Best 5 Small Loans Providers in 2020
Sometimes, you just need a little bit of extra cash. Whether it’s to help pay the bills, fund a home improvement project, or cover unforeseen expenditures on short notice; a small loan can help.
With a small loan, you can borrow only the money you actually need rather than pay for an enormous debt. Most small loans don’t require collateral, and you can get money in as little as one business day.
In this article, we’ll talk more about what small loans are, how they work, and why you might consider one. We’ll also highlight five of the best small loan providers on the market right now. By the end, you’ll have everything you need in order to make an informed decision about whether a small loan is right for you and which lender to use.
Summary of the Best Small Loans ProvidersReviewers ChoiceCashUSA.comRatingAvailable Loan Amount$500 - $10,000Available Term Length6 monthsRepresentative APR5.99% to 35.99%Product Details
- Best for borrowers looking to boost their success rate by seeking loans from numerous lenders
- High number of lenders increases your chances of succeeding
- Advances high loan limits – up to $10,000
- Encourages extended repayment periods – up to 5 years
- Not a lender but an intermediary
MoneyMutual LoanRatingAvailable Loan Amount$100 - $2,500Available Term Length3 to 72 monthsRepresentative APR264% to 1,304%Product Details
- Fast loan approval and processing times – 48hours
- Lends to all types of credit borrowers
- Easy to use interface
- Best for borrowers with poor credit in need of a loan up to $2,500 quickly
- No minimum credit score required
- No penalties for prepaying
- Very easy online application
- Not a direct lender
- High interest rates
Lending ClubRatingAvailable Loan Amount$5000 - $40,000Available Term Length3 yearsRepresentative APR6% and 35.89%Product Details
- Made loans to more than 2 million borrowers since 2010
- Works with a nationwide network of lenders
- Money is often delivered by the next day
- Best P2P lender for bad credit borrowers
- Long term loans of up to 60 months
- Lenders willing to advance you loans despite the low credit score
- Soft credit search doesn’t hurt your credit score
- Imposes an origination fees of up to 6%
Cash AdvanceRatingAvailable Loan Amount$100 - $1,000Available Term Length7 days to 12 monthsRepresentative APR15% to 1,564%Product Details
- Maintains the largest base of lenders both individuals and institutions
- Presents you with several loan options to choose from
- The loan terms – APR and term length are dependent on your credit score
- Best for short-term, small loans for borrowers with bad credit
- No minimum credit score for approval
- Online application is transparent
- APRs vary from lender to lender
UpstartRatingAvailable Loan Amount$1,000 - $50,000Available Term Length3 or 5 yearsRepresentative APR7.69% to 36%Product Details
- Owned by the Ute Indian Tribe
- Member of the Online Lenders Association
- Works with a nationwide lender network
- Best for individuals without a borrowing history or credit record
- More than 70% of loan applications are processed automatically
- Overlooks FICO and embraces AI in determining credit score
- AI removes bias from the credit decision
- Imposes origination fees on loans
- Advances loans to individuals without a credit history
- Reports lowest cases of loan defaults
- Has a higher than the banks' average credit approval rate – 73%
Understanding Small Loans
A small loan is a good way to put extra cash in your bank account to cover minor expenses. What constitutes a “small” loan varies from person to person and lender to lender. But in general, loans under $5,000 are considered small.
What Can You Use a Small Loan For?
In most cases, you can use a small loan to pay for anything you want.
Small loans are frequently used to pay for necessary expenses between paychecks. For example, you can borrow money to pay your bills on time or to cover the cost of food. Alternatively, you can use a small loan to pay for an unexpected expenditure, such as a medical bill or an emergency.
That said, you can also borrow money for non-essential expenses. Cash from a small loan can be used to make improvements to your home, to purchase a new appliance, or for anything else you have in mind.
Types of Small Loans
There are many different types of small loans out there, each with their own advantages and disadvantages. Understanding the options you have to get an extra infusion of money into your bank account is important.
Payday loans are the most common and well-known type of small loan. These loans are typically used when you want to borrow less than $1,000 for a period of a few months or less—just enough money and time to carry you through to your next paycheck.
The convenience of payday loans is offset by the fact that they can be very expensive. Many lenders charge interest rates well over 100%.
The second most common type of small loan is a personal loan. Like payday loans, these don’t require collateral. But, in contrast to payday loans, the amount you borrow is often more than $1,000 and the repayment period may be several years. The advantage, however, is that interest rates are much lower and there’s often no penalty if you repay your loan ahead of schedule.
Finally, there are several secured loan options that you can use to get extra cash in your bank account. Title loans require you to collateralize your loan with your car and if you fail to make payments, your lender can repossess your car. Pawnshop loans require you to secure your loan with other valuables, like appliances or jewellery. Both of these types of small loans are generally less favorable than unsecured payday or personal loans.
Affording a Small Loan
When looking for a small loan, it’s important to keep in mind that borrowing cash can be expensive. After fees and interest, you could end up paying back significantly more money than you initially borrowed. Before you take out a small loan, especially for non-essential expenses, it’s essential to figure out how much you can safely borrow.
Financial experts recommend that your monthly payments are no more than 5% of your monthly income. In addition, these payments should be fixed so that you’re not struggling to make multiple payments piled up on one another. Ideally, the length of your loan repayment plan should be between three and 12 months.
Best Small Loan Providers in 2020
2. MoneyMutual - Best for Bad Credit
Bad credit isn’t a problem for getting a small loan with MoneyMutual. This lender doesn’t have a minimum credit rating. Instead, the only requirements are that you are currently employed and make at least $800 per month.
Unfortunately, you can expect to pay a lot for MoneyMutual turning a blind eye to poor credit. Loan interest starts at 264% APR, and origination fees can range as high as 5% of your total loan.
Even then, this lender also stands out for hitting the sweet spot of loan amounts and lengths. You can borrow anywhere from $100 to $2,500, and repayment time can range from 3 months to 6 years. Helpfully, MoneyMutual doesn’t charge prepayment penalties, giving you the option to pay your loan off sooner if you want.
- APR: 264% to 1,304%
- Loan Type: Payday Loan
- Loan Amounts: $100 to $2,500
- Minimum Credit Rating: None
- Length: 3 to 72 months
- Works with Bad Credit: No minimum credit score required
- Medium-term Loans: Repay over 3 months to 6 years
- No Prepayment Penalty: Pay your loan off sooner with no fee
- High Interest Rates: Start at 264% and go up to four digits
- Origination Fees: As high as 5% of your loan
3. LendingClub - Best for Medium-sized Loans
If you need to borrow $1,000 or more, LendingClub is a reasonably affordable option. This peer-to-peer lending network issues loans with a maximum APR of 36%, and the majority of loans are even less expensive. Origination fees range from 1% to 6% of your loan, though, so make sure to take that into account when comparing your options.
Loan terms are very long compared to other small loan providers, lasting 3 to 5 years. But, there’s no prepayment penalty, so you can lower your interest charges by paying more than your required monthly payments.
Perhaps the biggest downside to LendingClub is that it's only available for people with decent credit. The platform requires a minimum credit score of 600 in order to consider you for a small loan, and you must have at least three years of credit history.
- APR: 7% to 36%
- Loan Type: Personal Loan
- Loan Amounts: $1,000 to $40,000
- Minimum Credit Rating: 600
- Length: 3 to 5 years
- Affordable Loans: Interest rates as low as 7% APR
- Long Loan Term: Reduces the size of your monthly payments
- Medium-sized Loans Available: Up to $5,000 and beyond
- Origination Fee: Adds a significant cost to your loan
- Good Credit Required: Minimum credit score of 600
4. CashAdvance - Best for Short-term Loans
CashAdvance is an online payday lender that makes it easy to get a small, short-term loan. The company offers loans up to $1,000 and repayment periods from 7 days to 12 months. There’s also no minimum credit score, so you can get approved even with bad credit.
Interest rates at CashAdvance can vary widely depending on your needs and credit. If you borrow $1,000 for 12 months, for example, your interest rate could be as low as 15%. A one-week loan might come with an interest rate over 1,500%. Thankfully, the online application interface is upfront about what your loan will cost relative to how much you’re borrowing.
One other thing to watch out for with CashAdvance is that some loans do carry prepayment penalties. In that case, you’ll end up paying extra fees if you try to save money by paying off your loan early.
- APR: 15% to 1,564%
- Loan Type: Payday Loan
- Loan Amounts: $100 to $1,000
- Minimum Credit Rating: None
- Length: 7 days to 12 months
- Short-term Loans: Repayment periods as short as 7 days
- No Minimum Credit Score: Get approved even if you have bad credit
- Helpful Online Application: Clearly shows the cost of your loan
- High Interest Rates: Especially for shorter-term or smaller loans
- Prepayment Penalties: Some loans cannot be paid off early
5. Upstart - Best for Quick Cash
Upstart is another good option if you need a small loan, but don’t want to pay exorbitant interest rates for it. This lender limits interest to 36% APR and offers loans at as low as 6% APR. Watch out for origination fees, which can be up to a whopping 8% of the value of your loan.
One of the things that sets Upstart apart from other lenders is that you can get cash quickly. The company promises to get money into your bank account by the next business day, so it’s almost as fast as a payday loan, but without any of the high-interest charges.
Another factor that allows Upstart to stand out is that this lender will work with borrowers with no credit history. The company looks at job history and education in order to determine your creditworthiness, which can be an advantage for a lot of borrowers.
- APR: 6% to 36%
- Loan Type: Personal Loan
- Loan Amounts: $1,000 to $50,000
- Minimum Credit Rating: 580
- Length: 3 to 5 years
- Low Interest Rates: As low as 6% APR
- Quick Cash: Money in your bank account by the next day
- Alternative Credit Metrics: Looks at job history and education
- High Origination Fees: Up to 8% of your loan value
- Medium-sized Loans: Minimum amount you can borrow is $1,000
Borrowing a small amount of money can be a great way to pay your bills and meet daily expenses in between paychecks. There is a wide range of lenders offering both payday and personal loans with different loan terms, interest rates, and minimum loan amounts. So, it’s important to determine exactly what you need before applying.
With our review of the five best small loan providers on the market today, you can make a more informed decision about whether a small loan is right for you. If a little bit of extra cash can help you meet expenses, apply today.
Can I get a small loan with bad credit?Yes, there are a number of lenders who will make small loans to borrowers with bad credit or even no credit history. However, these lenders tend to charge much higher interest rates. Consider whether you have other options, such as friends and family or a credit card, before committing to a small loan for bad credit.
Is it possible to reduce the cost of my loan?The best way to reduce the cost of your loan is to improve your credit score. Lenders frequently offer more favorable interest rates to borrowers with a stronger credit history. That said, you may also be able to knock your interest rate down by enrolling in auto-pay when you accept a loan offer.
Are there fees I should know about when applying for a small loan?Many loan offers are rife with fees, including origination fees and late fees. Origination fees are calculated as a percentage of your loan amount and are deducted from your loan before it even hits your bank account. Make sure your loan is large enough so that you have the money you need after the origination fee is taken out. Late fees are charged if you are late on a payment, and can quickly add up depending on the size of your loan.
Does applying for a small loan affect my credit score?Most lenders conduct a soft credit check rather than a hard credit check in order to approve you for a loan. So, your credit score won’t be affected and there’s no risk to applying at multiple lenders.
Can repaying a small loan help my credit score?Repaying a small loan can help your credit score. On the other hand, issues with repayment can hurt your credit score. If you want to see your credit score go up, make sure that your payments are on time every month and that you pay back the loan during the original payment period.