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 June 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.
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Best low-interest business loans
Read about how each of our best low-interest business loans work before you apply.
Best SBA loan: SmartBiz business loans
650
Min. Credit Score
5.04%
Starting APR
$5,000,000
Max Loan Amount
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
| Min. Loan Amount | $30,000 |
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| Max. Loan Amount | $5,000,000 |
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| APR | 4.75% to 7% |
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| Interest Rate Type | Variable |
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| Min. Credit Score | 650 |
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| Minimum Loan Term | 120 months |
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| Maximum Loan Term | 300 months |
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Best line of credit: BlueVine business lines of credit
600
Min. Credit Score
4.8%
Starting APR
$250,000
Max Loan Amount
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
| Min. Loan Amount | $5,000 |
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| Max. Loan Amount | $250,000 |
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| APR | Starting at 4.8% |
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| Interest Rate Type | Variable |
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| Min. Credit Score | 600 |
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| Minimum Loan Term | 6 months |
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| Maximum Loan Term | 12 months |
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| Turnaround Time | as little as 24 hours |
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Best peer-to-peer loan: Funding Circle business loans
660
Min. Credit Score
Starting at 4.99%
Starting APR
$500,000
Max Loan Amount
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
| Min. Loan Amount | $25,000 |
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| Max. Loan Amount | $500,000 |
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| APR | Starting at 4.99% |
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| Fee | 3.49% to 6.99% |
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| Interest Rate Type | Fixed |
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| Min. Credit Score | 660 |
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| Minimum Loan Term | 3 months |
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| Maximum Loan Term | 120 months |
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Best business loan marketplace: Lendio business loans
560
Min. Credit Score
6%
Starting APR
$5,000,000
Max Loan Amount
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
| Min. Loan Amount | $500 |
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| Max. Loan Amount | $5,000,000 |
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| APR | Starting at 6% |
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| Interest Rate Type | Variable |
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| Min. Credit Score | 560 |
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| Minimum Loan Term | 12 months |
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| Maximum Loan Term | 300 months |
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Best microloan: Kiva business loans
None
Min. Credit Score
0%
Starting APR
$15,000
Max Loan Amount
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
| Min. Loan Amount | $25 |
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| Max. Loan Amount | $15,000 |
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| APR | 0% |
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| Interest Rate Type | N/A |
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| Minimum Loan Term | 1 months |
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| Maximum Loan Term | 3 months |
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Best secured bank loan: First Republic Bank business loans
700
Min. Credit Score
Starting APR
$500,000
Max Loan Amount
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
| Min. Loan Amount | $25,000 |
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| Max. Loan Amount | $500,000 |
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| APR | Starting at 2.25% |
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| Interest Rate Type | Variable |
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| Min. Credit Score | 700 |
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| Maximum Loan Term | 60 months |
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Best unsecured bank loan: Bank of America business loans
670
Min. Credit Score
Starting at 4.75%
Starting APR
$100,000
Max Loan Amount
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
| Min. Loan Amount | $10,000 |
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| Max. Loan Amount | $100,000 |
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| APR | Starting at 4.75% |
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| Fee | $150 |
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| Interest Rate Type | Fixed |
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| Min. Credit Score | 670 |
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| Minimum Loan Term | 12 months |
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| Maximum Loan Term | 60 months |
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Best CDFI loan: Accion Opportunity Fund business loans
Not stated
Min. Credit Score
5.99%
Starting APR
$100,000
Max Loan Amount
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
| Min. Loan Amount | $5,000 |
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| Max. Loan Amount | $100,000 |
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| Fee | 4% to 5% |
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| Interest Rate Type | Fixed |
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| Minimum Loan Term | 6 months |
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| Maximum Loan Term | 60 months |
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Where can I get a low-interest business loan?
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.
Government loan programs for COVID-19
While the Paycheck Protection Program (PPP) is closed to new applicants, there are still low-interest federal and state options. The Economic Injury Disaster Loan program is still open, which sets interest rates at 3.75% for small businesses and 2.75% for nonprofits.
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.
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.
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.
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.
CDFIs
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
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.
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.
What’s a low interest on a business loan?
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.
How has COVID-19 affected business loan rates?
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.
Can my business qualify for a low interest rate?
- 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
- Low-risk industry
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.
Other factors to consider
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.
- Business credit cards offer revolving financing better suited for day-to-day expenses than a loan — like lunch orders and office supplies. And you won’t pay interest if you can pay the balance in full each month.
Recap: Which lenders offer low-interest business loans?
These providers offer some of the lowest interest rates available compared to other similar types of financing.
Visit our guide to the best business loans of 2021 for more options.
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