Best Of
Low-interest business loan options include SBA loans and online loans. You'll need good credit and strong finances to qualify.
As a business owner with good personal credit and strong financials, it’s easier to qualify for cheap financing — meaning you can borrow money at a lower annual percentage rate. APR is an accurate measure of the cost of financing. It includes the interest rate as well as all the fees you’ll pay over the life of the loan.
Even if you can’t qualify for a loan from a traditional bank, which typically offers the best rates, there are alternative lenders that offer low rates on small-business loans.
Our pick for
Lowest-cost loans
$5k - $5M
5 - 25 years
Starting at 5.5%
As fast as 2 weeks
Pros
Cons
Qualifications:
Our picks for
Businesses two or more years old
6.99 - 24.99%
650
Pros
Cons
Qualifications:
12.18 - 36.00%
660
Pros
Cons
Qualifications:
| Lender | Best For | Est. APR | Min. Credit Score | Next Steps |
|---|---|---|---|---|
Top SBA Lenders | Best for Lowest-cost loans | Starting at 6% | 620 | See Your Loan Options
with Fundera by Nerdwallet |
Credibility Capital - Online term loan | Best for Businesses two or more years old | 6.99 - 24.99% | 650 | See Your Loan Options
with Fundera by Nerdwallet |
Funding Circle - Online term loan | Best for Businesses two or more years old | 12.18 - 36.00% | 660 | See Your Loan Options
with Fundera by Nerdwallet |
SBA loans: If you’re looking for the lowest-cost loan, SBA loans are by far your best bet for the lowest possible rates if your business is strong. With the SBA guaranteeing 75% to 85% of the financing, lenders can offer SBA loan rates of about 7% to 9% that are based on the prime rate.
But the application process at banks is a major time commitment — we’re talking months — and small-business owners may not have time for that. You can also turn to SBA-approved online lenders that offer a streamlined and quicker loan process.
Term loans: You can get a business loan with competitive rates at traditional banks and other lenders. Many traditional lenders, such as banks, require at least two years of business history and solid personal and business finances to qualify for a loan.
If don't qualify for a term loan at a bank, online lenders have less stringent qualifications and a quicker application process. But their business loan rates will likely be higher than a bank's.
Outside of traditional business loans, you can also consider using a personal loan for business or a business credit card. You typically need to have good to excellent credit to get the lowest APRs.
Personal loan: Using a personal loan for business is typically best for starting your company. Since your company is brand new, you won’t have any business or revenue history, which are two key components that small-business lenders consider. Instead, personal loan providers will qualify you based on your personal credit score and income.
Personal loans also tend to have lower APRs than many online alternative lenders, but defaulting on them could hurt your personal credit score.
Business credit card: Using a business credit card not only gives you access to a revolving line of credit, but you can also earn valuable rewards, like cash back. Credit limits on business credit cards are typically higher than what’s offered for personal credit cards.
Business credit cards are a good option for recurring or everyday purchases. You can qualify based on your personal credit even if you don’t have an established business history.
If none of these options seems like a good fit, NerdWallet has created a comparison tool for the best small-business loans to meet your needs and goals. We gauged lender trustworthiness, market scope and user experience, among other factors, and filtered them by categories that include your revenue and how long you’ve been in business.
To recap our selections...
The latest round of the Paycheck Protection Program opened in January, allowing businesses hard hit by the Covid-19 pandemic to apply for forgivable loans. PPP is offering first-time loans to a wider array of small businesses, and "second-draw" loans to small businesses hardest hit by the pandemic shutdowns.
SBA lenders offer some of the lowest APRs. SBA loans work best for established businesses that can wait a bit longer to obtain financing.
Online business loan rates range from 6% to 99% APR, while SBA loans have a fixed-rate ranging from 5.50% to 8% APR, based on the size of the loan and repayment period. The rate you receive depends on factors such as your credit score, annual revenue and time in business.