limits the interest rate that can be charged on these loans, so SBA loans tend to have low-interest rates relative to other forms of business financing.

How they work: To qualify for an SBA loan, business owners must put up personal or business assets as collateral for the loan. In general, the collateral must cover at least 20%-25% of the loan value.

General terms offered: SBA loans are term loans with monthly payments. The interest rates on SBA loans vary by product, but SBA 7a loans (with terms less than seven years) have maximum interest rates ranging from 7%-9% depending on loan size.

Equipment and inventory loans have terms ranging from seven to ten years. Real estate loans may have terms up to 25 years.

Speed: Compared with other loans, SBA loans tend to have slow funding times. The fastest turnaround time is likely from SmartBiz, which claims it can fund loans as fast as seven days after the application is complete. However, the average time to funding for SBA loans tends to be much longer. Industry experts estimate that most SBA loans take at least a month to fund, and could be much longer.

Who should use them: With great interest rates and limited collateral requirements, an SBA loan makes a great choice for any business owner who has the time to wait for funding. These can be especially helpful for starting or expanding a business.

#3 Business lines of credit

Business lines of credit allow business owners to draw from a predetermined credit limit to meet business needs. After drawing down on the line of credit, business owners will make regular payments to pay it off. Business owners only pay for money they borrow, which makes lines of credit a cost-effective financing option for seasonal businesses.

These are a few lines of credit your business might consider:

Unsecured lines of credit

What they are: Unsecured lines of credit are business lines of credit that don’t require any specific form of collateral.

How they work: An unsecured line of credit allows business owners to draw on a line of credit to meet business needs. The business can continue to draw up to the credit limit. When the business repays the line, the credit limit is replenished.

General terms offered: Unsecured lines of credit have a drawdown period (where the business owner can draw from the credit limit). The drawdown period is usually a year long. After that, businesses must renew their line of credit or begin repayment. Generally, the business owner has to make minimum monthly payments during the drawdown period. The interest rates on unsecured lines of credit can be as low as 6.25%, but can be far higher.

Speed: Time to access funding will vary by lender. Large lenders may be able to approve your loan within a week and have funding to your business shortly thereafter.

Who should use them: Unsecured lines of credit are a low-cost, short-term financing solution for mature businesses. Business owners must have a plan to repay the credit line, or they may end up defaulting.

Asset-based lines of credit:

What they are: An asset-based line of credit is a line of credit that’s backed by an asset. The assets are usually outstanding invoices and equipment or real estate.

How they work: Some businesses have a long gap between when they produce work and when they receive payment for it. These businesses may need access to cash to bridge the gap between the time they spend money and when they receive payments. An asset-based line of credit allows businesses to draw on a line of credit that is secured by outstanding receivables and equipment. The business is free to draw on the line up to the credit limit. Once the business repays the loan, the credit limit is restored.

General terms offered: Most lenders will extend asset-based lines of credit for short terms (under a year). Having short terms on the line of credit gives the lender repeated opportunities to evaluate the strength of the line of credit. To qualify for an asset-based line of credit, you generally have to work in the B2B space, and have large receivables.

Speed: Establishing an asset-based line of credit generally takes a week or more.

Who should use them: Asset-based lines of credit are ideal for businesses with long collection cycles such as custom manufacturers and other businesses that sell on terms.

#4 CAPLines

What they are: CAPLines are SBA-guaranteed lines of credit designed to meet cyclical or short-term working capital needs. Businesses may need to show the expected costs of their projects or contracts to qualify for a CAPline.

How they work: Businesses apply for a CAPLine based on the projected costs of an expansion or larger product. When approved, a business can draw on the line up to the credit limit. When the business repays the credit line, the credit limit is restored.

General terms offered: Maturities on these lines of credit top out at 10 years. Currently CAPLines have interest rates ranging from 7%-9% APR.

Speed: Speed will vary by lender.

Who should use them: CAPLines are an appealing option for established businesses with short-term or seasonal borrowing needs.

Frequently asked questions

Lenders consider a variety of factors when underwriting business loans. More than nine in 10 start-ups (92%) rely on the owner’s personal credit score to obtain business financing, according to the Federal Reserve.

On top of business and personal credit, lenders also need to evaluate your business’s financial prospects during underwriting. Banks lean heavily on the information in your last two years of tax returns. “Banks need to see that you have revenue in excess of your expenses, or you’re not likely to be approved,” Dutta told MagnifyMoney. “Some business owners show losses year after year to minimize their taxes, but that means they won’t be able to get a loan when they need it.”

Start-up companies may need to submit a business plan and a detailed sales model to show how they will earn the revenues to pay back a loan. The plan will show the bank that you have a plan to fix problems should they arise.

The application process for business loans varies by lender.

Most online lenders have simple applications that take just minutes to complete. You’ll provide basic information about yourself and your company. On top of that, you’ll upload documentation to show the financial state of your company (for example, three months of bank statements or two years of tax returns).

Local banks, some of the biggest providers of loans to small business owners may have a more complicated lending process. It’s common for banks to require a detailed business plan with an application. Dutta recommended, “Before taking out a loan, you’ll want to get help from an industry-specific accountant who can help you make a business plan. Don’t be afraid to spend a little money if you’re taking on a big amount of debt. If you can’t afford [an industry-specific accountant], of course, get free help from SCORE. Just be sure to customize any templates you use to meet your needs.”

Following the 2008 financial crisis, small business lending took a dive, and it hasn’t fully recovered. Finding business funding remains a challenge for many business owners.

Small businesses tend to have the hardest time getting financing. In 2015, just 54% of businesses with less than $100,000 in annual revenue were approved for loans. By comparison, businesses earning between $1 million – $10 million in annual revenue saw an approval rate of 81%.

Approval rates for business funding also depend on your firm’s credit quality and where you apply. Firms with good credit (low credit risk) that applied at small banks were approved for business loans 78% of the time in 2016. Firms with medium or high credit risks had the best odds of being approved by an online lender. However, even with online lenders, just 45% of high-risk businesses managed to gain approval.

As of 2014, the average business owner who needed a loan, spent 33 hours looking for financing options, but the actual time to get a funding depends on the loan you’re considering. For example, SBA-guaranteed loans take up to several months to underwrite. On the other hand, online lenders in the business space can often underwrite and fund loans in a matter of days.

The cost of a loan varies based on the type of loan, the collateral required and who issued the loan. For example, loans from prominent online lender OnDeck had an average interest rate of 42.5% annualized, but borrowers often faced even worse interest rates when they took on financing from online lenders.

On the other hand, some forms of business financing can be very cost effective. Interest rates on most SBA loans are under 10% APR, and some lenders boast rates as low as 4.99% on fixed-term loans.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Hannah Rounds
Hannah Rounds |

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah here


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Consolidated Credit – Debt Relief Review

Editorial Note: The editorial content on this page is not provided or commissioned by any financial institution. Any opinions, analyses, reviews, statements or recommendations expressed in this article are those of the author’s alone, and may not have been reviewed, approved or otherwise endorsed by any of these entities prior to publication.

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Managing your money can be difficult. But when life throws you curveballs, that’s when financial trouble can arise. Of course, bad financial habits can also erode your financial security over time.

No matter how you came upon your debt issues, you have options for managing them. A nonprofit such as Consolidated Credit can help you explore and pursue those options. Here’s a comprehensive review of Consolidated Credit to help you understand how it may be able to help you with your debt.

What is Consolidated Credit?

Consolidated Credit is a not-for-profit company dedicated to helping people improve their financial lives. Since launching in 1993, the company has helped 6.5 million people. Thanks to the company’s dedication to its customers, the company has earned an A-plus rating with the Better Business Bureau (BBB). Although Consolidated Credit is based in Plantation, Fla., it helps people nationwide, including in Puerto Rico, and serves both English and Spanish speaking populations in the United States.

Consolidated Credit offers a wide range of services to help people struggling with debt. Some of its services include credit counseling, corporate financial wellness programs, counseling for first-time homebuyers and debt management plans. All Consolidated Credit counselors are Certified Personal Finance Counselors. Its counselors are trained to help people better understand how to eliminate their debt as fast as possible.

Breakdown of Consolidated Credit services

If you’re considering working with Consolidated Credit, it’s important to understand whether you’ll qualify to work with them. Most of Consolidated Credit’s services are free, but its debt management plan carries some fees.

This table explains the fees and limitations associated with Consolidated Credit’s debt management plans. It also shows other critical information about the company as a whole.

Services offered

Credit counseling, debt management plans, homebuyer counseling, reverse mortgage counseling, corporate financial wellness.

Minimum debt required

More than $1,000

Credit check

Yes, but no impact on credit (soft credit inquiry)

Expected time to debt payoff

Generally 36 to 60 monthly payments

Initial consultation fees

Free initial consultation.

Initial setup fees

Initial setup fees vary by state, but will be similar to your monthly fees.

Cancellation fees

No cancellation fees.

Service fees

Up to $79 per month. On average, $40 per month).
Consolidated Credit may waive fees for high-need individuals.

Types of debt accepted- debt management plans

Unsecured debts (credit cards, most personal loans, medical debts less than 1 year old). Debts in collections (charge-offs) may be allowed in the debt management plan. Some payday loans or cash advances can be consolidated.

Service limitations- debt management plans

Once you enroll in a debt management plan, you must make the payments as agreed. Failing to make the payments could lead to more fees, penalty interest, or being sued.

Consolidated credit does not allow Federal Student Loans, auto loans or mortgages into its debt management programs. However, it has foreclosure prevention services for people struggling with their house debt.


Member of the Financial Counseling Association of America (FCAA).

All counselors are Certified Personal Finance Counselors.

Housing counselors certified by the US Department of Housing and Urban Development (HUD).


A-plus rating with the BBB.

Free tools and resources

A consultation with a credit counselor at Consolidated Credit is free. Other free resources include ebooks, videos, webinars and in-person seminars.

Customer service

If you enroll in a debt management plan, you’ll work with a specific counselor who will help you through the process.

Who’s eligible?

  • Consolidated Credit offers credit counseling services to people in the U.S. and in U.S. territories, including Puerto Rico). If you live in the U.S. and owe debts to creditors in the country, you may qualify for Consolidated Credit services.
  • To qualify for Consolidated Credit’s debt management program, you need to go through a free credit counseling session. A certified personal finance counselor will help you decide whether Consolidated Credit’s debt management program is right for you. They will also help you review options for DIY debt consolidation.

Consolidated Credit advertises that people with poor credit and people with huge balances are most likely to benefit from a debt management plan. If most of your debts are in collections, you may have to pursue debt settlement options. On the other hand, if you still have good credit, debt consolidation might be the right approach for you.

What are the benefits and risks of Consolidated Credit?



Not for profit company

Credit cards are frozen during debt management plan.

Free initial consultation

Cannot take out new credit cards during repayment.

Consider a variety of debt payoff options.

Some complaints about customer service

Debt management plan reduces interest rates and fees.

Must make timely monthly payments.

Highly rated customer service

How much does Consolidated Credit cost?

Consolidated Credit offers free credit and personal finance counseling. During an initial 30 to 60 minute consultation, a Certified Personal Finance Counselor will analyze your debts, your budget and your credit score. If the counselor recommends a debt management plan and you choose to enroll, these are the fees you can expect.



Initial setup fee (debt management plan)

Varies by state

Monthly fee (debt management plan)

On average, $40 per month, but can be as high as $79 per month

In certain situations, Consolidated Credit may waive the debt management plan fees for a limited or extended period of time.

In addition to its debt counseling services, Consolidated Credit offers several services for current and aspiring homeowners. Its services include free home buying and mortgage readiness classes and information on home retention and foreclosure prevention for people struggling with their mortgage. Seniors looking for education and counseling about reverse mortgages may speak with a HUD certified counselor.

Consolidated Credit also offers several free online resources for people looking for financial education. Its free eBooks and videos cover a range of topics including marriage and money, the financial costs of children and more.

How long does the program take?

When you sign up for a debt management plan at Consolidated Credit, you can expect to make payments for about three to five years before you’ve paid off your debts.

Consolidated Credit is not a debt settlement company. It will not help you negotiate for lower balances on your debts. However, the company will negotiate a lower interest rate (usually 0% to 11%) and for lower fees. By lowering your interest rate, Consolidated Credit may be able to cut your payments down by 30 to 50%. Over the course of three to five years, you will pay off the entire balance that you owe.

Is Consolidated Credit safe to use?

Consolidated Credit is a not for profit company, with a solid reputation. It’s been in business for 25 years with an A-plus rating with the BBB, and it hasn’t had any legal actions taken against it.

Although most online reviews of Consolidated Credit are positive, some customers have issued complaints. Many of the complaints stated that Consolidated Credit improperly managed a debt payoff plan, and the result of the mismanagement was negative marks on a credit report or late fees.

On top of that, all of Consolidated Credit’s counselors meet the Uniform Debt Management Services Act accreditation standards. That means all counselors are qualified to help you with your debt management strategy, and they have expertise in helping you with debt management services.

How do I sign up for Consolidated Credit?

  • People looking for a free a counseling session from Consolidated Credit can reach out to the company online or via the phone. People who want to talk with a credit counselor right away can call Consolidated Credit at 1-844-861-9479.

Those who want more time to gather information, can gather information at their own pace by filling out Consolidated Credit’s debt analysis tool. Once you’ve filled in all the necessary information, a credit counselor will reach out with recommendations on the best way for you to attack your debt.

What to expect after signing up for Consolidated Credit

Here’s how Consolidated Credit’s process works:

  • Step 1: During your first credit counseling session, a certified personal finance counselor will review your debts, your budget, your credit score and your options for debt relief. The counselor will help you understand whether your debt relief options.
  • Step 2: If the counselor does not think a do-it-yourself option for debt relief will work for you, they may recommend a debt management plan. The counselor will disclose the fees associated with the plan, and you can choose whether to enroll in it.
  • Step 3: During the payoff period, you will not be able to use your credit cards. You also cannot open any new credit card accounts. In most cases, you should be able to apply for an auto loan or mortgage during the payoff period.
  • Step 4: Anyone who chooses to enroll in a debt management plan will stop making payments to their creditors, and start making a monthly payment to Consolidated Credit. Consolidated Credit will distribute the payment among your creditors.
  • Step 5: After 36 to 60 monthly payments (less if you can add extra money to your payments), your debt will be paid off.

Alternative methods to pay down debt

Debt management plans are one method that you can pursue debt relief, but they aren’t the only option. In some cases, you may be able to pay off your debts faster using a DIY payoff plan. In other cases, your debt may be so overwhelming that bankruptcy or debt settlement makes more sense. Review these five options to see if one fits your needs better than a debt management plan.

Debt consolidation

Debt consolidation loans allow you to refinance all your existing credit card balances into a single loan (usually an unsecured personal loan). By refinancing all of your debt, you’ll deal with just one monthly payment instead of several. In most cases, a debt consolidation loan will also lower your interest rate, so you’ll pay less interest over time.

You may be able to explore personal loan offers from lenders using this tool from LendingTree. You’ll input information about yourself and what you need out of a loan. Afterward, you’ll see what lenders have to offer you.


  • Usually have fixed interest rates.
  • Fixed time to payoff debt.
  • Lower interest rates than most credit cards.
  • Likely to increase credit score, when paid as agreed.


  • Loan may have an origination fee.
  • Interest rate savings not guaranteed.
  • Retain access to credit cards (which could lead to more debt).


Credit Req.

Minimum 500 FICO

Minimum Credit Score


24 to 60


Origination Fee



on LendingTree’s secure website

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LendingTree is our parent company. LendingTree is unique in that you may be able to compare up to five personal loan offers within minutes. Everything is done online and you may be pre-qualified by lenders without impacting your credit score. LendingTree is not a lender.

Balance transfer credit card

People with high credit scores may qualify to transfer their existing credit card debt to promotional 0% APR balance transfer credit card. These credit cards offer a 0% APR on balance transfers for a limited period of time. After the promotional period ends, your interest rate will increase. Most of the time, borrowers need to pay a balance transfer fee (up to 5% of the balance) when using a balance transfer credit card.


  • Lowest possible interest rate.
  • Usually increases credit score (by decreasing credit utilization).
  • Opportunity to transfer balances again if you cannot pay off balance during the promotional period.


  • Interest rates increase following the promotional period.
  • Increases available credit, which could lead to more debt.
  • Balance transfer fees may slow down repayment.


Bankruptcy is the legal process that helps consumers and businesses resolve debt issues when they cannot handle their debt obligations. Most consumers will pursue Chapter 7 or Chapter 13 bankruptcy. If you cannot handle your debt load, you may want to speak to a bankruptcy attorney.


  • Complete relief from debts (following liquidation or repayment).
  • May be able to keep some or all assets.
  • Addresses most forms of debts.
  • Decisions are final.


  • Hurts credit score
  • You may not be able to take out a mortgage for up to two years following bankruptcy.
  • Chapter 13 bankruptcy repayment plan may last three to five years.
  • Can be expensive (high attorney’s fees and legal fees).

Debt settlement with an attorney or debt settlement company

Debt settlement is the practice of renegotiating the terms and balances of debts that are in or near default. Sometimes debt settlement companies will advertise that they can negotiate for repayment terms that are “pennies on the dollar” compared to what you owe.

The Consumer Financial Protection Bureau (CFPB) warns that working with a debt settlement company may be risky — it can lead to higher fees, penalty interest rates and other problems. Settling debt is also likely to have tax implications. Hiring an attorney that specializes in debt settlement may lead to less risk. You can find consumer advocacy attorney by searching the database at the National Association of Consumer Advocates.


  • May eliminate a portion of your debt.
  • Working with an attorney reduces your risks of legal repercussions.
  • Allows you to avoid working directly with creditors or collections agents.


  • May hurt credit score.
  • May lead to more fees and penalty interest rates.
  • Can be expensive.
  • Debt settlement often has tax consequences.

DIY debt settlement

People with debts in collections may be able to settle their debts on their own. Settling debts means negotiating the terms or balances of a loan. In general, collections companies will reduce the balance that you owe in exchange for a payment guarantee.

If you wish to pursue debt settlement on your own, the CFPB advises you to learn about the debt in collections, create a realistic budget for paying off the debt and negotiate with collectors.


  • No fees or expenses.
  • May eliminate a portion of the debt you owe.
  • Can help you avoid bankruptcy.


  • May not successfully negotiate for an affordable plan.
  • May accidentally revive a time-barred debt.

Advertiser Disclosure: The products that appear on this site may be from companies from which MagnifyMoney receives compensation. This compensation may impact how and where products appear on this site (including, for example, the order in which they appear). MagnifyMoney does not include all financial institutions or all products offered available in the marketplace.

Hannah Rounds
Hannah Rounds |

Hannah Rounds is a writer at MagnifyMoney. You can email Hannah here


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