Low-interest business loans

Most business loans come with an origination fee, typically from 1% to 5% of the amount you’re borrowing. The lender deducts this fee from your loan amount before your business gets its funds.

Factor any origination fee into your plans so that you aren’t left short. If you borrow $5,000 with a 1% origination fee, for instance, your business repays the $5,000 but receives that amount less the fee — or $4,950.

Some lenders charge a flat fee of up to $100 to process your application, while others calculate the fee as a percentage of your total loan amount.

For a secured business loan, you might also pay for an expert to appraise the value of your business assets.

Costs vary widely depending on the asset. Real estate can easily set your business back $300 to $500, while a car evaluation could be free.

If your business is applying for a government-backed loan, you may need to pay a fee on the funds amount the SBA guarantees — typically 75% to 80% of the loan amount. The SBA charges a fee based on the guaranteed portion, not the gurarntee

How much you pay depends on the amount the SBA guarantees on your loan and your loan term. Terms of 12 months or more come with the following fees:

• $150,000 and under — 2%
• $150,001–$700,000 — 3%
• $700,001–$1 million — 3.5%
• $1 million or more — 3.5% up to the first guaranteed portion worth $1 million, 3.75% of $1 million and up

Loans with a term of less than 12 months come with a 0.25% fee on the guaranteed amount, regardless of how much you borrow

Government-backed loans are a popular choice for small business owners looking for a competitive rate. APRs on loans from the SBA’s 7(a) program can range from 6.30% to 10% — solidly low interest rates. Loan amounts go up to $5 million, depending on the program.

The downside to Small Business Administration loans is that they come with a long, complicated application. Services like SmartBiz are available to take care of the most difficult parts.

SBA loans also have some of the highest rejection rates: Only 55% of SBA applicants were approved in 2016, according to a survey by the Federal Reserve.

Banks often offer business loans with low rates ranging from 4% to 13%. They are a solid option for established businesses looking to fund big, complicated projects, like purchasing real estate or acquiring business.

Young businesses and owners with low credit might find it hard to qualify with a bank. Bank loans can also take several weeks and work hours for approval, which isn’t ideal for emergency expenses.

To improve your odds of approval, you might also want to stick to that bank around the corner. In 2016, small regional and national banks came in at higher approval rates than large banks.

Online lenders tend to offer low-interest business loans with APRs that start at 7%. They can also go as high as 100% APR.

Borrowing online isn’t always cheaper than your local bank either. But digital lenders tend to offer wider ranges with more flexible eligibility criteria. Online lenders also tend to turn around your loan faster, with a few advertising funds the next business day.

The application often takes only a few minutes, making it a decent option if you don’t have time to head to the bank.

Credit Unions are nonprofit financial institutions owned by its members. As a result, many offer lower rates and fees, more flexible eligibility and small amounts than big-name banks.

You’ll typically need to join the credit union to qualify for a loan, however. And it can take a couple of weeks to get your funds.

These mission-driven financial institutions approved more loans in 2016 than any other financial institution. CDFIs are designed to provide affordable financing to small businesses in low-income communities — including low-interest business loans. The goal is to promote economic development in these areas.

A CDFI can be a local bank, credit union or nonprofit lender in an underserved areas. What makes them a CDFI is registration with the Department of Treasury’s CDFI Fund.

If your business serves an economically disadvantaged area, a CDFI could be a helpful low-interest financing solution.

Business grants are a popular financing option for nonprofits, which can find it hard to qualify for business loans. But the government and private foundations also offer grants for small businesses, usually with the aim of promoting a demographic of business owners or serving a charitable cause. Women, minorities and veteran business owners in particular might want to research this option.

Startups and businesses looking to fund a one-time project might want to turn to crowdfunding sites. You’ll typically pay a percentage of the funds you raise as a platform fee. And some crowdfunding sites won’t give you anything if you don’t reach your goal. When successful, however, crowdfunding is a low-cost source of financing.

Another alternative to business loans is pitching your business or project to venture capitalists or angel investors. If they think it’s viable, they offer funding in exchange for a percentage of ownership.

Got good credit but not enough time in business? A personal loan might be the low-interest solution you’re looking for. Personal loans depend entirely on your personal credit and often start at lower rates than business loans. In fact, they’re capped at 36% in most states, while business loan rates can easily shoot to 100% or more. Personal loans are also often available in smaller amounts.

It’s not likely. Your time in business and revenue are important factors for business loan approval. But if you have excellent credit, you might find a personal loan with a low interest rate.

They can be. If your business is in what lenders consider a high-risk industry, you might have a hard time being approved for a business loan at all. Businesses that aren’t yet a year old, with spotty cash flow or owners who have bad credit can also have trouble getting a business loan.

It also depends on which lender you apply with. In 2016, CDFIs approved 88% of businesses that applied for financing, while SBA lenders approved only 55%.

SBA lenders typically require a 10% down payment or “injection” on their business loans.

You’ll likely need to submit at least three months of business bank statements, business and personal tax returns and records of credit card sales. But different lenders and types of financing require different documentation.