A business loan can help you purchase inventory, boost cash flow or even open a new location. And when comparing options, interest rates are one of the most important factors to watch.
As of December 2025, the average fixed rate for a bank prime term loan sits at 6.83%,(1) about a point lower than a year ago. That slight drop, tied to the Federal Reserve’s most recent cut, could signal more favorable borrowing conditions for small business owners.
Traditional banks still tend to offer the lowest rates overall, though business loan APRs can range anywhere from 3% to 60% or higher, depending on the lender and loan type.
No matter what kind of financing you’re after, our picks for the best business loans highlight options with competitive rates, low fees and fast approvals and funding.
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Our lending experts analyze dozens of business loan providers to determine the best for business owners and startups. We search for lenders that suit a range of lending needs, highly-rated lenders that offer loans of $100,000 or less because most small business loans fall into that range.
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What is your primary need for a business loan?
A business loan is a form of financing designed to help you start, grow or operate your small business, offering access to capital to cover payroll, purchase real estate, invest in equipment or other business needs.
Business loans can be unsecured or secured, which means collateral backs the loan. Even lenders advertising unsecured business loans may require a lien on business assets. You may also be asked for a personal guarantee, which means you’re responsible for the loan if the business fails.
You can find business loans through traditional banks and credit unions, online lenders and marketplaces, and community lenders. While a conventional business loan is a lump sum you repay in monthly installments, plus interest and fees — there are other types of financing that work differently but are still referred to as loans by lenders.
Interest rates vary widely by business loan type, ranging from 3% to 300% APR. Loans secured by collateral like invoices, equipment or real estate tend to have the lowest rates, while short-term financing options like merchant cash advances tend to have the highest rates.
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How we picked theseThe Finder Score crunches 12+ types of business loans across 35+ lenders. It takes into account the product's interest rate, fees and features, as well as the type of loan eg investor, variable, fixed rate - this gives you a simple score out of 10.
To provide a Score, we compare like-for-like loans. So if you're comparing the best business loans for startups loans, you can see how each business loan stacks up against other business loans with the same borrower type, rate type and repayment type.
Term loans and lines of credit may be the most popular types of financing, but other options might be better for certain businesses — especially those that struggle to qualify for traditional bank financing.
| Loan type | Typical loan amounts | Best for |
|---|---|---|
| SBA loan | $30,000 to $5 million | Small businesses that have trouble qualifying for a low-interest loan. |
| Term loan | Up to $2 million | Covering one-time expenses, like buying office supplies or technology or other costs that your business doesn’t need to cover regularly. |
| Business line of credit | $2,000 and $250,000 | Covering recurring expenses tied to your business’s cash cycle, picking up the slack during an off-season or paying for ongoing projects where costs are difficult to predict. |
| Equipment financing | Up to 100% of the equipment’s value | Businesses buy heavy machinery and other expensive equipment. |
| Microloan | Start as low as $500 | Small businesses that need financing for basic necessities but can’t qualify for a traditional business loan. |
There are several benefits to using a small business loan or another type of financing:
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While small business loan requirements depend on the financing you need, you’ll get the lowest rates and strongest terms by meeting general requirements that include:
Don’t meet these requirements? Visit our guide to business loans to learn more about your options. You can also set up an appointment at a local bank. Community banks tend to have more flexible requirements than their larger counterparts. Even if you don’t qualify for financing, the bank can point you toward other options and advise you on strengthening your application. Or, consider a personal loan from a lender like Upstart if you need funding fast.
Prepare to submit personal and business documents when applying for a small business loan, including:
How much of a loan you can qualify for depends on factors like your business’s revenue, debts and what you’re financing. Generally, your loan amount is based on the value of a self-liquidating asset you’re using the funds to purchase.
If you own a newer business, haven’t yet reached $100,000 in revenue or have poor credit, you may not qualify for the lowest rates. Look to other financing options to grow your business.
A personal loan is a common choice for entrepreneurs looking to fund a startup. These loans typically max out at $50,000, though sometimes reach $100,000. The best personal loans require good credit, which is unsuitable for all business owners and needs.
You might not need to take on debt or pay anyone back if your business needs to fund a project that’s easy to communicate in a short video. Friends, fans or investors can help you raise money through crowdfunding. But keep up with regulations that are developing around it.
For example, all crowdfunding transactions must be online through a Securities and Exchange Commission (SEC)-registered intermediary. You can’t raise more than $5 million through crowdfunding offerings in a 12-month period, as stated by the US SEC.
You could finance your business needs by bringing on an investor. An investor allows you to get funding for your business that you never have to pay back in exchange for partial ownership in your company. But ensure you have a lawyer on retainer to avoid legal trouble with the SEC.
For small expenses or working capital, a business credit card can be easier to manage than a loan. Plus, many business credit cards come with 0% APR promotional periods, giving you a window to make a big purchase and pay it off without interest over a few months or a year.
This alternative type of financing is an advance on unpaid accounts receivables — also called accounts receivable financing. It’s an asset-based loan to help give your business cash flow while you wait for invoices to be paid. However, invoice financing is an advance that can be expensive.
Got orders but not enough inventory? Inventory financing is a line of credit you use to purchase products, and the inventory is collateral on the loan. However, if you need to buy perishables like produce, you can find financing options for which the merchandise doesn’t secure the loan.
An alternative borrowing option, a merchant cash advance, is a lump sum loan based on a percentage of your business’s card sales. It’s often for emergencies, used to cover expenses in a pinch or during slow seasons. Merchant cash advances don’t charge traditional interest. Instead, you get charged a fee called a factor rate expressed as a decimal — usually between 1.09 and 1.5 — and the factor gets multiplied by the amount borrowed.
This type of financing can get expensive, and many providers require weekly repayments.
Whether you’re just starting or need help with crafting a business plan, check out these no- or low-cost resources:
Business owners may not be strangers to debt. But if you’re looking to take on your first business loan or you’re struggling to manage multiple credit lines, keep these tips in mind:
Debt consolidation works by paying off one or more loans with a new loan, usually to save on interest charges. Most business debt consolidation loans are term loans, but it’s also common to consolidate debt with a low-rate credit card, such as a balance transfer credit card.
You can also consolidate business debt with a personal debt consolidation loan or home equity loan, though you’ll be responsible for repayment if the business fails.
Debt consolidation might be wise if you have good credit and high-interest debt. But if you have poor credit and your company isn’t profitable, your business isn’t likely to qualify for a low rate on the consolidation loan. Even if you do, it may not save you money in the long run.
Yes, it’s possible to get a business loan with bad credit. Some lenders — especially online lenders — will accept scores as low as 500 on certain short-term loans, like merchant cash advances. And other financing options, like invoice financing or factoring, may not consider your credit score at all.
As long as you can show sufficient revenue or invoice value, you could qualify. But rates can often run high on these types of bad credit business loans and are best used in a cash crunch.
Many banks and credit unions offer loans to the self-employed, including business loans. But your odds might be better with an online lender. If you’ve exhausted these options, consider applying to the US Small Business Administration (SBA).
The following SBA loans are available to sole proprietors or independent contractors:
Different SBA loans come with varied eligibility requirements. To qualify for an SBA loan, you must typically have a 680 FICO score, operate your for-profit business in the US, and have exhausted all other funding options.
Startup loans for brand-new businesses with no track record are hard to come by. Most lenders want to see at least six months in business and a certain level of revenue. This presents a catch-22 if you haven’t earned anything yet.
Instead, you could look into getting a personal loan to fund a new business or borrow against your assets, like your home or 401(K) — but these options come with financial risks. If you’re more entrepreneurial, consider a microlender like Kiva, an angel investor or a crowdfunding campaign.
Explore the top business loan guides to help you along your business journey — from information on the best business loans on the market or your best startup loan options to business loans that require little to no paperwork and more.
Same-day business loans can get you funds the same business day as you apply, rather than making you wait 24 hours or more.
Compare top business loan marketplaces that connect you with multiple lenders through one simple application.
Looking for fast business funding? Learn about a lender with flexible criteria but frequent repayments.
Compare the best business term loan providers for flexible funding, competitive rates and repayment terms that fit your goals.
See which business lenders could get you approved funds the fastest. Turnaround times as short as one day.
Compare business loans with genuine repayment flexibility — from choosing your payment frequency to revenue-based remittances that scale with your sales.
Get funding of up to $500,000 with the benefit of early repayment discounts for qualifying borrowers.
Square Loans are invite-only for Square sellers, with no credit check required and funding in as little as one to three business days or instantly with Square Checking.
Compare the best merchant cash advances built for gig workers, freelancers and independent contractors.
Startups may have a harder time qualifying for business loans, but getting funding isn’t impossible.