Banks: cheapest money, strictest door
Online lenders approve more easily but can charge 14% to 99% [1]. Banks usually charge the least. NerdWallet, citing Federal Reserve data, reports average small-business bank loan rates of 6.37% to 10.98% in the first quarter of 2026 [1]. The tradeoff is the bar to get in: banks look for years of tax returns, steady profit, good personal credit and often collateral.
Banks are also where most government-backed lending happens. In SBA's loan file, banks made 6,260 of the 6,793 SBA 7(a) loans for New Jersey projects from October 2023 through June 2026, through 150 different banks [2]. If a bank turns you down for a regular loan, ask whether it would consider an SBA loan or the NJEDA Premier Lender Program, where the state takes up to half of the bank's loan [5]. Either can turn a no into a yes without changing lenders.
Credit unions: member-owned, sometimes surprisingly large
Credit unions lend to members, and many small business owners already bank at one for personal accounts. Their business lending is smaller in volume but not in size. In SBA's data, credit unions made 58 SBA 7(a) loans for New Jersey projects from October 2023 through June 2026, but the median loan was $710,000, far above the $150,000 statewide median [2]. Financial Resources Federal Credit Union, with a New Jersey address in SBA's file, made 26 of them [2].
Start with the one where you already have accounts. Your deposit history is the evidence they will weigh most.
CDFIs: community lenders for businesses banks pass on
A community development financial institution (CDFI) is a mission-driven lender certified by the U.S. Treasury's CDFI Fund, which keeps a public list of certified CDFIs [6]. CDFIs often lend to startups, owners with thin or damaged credit, and businesses in lower-income areas, and they usually pair the loan with coaching.
NJEDA lists these CDFIs that serve New Jersey [7]:
- Cooperative Business Assistance Corporation (CBAC), focused on Camden
- BOC Capital, with a special focus on women, minority and immigrant entrepreneurs
- Greater Newark Enterprises Corporation (GNEC)
- New Jersey Community Capital (NJCC)
- Pursuit Lending, serving New Jersey, New York and Pennsylvania
- Regional Business Assistance Corporation (RBAC), lending since 1981
- Renaissance Economic Development Corporation
- UCEDC, statewide
Some CDFIs also lend NJEDA money under rules that cap the rate at 5% and require a payment break of at least 12 months [3]. Our micro business loan alternatives page lists which ones.
Online and other nonbank lenders: fast, flexible, more expensive
Online lenders decide quickly and accept shorter histories and lower scores. NerdWallet notes that "Interest rates on some types of online business loans can range from 14% to 99%" [1]. That range covers very different products, so the label matters less than the total payback.
Not every nonbank lender is expensive. Sixteen nonbank lenders made 475 SBA-backed loans for New Jersey projects in the same period, with a median of $232,300 [2]. ReadyCap Lending, based in Berkeley Heights in SBA's file, made 286 of them [2].
A merchant cash advance is not a loan
Many "loan companies" that advertise same-day money offer merchant cash advances: a purchase of future receivables, collected by a split of sales or a fixed debit. The cost is set as a factor or a fee, not a rate, so ask for the total you will pay back in dollars. Read our New Jersey MCA law guide before signing one.
How to compare offers from different kinds of lenders
Ask every lender for the same five things in writing, then line them up:
| Ask for | Why it matters |
|---|---|
| Amount you actually receive | Fees taken at closing shrink the money you get |
| Total you will repay, in dollars | The only number that compares a bank, an online loan and an advance fairly |
| APR, or enough to estimate it | Puts different terms on one scale |
| Payment amount and how often | A daily or weekly debit hits cash flow differently than monthly |
| Prepayment terms and fees | Some products charge the full cost even if you repay early |
Then check the lender. For a bank or credit union, look up its charter. For a CDFI, check the CDFI Fund's certified list [6]. For any lender, search the New Jersey Attorney General and court records for complaints. Comparing two real offers in dollars beats any ranking.
Business Funders does not lend. Our quiz sorts your situation into the lender types above and shows the realistic cost range for each, and Batch Capital, our funding team, can quote private options if those fit.