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Best Low-Interest Business Loans of 2021

Low-interest business loan options include SBA loans and online loans. You'll need good credit and strong finances to qualify.
Jackie ZimmermannSeptember 20, 2021
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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.

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LenderBest ForEst. APRMin. Credit ScoreNext Steps

SBA 7(a) loan

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Best for Lowest-cost loans5.50-8.00%650
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Live Oak Bank - SBA loan

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Best for Lowest-cost loans5.50-8.25%650
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Credibility Capital - Online term loan

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Best for Businesses two or more years old6.99-24.99%650
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Funding Circle - Online term loan

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Best for Businesses two or more years old12.18-36.00%660
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Summary of Best Low-Interest Business Loans of 2021

Our picks for

Lowest-cost loans

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SBA 7(a) loan

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Est. APR

5.50-8.00%

Min. Credit Score

650

7(a) program participants include specialized lenders like Live Oak Bank and big-name traditional banks like Wells Fargo.

Pros

  • Available as a term loan or line of credit.
  • Interest rates are capped.
  • Long repayment terms available.

Cons

  • Personal guarantee is required.
  • Collateral is typically required.
  • Longer processing times than online lenders.
Read full review

Qualifications:

  • Be a for-profit U.S. business.
  • Must first use alternative financial resources, including personal assets.
  • Financial qualifications determined by individual lender.
Lowest interest rate
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Live Oak Bank - SBA loan

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Est. APR

5.50-8.25%

Min. Credit Score

650

Live Oak Bank's SBA loans work best for established businesses looking to finance an expansion.

Pros

  • Competitive rates among online lenders.
  • Faster than getting an SBA loan from a bank.

Cons

  • Must have strong financials, supported by personal and business tax returns for the past 3 years.
  • Only for specific industries.
  • Stringent rules on use of proceeds.
  • Requires business lien and personal guarantee.
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Qualifications:

  • Minimum credit score: 650.
  • Cash flow must be able to support the debt.
  • No bankruptcies or foreclosures.
  • No outstanding tax liens.

Our picks for

Businesses two or more years old

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Credibility Capital - Online term loan

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Est. APR

6.99-24.99%

Min. Credit Score

650

Credibility Capital offers low-cost business loans that work best for small-business owners with strong credit.

Pros

  • Competitive rates among online lenders.
  • No prepayment penalty.
  • Extra monthly payments can save interest cost.

Cons

  • Requires high minimum credit score and revenue.
  • Requires business lien and may require personal guarantee.
  • Not available in Nevada, North Dakota, South Dakota or Vermont.
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Qualifications:

  • Minimum credit score: 650.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: $200,000.
  • No bankruptcies in the past 5 years.
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Funding Circle - Online term loan

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Est. APR

12.18-36.00%

Min. Credit Score

660

Funding Circle is an option for established businesses that are financing an expansion or refinancing debt.

Pros

  • Cash can be available within 3 business days.
  • Competitive rates among online lenders.
  • No minimum revenue requirement.

Cons

  • Requires business lien and personal guarantee.
  • Not available in Nevada.
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Qualifications:

  • Minimum credit score: 660.
  • Minimum time in business: 2 years.
  • Minimum annual revenue: None.
  • No bankruptices in the past 7 years.
May fund quickly

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Types of low-interest business loans

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.

If you’re looking for business loan alternatives

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.

Find and compare small-business loans

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.
Last updated on September 20, 2021

To recap our selections...

Best Low-Interest Business Loans of 2021

Frequently Asked Questions

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