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.