 TITLE: How Do Small Business Loans Work? CONTENT: Where to Get a Small Business Loan\n----------------------------------\nThere are several different places you can go to for a small business loan, including:\n### Direct Online Lenders\nThere are many online lenders that offer loans directly to small business owners. Since they use the power of technology and algorithms, their loans are quicker to obtain than the loans of traditional lenders like banks.\nHowever, the costs of borrowing with direct online lenders is typically higher. You may want to pursue this route if you need access to quick cash and are having trouble qualifying for a loan from a traditional lender.\n### Large Commercial Banks\nWhile large commercial banks have rigorous requirements for small business loan borrowers, they have the power to offer larger loans than other lenders, which can be very helpful when you're growing your business.\nAnother advantage of taking out a small business loan from a large commercial bank is the chance to lock in low interest rates. Keep in mind that while financing with a commercial bank has its pros, these loans can be challenging to qualify for, especially if you don't have the best credit.\n### Large Community Banks\nCommunity banks are locally owned and operated. Because they are typically smaller than commercial banks, they can provide you with more individualized service, which can be a huge plus as your business grows.\nIn addition, unlike commercial banks, which may solely focus on your credit score and financial statements, community banks are more likely to look at your entire credit report and other aspects of your business. This is a huge advantage if you have a solid credit history but don't have the best credit score.\n### Peer-to-Peer Lending Sites\nSmall business loans from peer-to-peer lending sites such as Prosper and Lending Club are often easier to qualify for than loans from traditional lenders because the money comes from a group of investors instead of a single lender. These types of loans usually come with higher interest rates that can increase the overall cost of your loan.\nHere's how peer-to-peer lending sites work: The P2P lending site acts as the middleman between you (the borrower) and the investors. It can match your loan request with investors' funds. Investors that lend to you will receive the interest you pay on the loan minus the lending site's fee.\n### Bank Lenders Backed by the SBA\nMany SBA preferred lenders are banks that have strict requirements for applicants.\nAlthough SBA loans are difficult to qualify for, they are definitely worth considering, as they come with lower down payment requirements, lower interest rates and longer repayment terms than other options. END