Rates on Small Business Loans

Rates on Small Business Loans

Rates on small business loans
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Rates on small business loans depend on a few factors. These include your personal credit score, how long you have been in business or if you are a startup, and what type of lender you decide to work with.

 

Because rates tend to be all over the place, let’s look at a few common lending sources that you might consider depending on your personal situation.

 

Then you can make a simple comparison, and find the best rates for you.

 

Rates on Small Business Loans – The Small Business Association (SBA)

For many business owners, the federal government’s Small Business Association is a great place to start their search for small business financing. The SBA offers two types of loans.

 

For most business owners the 7A loan works the best. It can be used for all sorts of business types. Their interest rates are determined by the amount of the loan and the loan term. The following rates are for 2017.

 

Repayment in under 7 years:

  • Under $25K – 8%
  • $25 to $50K – 7%
  • Over $50k – 6%

 

Repayment in 7 years or more:

  • Under $25K – 8.5%
  • $25 to $50K – 7.5%
  • Over $50K – 6.5%

 

The SBA does offer both variable and fixed rate loans. With a variable interest rate loan, the interest rate can change over the term of the loan.

 

With a fixed rate loan, the interest rate never changes.

 

Rates on Small Business Loans – Online Lenders

There are a variety of online lenders that are happy to work with you. Interest rates vary depending on your past credit history and current business health, but regardless of your credit score, one of these lenders should be a good fit for you.

 

  • Kabbage – 24% to 99% – no personal credit score needed
  • Lendio – Up to 17% – personal credit score of 680 or more
  • OndeckInterest rates from 5.9%  – credit score of 500 or more needed
  • Able Lending – 8% and up – credit score of 600 or more needed

 

While some of these rates are higher than a traditional bank or credit union, the lending requirements are typically more relaxed, and the approval times are much faster.

 

It can be very difficult to get a small business loan from your bank even if you have good credit. This is due to regulations that the banks must follow. If you do have excellent credit, it makes sense to talk to your bank first.

 

Rates on Small Business Loans – Traditional Lenders

If your credit is good you have a lot more options when it comes to getting a small business loan. The interest rates will be much better.

 

Just keep in mind that you don’t want to apply to too many lenders. When they do a credit check your credit score can take a hit.

 

Instead, pick two or three options and be sure to apply to all of them in a one to two week period.

 

You’ll find that the more traditional lenders such as banks have the best interest rates.

 

Average Interest Rates at Banks

  • Small National & Regional Banks – 2.86 to 5.43%
  • Large National Banks – 2.24 to 4.77%
  • Foreign Banks – .075 to 4.88% – (these loans are made by U.S. branches)

 

Finally, there are other online options that have lower interest rates. Again, these rates are available if you have good credit.

 

  • Online lenders average rates – 5.49 to 66.57

 

The lower rates, such as 5.49 are for those with good credit while the higher end rates at 66.57% are for those with damaged credit.

 

Regardless of your personal situation, there are small business loans available to you either online or at your local bank or credit union.

 

By doing a little research ahead of time, you’ll find that you can find the best rates on business loans for you.

 

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