Editor's choice: Fundera business loans
- Small business loans up to $5 million
- Low interest rates
- Get financing in 5-10 days
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Finding a low-interest loan can save your business hundreds or thousands of dollars when you need the funds to expand or cover overhead. But not every business has the time to research the lowest rates its eligible for.
But time is money, they say. Let us help you save both with tips to finding a low-interest loan that’s the right fit for your business’s financing needs.
|$25,000||$500,000||620+ personal credit score, 2+ years in business, for-profit business in an approved industry|| |
|4.75% to 7%||$30,000||$5,000,000||650+ personal credit score, US citizen or permanent resident, 2+ years in business, $50,000+ annual revenue, no outstanding tax liens, no bankruptcies or foreclosures in past 3 years|| |
|6.98% to 19.97%||$3,500||$75,000||Must be an American Express Basic Cardmember or an American Express Business Cardmember in good standing.|
|8% to 75%||$2,000||$250,000||Be in business for 1+ year, $25,000+ annual revenue, have "reasonable" credit and be a US citizen.|
|12% to 18%||$10,000||$150,000||690+ credit score, less than 50% credit utilization ratio, few credit inquires, no recent negative lines on credit report|
Any business loan with an annual interest rate (AIR) of 3% to 10% is considered low interest, depending on where you borrow from.
However, it’s more common for lenders to display annual percentage rates (APR), which also include fees. APRs of 6% to 15% APR could be considered low.
The fees you’ll pay in addition to your APR depend on the lender and type of loan you’re applying for. Carefully read the fine print of your contract to avoid these costs taking your business by surprise.
The lowest interest rates typically go to applicants with the strongest credit, which means a select few qualify for the strongest rates.
When deciding on your rate, business lenders often consider:
The lender you choose can affect your loan’s interest rate. Start your search for a low-interest business loan with the following types of lenders.
Generally — though not always — lenders charge higher rates for smaller amounts. New businesses that need only a few hundred or thousand dollars might want to look into a microloan instead.
Microloans tend to come with lower interest rates than your typical business loan. Nonprofit lender Kiva Zip even offers business financing at 0% interest. Your business can also find microloans with a local CDFI, credit union or nonprofit lender in the area.
If you’re not yet sure about your business taking on a loan, look into alternative sources of funding to meet your needs.
Low-interest business loans can save your business money. But not every business can qualify — typically the lowest rates are for businesses and owners with an established sales record and credit history. They also can be hard to find if your business needs money quickly or doesn’t have the time to invest in applying with a bank.
To learn more, read our guide to business loans.
Image source: Shutterstock
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