Bank loans and SBA loans tend to come with the lowest interest rates. But they might not be right for every small business. Traditionally, large banks and SBA lenders tend to have lower approval rates and a longer turnaround time than online providers.
That’s why we selected the best low-cost options for a variety of different types of loans when selecting the best low-interest loans of October 2021.
After reviewing over 220 providers, we chose these providers primarily based on the annual percentage rate (APR), rather than interest. Because APR includes interest and fees, we believe it’s a more accurate representation of the cost. We keep this list regularly updated, based on the most recent rates available.
8 best low-interest business loans
These eight lenders offer some of the lowest interest rates available compared to other similar types of financing.
SmartBiz is an online connection service that specializes in loans backed by the Small Business Administration, or SBA loans. This allows you to quickly compare options and find the lender that your business is eligible for. While you’ll pay a referral and packaging fee for this service, SBA loans are still often cheaper than the alternative for businesses that have struggled to find an SBA lender in the past.
Specializes in SBA loans
Can also connect you with bank loans
Makes it easier to find a lender if you’ve struggled on your own
Packaging and referral fees
Not a direct lender
$30,000 – $5,000,000
4.75% to 7%
Min. Credit Score
10 to 25 years
640+ 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
Lendio is an online marketplace that can help you connect with a business loan. In addition to a wide range of business financing, you can also use this service to prequalify with low-rate loan programs like SBA loans. But while it offers options for bad credit borrowers and startups, you likely won’t qualify for the lowest advertised rates.
Over 75 partner lenders
SBA and PPP loans available
Partners with banks and online lenders
Not a direct lender
You may have to field calls from partners
Low rates not available to all businesses
$500 – $5,000,000
Starting at 6%
Min. Credit Score
1 to 25 years
Operate business in US or Canada, have a business bank account, 560+ personal credit score
BlueVine is an online lender that offers lines of credit with some of the lowest starting interest rates available. There’s no origination or monthly maintenance fees and it can fund you within two business days. There’s also no draw fee, though BlueVine charges $15 if you want to receive your funds the same day you make a request. While it accepts credit scores as low as 600, you likely won’t qualify for BlueVine’s starting rate of 4.8% if you just make the cutoff. And each withdrawal turns into a loan with a term of 6 to 12 months, which you repay weekly, which is less flexible than a revolving line of credit.
Low starting rate of 4.8%
Accepts fair credit
Turnaround within two business days
Less flexible payments than revolving credit line
$15 fee for same-day funding
Potentially high APR for fair credit borrowers
$5,000 – $250,000
Starting at 4.8%
Min. Credit Score
6 to 12 months
6+ months in business, $10,000+ in monthly revenue, 600+ credit score
Funding Circle is a peer-to-peer platform that offers business loans with rates as low as 4.99%. It accepts fair credit scores as low as 660 and doesn’t advertise a minimum revenue cutoff. But it’s not transparent about the maximum interest rates available. And it charges an origination fee of to cover platform costs — common for a P2P lender, but higher than your typical direct provider.
Accepts fair credit
No stated minimum revenue required
No prepayment penalties
Origination fee starts at a high
Five-day turnaround in some cases
Doesn’t disclose maximum APR
$5,000 – $500,000
4.99% to 38.43%
Min. Credit Score
3 to 120 months
660+ personal credit score, 2+ years in business, for-profit business in an approved industry, not located in Nevada
Kiva is a nonprofit offering interest-free microloans to entrepreneurs and small businesses. It’s one of the best deals out there, but it’s not the right choice for everyone. You’ll have to raise funds from at least 10 people in your social network to get approved, and the whole process can take up to 45 days. It’s best for community-oriented businesses that need small amounts of funding off the ground — loans stop at $15,000.
0% APR loans
No minimum credit score
Can be used to start a business
Must raise funds from your social network first
Can take 45 days to fund
No customer service line
$25 – $15,000
1 to 3 years
Have members of social network willing to contribute, live in US, ages 18+, not in bankruptcy, not a registered sex offenders or terrorist, not convicted of violent or financial crimes in past five years.
First Republic Bank offers some of the lowest interest rates and fees available when it comes to business financing. Its term loans and lines of credit start at a low introductory rate of 1.95% APR for the first six months. And afterward, minimum rates increase to 2.25% APR. But rates are variable — and will increase if the Federal Reserve raises interest rates. And like most bank loans, your business must be around for at least three years to qualify. Skip this one if it’s one of your first business loans — or you need less than $25,000. Or, if your business isn’t near one of its branches, which are mainly on the east or west coast.
Promotional APR for first six months
Specialty loan agents to work with nonprofits
Post-intro rates start at 2.25%
Offers variable rates, which can increase
Only available in seven states
Lowest APR requires autopay from a First Republic account
$25,000 – $500,000
Starting at 2.25%
Min. Credit Score
Up to 60 months
3+ years profitable, 700+ personal credit score, valid checking account with First Republic Bank, meet additional credit standards
Bank of America offers some of the lowest rates on unsecured business loans out there — in addition to a wide range of other products, like business auto loans. It’s also one of the few national banks that’s truly available in all 50 states. But like with most bank loans, it can be difficult to qualify if you aren’t already a customer. Bank of America has also paused its lending program to focus on the Paycheck Protection Program — though it’s likely to start accepting applications again soon.
Low rates compared to other unsecured loans
Business auto loans available
Available in all 50 states
Paused applications to process PPP loans
May be difficult to qualify as new customer
Flat $150 origination fee regardless of loan amount
$10,000 – $100,000
Starting at 4.75%
Min. Credit Score
Depends on loan terms
At least 2 years in business with current ownership, 670+ credit score, $100,000+ in annual revenue.
Accion Opportunity Fund is one of the few community development financial institutions, or CDFIs, that offers financing across the country with an online application. It has some of the lowest starting rates out there, paired with flexible requirements — you only need to make $50,000 in annual revenue and there’s no stated credit score minimum. And it offers coaching and mentoring programs to help your business grow successfully. But AOF is relatively new — it’s the product of a merger between two nonprofit lenders — and may be working out some kinks. Both Accion and Opportunity Fund have gotten mixed reviews on the quality of customer service in the past.
Low 5.99% starting APR
Low revenue requirement compared to other lenders
No stated minimum credit score
Established as AOF in March 2021
Doesn't disclose maximum rates
Mixed customer service reviews
$5,000 – $100,000
5.99% to 25.99%
12 to 60 months
12+ months in business, $50,000+ in annual sales, 20%+ ownership of business, 18+ years old
7 types of lenders that offer low-interest business loans
Under normal circumstances, banks, nonprofits and other providers that offer government-backed loans have the lowest interest rates on the market. But currently COVID-19 assistance loan programs offer lowest rates available.
Many local governments have loan and grant programs for local businesses as well. For example, the New York Forward Loan Fund offers loans with interest rates fixed at 3% for small businesses and 2% for nonprofits. But as the economy recovers, fewer and fewer of these programs will be available.
2. SBA lenders
SBA lenders offer government-guaranteed loans to established businesses that might not qualify for a bank loan. The SBA sets limits to interest and fees for all SBA loans that these lenders can charge, depending on the program and loan size.
Some SBA loans might even offer options to startups and business owners with bad credit, like the SBA Community Advantage and microloan programs. But generally, you need to have at least three years in business and good credit to qualify for most SBA loan programs.
3. Large national banks
Large national banks like Bank of America, Chase and Wells Fargo tend to offer the lowest interest rates out there on loans. For example, First Republic Bank offers business loans with introductory rates that start at 1.95% APR for the first six months and adjust to a variable rate Starting at 2.25% APR.
But national banks are highly risk-averse and offer some of the hardest loans to qualify for as a small business. Startups, business owners with credit scores below 670 and businesses in traditionally high-risk industries like construction may want to look into other options.
4. Regional and community banks
Regional banks like Citizens Bank and small community banks might offer slightly higher rates than most national banks — usually they start at around 5% APR. But they're generally cheaper than online lenders, are better suited to work with small businesses and offer more than just financing.
Community banks in particular are often intimately familiar with the local market and can offer personalized advice. And since these lenders are small, they can often be more flexible with credit requirements, such as the time in business or credit score minimum.
Community development financial institutions, or CDFIs, are small nonprofit lenders with a mission to support the economy in the community it serves. They often offer relatively low-cost loans to small businesses that can’t qualify for an SBA or bank loan. But they’re generally more expensive than a bank or SBA loan.
Microlenders are nonprofits that offer small-dollar financing to entrepreneurs and startups. While rates often top 12% APR, they’re cheap compared to the other options available to the borrowers they target. For example, interest rates on online loans available to startups and borrowers with bad credit typically top 60% APR.
7. Credit unions
While most credit unions don’t have business loan programs, those that do often have rates comparable to a regional or community bank. For example, Lake Michigan Credit Union’s business loan rates start at 5%. Requirements also often compare to regional or community bank loans — plus, you typically have to become a credit union member.
Rates under 15% APR are considered low-interest
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 APR instead of AIR. Since business loans typically come with origination fees of 1% to 5% of the loan amount, APRs of 6% to 15% APR is usually considered low. That's because business loans can reach 100% APR or higher — especially with online short-term loan.
Business loan rates decreased during COVID-19 — but so did approvals
The coronavirus outbreak has generally lowered interest rates across the board. In March 2020, the federal reserve lowered the interest rate it charges banks to borrow money from the government from 1.5% to a historic low of 0.25%, lowering interest rates for all types of credit, including business loans.
However, business lending became a lot more risky during COVID-19, with safety precautions cutting into many firm’s bottom lines. Many lenders paused their regular lending programs to focus on the PPP in the spring and fall of 2020. And many haven’t fully reopened. For example, Bank of America still doesn’t accept applications to its unsecured lending programs as of June 2021.
Those that have reopened don’t necessarily charge lower rates — especially online lenders that specialize in startup or fair credit financing. For example, the starting rates for online lender OnDeck’s term loans jumped from 11.89% APR before COVID-19 to 35% APR after.
That’s why coronavirus assistance programs may be the cheapest option for most small businesses. If you've already received as much COVID-19 assistance as you can, consider applying for an SBA loan before turning to banks or online lenders. The SBA has temporarily lowered fees for some programs and increased the guarantee, making it easier to qualify for lower-than-normal rates.
You need good credit and a history of strong revenue to qualify
You typically need to meet the following requirements to qualify for a low-interest business loan:
At least three years in business
Good or excellent credit score of at least 670
Profitable business with regular revenue
Low debt obligations compared to revenue
While requirements generally depend on the lender and type of loan, the lowest rates tend to go to these types of businesses.
Each lender has its own underwriting criteria. That's why comparing offers from multiple providers can help you find the lowest interest rates available to you.
More ways to compare business loans
While the interest rate is a large factor in your loan’s cost, it’s not the only thing you should compare. These factors can help you find financing that’s a good fit for your business.
Available loan amounts are key to comparing lenders. Look for a provider that offers the exact amount you need to avoid over-borrowing.
Loan terms tell you how long you have to pay off the loan and determine your monthly payment. A longer term gives you a lower payment but a higher total cost.
Monthly payments are how much you owe each month and will have an immediate effect on operations. Looking for a monthly payment you can afford is important to avoid defaulting on a loan.
Origination fees are a percentage of your loan that the lender either deducts or adds to the balance at closing. This can affect how much funding you receive and should factor into the amount you apply for.
Minimum requirements for credit score, revenue and time in business tell you where the lender isn’t willing to budge. For the best rates, look for a lender with requirements you comfortably meet.
Customer reviews on sites like Trustpilot and the Better Business bureau tell you what you can expect from customer service and alert you to red flags that you should watch out for.
Low-cost alternatives to business loans
Business loans aren’t always the right choice for every financing need. You may want to consider these alternatives before you apply.
Business grants offer funds that your business doesn’t have to repay, usually up to around $15,000. While traditionally grants are mostly available to nonprofits, COVID-19 grant programs are a good option for businesses with inconsistent revenue.
Personal loans can be a good choice if you need seed funding to start a new business. But a personal loan to fund a business comes with some risk: You’ll be responsible for payments even if your business shuts down.
Anna Serio is a trusted lending expert and certified Commercial Loan Officer who's published more than 1,000 articles on Finder to help Americans strengthen their financial literacy. A former editor of a newspaper in Beirut, Anna writes about personal, student, business and car loans. Today, digital publications like Business Insider, CNBC and the Simple Dollar feature her professional commentary, and she earned an Expert Contributor in Finance badge from review site Best Company in 2020.
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