Average Business Loan Rates in 2024

Understanding interest rates can help you select the best loan option for your business.

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Current average business loan interest rates

Business loan typeAverage interest rates
SBA 7(a) loansFixed: 13.50% to 16.50%

Variable: 11.5% to 15%

Rates vary depending on loan amounts and terms
Traditional bank loans8% to 8.9%
Lines of credit7.7% to 9.1%
Term loansFixed: 3.52% to 10.99%

Variable: 5.63% to 11.45%
Merchant cash advances1.0 to 1.5 factor rate
Invoice factoring0.55% to 8.25% factor rate (also called discount rate)
Read more about our list of the best small business loans.

Interest rates for business loans

Written by Jill A. Chafin | Edited by Dawn Daniels | June 28, 2024


Average small business loan interest rates depend on multiple factors, such as loan type, lender and business qualifications. Fixed-rate term loans could go as low as 3.52%.

While online lenders typically have less stringent requirements, you might see average APRs of 56.1% or higher.

Knowing average loan interest rates in advance can help you pick the most ideal small business loan to fit your needs.

Interest rates by loan type

Current business loan rates vary based on the lender and type of business loan. Your individual business details, such as credit score, annual revenue and time in business, will likely affect the interest rate you receive.

Here are some popular small business financing options and the typical rates you could expect to see.

SBA 7(a) loans

The Small Business Administration (SBA) partners with financial institutions to provide SBA loans to those who may not qualify for traditional financing. Since the SBA reduces lender risk by guaranteeing a portion of the funds, these loans typically have low interest rates and flexible repayment terms.

The popular SBA 7(a) loan can cover a range of business expenses, such as working capital, commercial real estate, equipment, payroll and more.

Maximum SBA loan rates are determined based on the current prime rate (8.50% as of June 18, 2024), type of loan, loan amount and repayment term.

SBA 7(a) variable loan interest rates

Loan amountRate standardVariable maximum allowable (with current 8.50% prime rate)
$0 to $50,000Base* + 6.5%15%
$50,001 to $250,000Base* + 6%14.5%
$250,001 to $350,000Base* + 4.5%13%
$350,000 or aboveBase* + 3%11.5%

*Variable interest rate 7(a) loans are pegged to the prime rate (currently at 8.5%), the LIBOR rate or the SBA optional peg rate.

According to the SBA, fixed interest rate 7(a) loans are based on the prime rate in effect on the first business day of the month of your loan.

SBA 7(a) fixed loan interest rates

Loan amountFixed maximum allowable (with current 8.50% prime rate)
$0 to $25,00016.50%
$25,000 to $50,00015.50%
$50,000 to $250,00014.50%
Over $250,00013.50%

Rates accurate as of June 2024.

Traditional bank loans

Banks tend to have strict eligibility requirements for small business financing, typically requiring good personal and business credit scores, at least two years of business history, a solid business plan, financial statements, cash flow projections and collateral.

Because of these high underwriting standards, bank loan interest rates can start as low as 6.50% and often come with more flexible repayment terms.

Business lines of credit

Like a credit card, a business line of credit allows you to borrow up to a set limit on an as-needed basis. You only pay interest on the withdrawn amounts, although some lenders may charge additional maintenance or withdrawal fees.

Rates vary depending on the lender and if you get a secured versus unsecured line of credit. Business line of credit rates can start as low as 3%.

Term loans

If you want a lump sum of cash with scheduled repayments, a business term loan from a traditional bank or online lender could be a great choice. While alternative business loans offer speedy turnarounds and work with low-credit borrowers, you may end up with higher interest rates and less attractive terms.

A long-term business loan can offer your budget more breathing room, but you’ll likely pay more interest over time. Term loan rates can start as low as 3%.

Merchant cash advances

A merchant cash advance (MCA) allows businesses to receive a cash advance in exchange for a portion of your future credit and debit card sales. MCAs charge a factor rate rather than a standard interest rate. The lender multiplies the advance amount by the factor rate to determine how much you need to pay.

For example, if you borrow $10,000 and the factor rate is 1.3, you’ll owe $13,000, including principal and interest. While factor rates can start as low as 1.10, it’s worth converting to an APR to more accurately compare against other offers.

Invoice factoring

Invoice factoring allows businesses to sell their unpaid invoices for a cash advance — typically 70% to 90% of the invoice’s face value. The factoring company then collects money from your customers on your behalf and sends you the remaining balance, minus their fee.

Factoring companies charge a factoring fee, or discount rate, as a flat fee per invoice or as a variable fee starting as low as 0.55% — which can increase the longer an invoice remains unpaid.

While fast and convenient, invoice factoring tends to be more expensive than other forms of financing.

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How to get the best business loan interest rate

Comparing rates between small business lenders can be tricky since many borrowers don’t qualify for the lowest or highest advertised rate. Instead, they fall somewhere in the middle. Your final rate will be based on factors like loan amount, credit score, time in business and annual revenue.

The best way to lock in the lowest rate is to apply to multiple lenders simultaneously. This way, you can see exactly what you’ll pay and can pick the best offer. You can “rate shop” for 14 days without any further impact to your credit.

You can compare small business loan rates on LendingTree when you click on the “compare business loan offers” link. Here’s how it works:

  • Pick your business type: Click on the box that best represents your business entity, such as sole proprietor, partnership, LLC, C corp or S corp.
  • Funding amount: Use the slider to select the funding amount you need.
  • Loan purpose: Use the drop down menu to pick how you plan to use the funds, such as business expansion, marketing or payroll. If you anticipate needing to cover multiple expenses, select the principal one.
  • Funding speed: How quickly you need funds can help narrow down your options. Just note that fast business loans typically come with higher interest rates.
  • Monthly revenue: Estimate your company’s gross revenue.
  • Credit score: You can select your estimated credit score range, such as poor, fair, good, very good or excellent.
  • Business details: You’ll need to enter some basic business info, such as business name, zip code, establishment date and type of industry.
  • Personal details: By providing your name, phone number and email, you’ll be able to see a list of customized loan options. While lenders may reach out to you with offers, you’re not obligated to commit to any type of business financing.
  • View funding options: After submitting the above info, you’ll see a list of matched partners with rates and terms based on your specific criteria. You can also click on “typical funding examples” to see estimated costs of borrowing, average funding times and loan purposes.

Why rate shopping matters

Let’s say you’re approved for a $30,000 business loan with a five-year term and a 15% APR. Your monthly payment will be $660, with a total paid interest of $9,610.

Shopping around and finding an APR of 10% would reduce your monthly payment by $71 and save you $4,233 in interest.

Ultimately, shopping for the best rate can save you thousands of dollars in the long run.

  Use our business loan calculator to estimate how much you could borrow for your business.

What factors impact business loan interest rates?

Your final business loan interest rate could depend on multiple factors, such as your credit profile, business finances, business history and more.


Small business lenders typically assess your personal and business credit when reviewing loan applications. If you have yet to build your business credit history, a lender may heavily weigh your personal FICO Score when making a decision.

A higher credit score generally leads to a lower interest rate. Banks may require scores in the mid to high 600s, while alternative lenders may accept scores as low as 500.

Business finances

Your business’s financial standing indicates your likelihood of repaying a loan, which would impact your interest rate. If a lender perceives you as a high-risk borrower, you would likely receive a higher rate. Be prepared to share your revenue, cash flow analysis and profitability documents.

Small business lenders may have specific revenue requirements similar to credit score requirements. Should you be approved, you may also need to explain how you plan to spend the loan funds.

Time in business

Businesses operating for fewer than two years may be considered riskier since they typically lack capital, collateral or business credit. Because of this, lenders may assign higher rates to startup business loans to ensure they get their money back. However, you may not get approved if you don’t meet the minimum business history requirements at all.

4 ways to qualify for lower rates

One of the best ways to secure the lowest business loan interest rate is to make your business look strong and resilient to lenders. Consider the following tips to improve the likelihood of securing an attractive business lending rate.

1. Offer collateral

Some types of funding may require collateral, such as equipment financing or invoice factoring. Even if the lender doesn’t need collateral, offering it could help you receive more favorable rates.

Collateral helps reduce lender risk, allowing the lender to seize the assets you pledged if you default on the loan. Secured business loans using collateral generally come with lower rates than unsecured business loans.

2. Improve your personal credit

The higher your credit score, the less risky you may seem to a business lender, which could result in low-interest financing. After checking your credit score, you may want to boost your credit profile before applying for financing by following these tips:

  • Paying down any existing debt, including credit card balances
  • Making on-time or early bill payments
  • Disputing any errors that currently appear on your credit report (you may be able to remove those errors as well)

You can also monitor and track your credit score for free with LendingTree Spring.

Learn more about how to improve your credit score.

3. Build your business credit score

While personal credit scores have a fairly standardized rating system, business credit scores vary depending on the company calculating the score. For example, Equifax creates three numbers for small businesses: a business credit risk score, a business failure score and a payment index.

Boosting your business credit profile can help unlock more competitive rates and terms.

4. Establish a relationship with a lender

Both banks and alternative lenders may be more willing to approve a business loan application if you’ve opened a deposit account or business checking account with the institution. And if you’ve previously borrowed from the lender and made on-time payments, you could have a good shot at getting a second loan.

Furthermore, some banks offer reward programs for members, such as interest-rate discounts if you decide to take out a business loan or line of credit.

Although circumstances could prevent you from borrowing and banking in the same place, it’s worth trying to do so if possible.

How do typical business loan interest rates work?

Business loan rates vary for different loan types, lenders and financing arrangements. However, you may encounter a few variations of typical business loan interest rates in your search for financing.

Fixed vs. variable interest rates

Interest rates for business loans can remain stable or fluctuate over time.

  • Fixed rates: The interest rate doesn’t change during the loan term. Fixed rates are typical with standard business term loans, some SBA loans and equipment financing.
  • Variable rates: Interest rates are subject to change during the life of the loan. Variable rates are often associated with business lines of credit, merchant cash advances and some SBA loans.

Budgeting for fixed-rate loans is generally more manageable since your payments never change. Still, varying interest rates could save you money, especially with short-term funding. Consider how fixed versus variable business interest rates could affect your company before making a decision.

Annual percentage rates (APR)

Annual percentage rates (APR) are commonly used to measure the cost of financing. Business loans, credit cards, mortgages and other forms of financing use APR to express interest. An APR on a business loan would include the interest rate and associated fees.

Annual interest rates (AIR)

Annual interest rate (AIR) reflects the interest owed each year on a loan. Unlike APR, AIR does not incorporate any fees that may be associated with the loan.

To find AIR, divide the total interest by your loan amount and term length. Regarding business loans, AIR may be more helpful than APR when needing to calculate business loan costs, especially as the balance decreases.

Factor rates

Unlike the above rates, factor rates are displayed as decimal figures, not percentages. Though not as common as APRs and AIRs, factor rates are typically associated with high-risk business lending products, such as merchant cash advances.

Since a factor rate isn’t annualized, it might be more suitable than APR for loans or cash advances with terms of less than one year.

How much are business loan fees?

In addition to interest and factor rates, many lenders charge loan fees to cover the costs of issuing and administering a loan.

Here are some standard fees you may see included with your small business loan:

  • Origination fee: The loan origination fee covers the costs of processing the loan, including underwriting, preparing and reviewing the loan application and deciding whether to approve the loan. The loan origination fee may be a flat fee or a percentage of the loan amount.
  • SBA guarantee fee: The Small Business Administration charges this fee to guarantee a loan. It usually costs between 0% and 3.75% of the guaranteed portion of the loan.
  • Servicing fee: Some lenders charge servicing fees annually to cover the costs of administering your loan, such as customer service, billing and collections.
  • Underwriting fee: A lender can charge an underwriting fee for assessing and underwriting a business loan application. The amount varies from lender to lender but may be a flat fee or a percentage of the loan amount.
  • Late payment fee: Lenders may charge a late payment fee if you pay past the due date. The fee may be a flat rate or up to 5% of the outstanding amount.

While the loan’s APR will likely include fees like origination and underwriting, certain fees may not be included in the APR rate. Check with your lender to see which fees they’ve designated as APR fees so you can calculate the total cost of borrowing.

How to apply for a small business loan

Most banks and private business lenders allow you to apply for a small business online, although some traditional banks might require an in-person visit or phone call. Some lenders even make a lending decision within minutes, especially with same-day business financing.

Answering the following questions can help narrow your loan options, including rates and terms:

  • What type of loan do you need?
  • How much do you want to borrow?
  • How quickly do you need the funds?
  • Do you meet the lender’s personal and business qualifications?

Don’t forget to compare lenders before signing the business loan agreement, converting factor rates to APRs if necessary. Read our tips on how to apply for a small business loan to help you get started.

Frequently asked questions

Depending on the business loan product, lenders typically offer the choice between a fixed or variable interest rate.

Fixed rates are generally best for long-term loans, such as commercial real estate loans or equipment financing. This way, you can plan your business budget without any surprises along the way.

On the other hand, a short-term business loan or a business line of credit could benefit from a variable interest rate, allowing you to borrow money when you see the rate drop without committing to it for the long term.

A reasonable interest rate for a small business loan or line of credit is between 3% and 17%, while an SBA 7(a) loan rate is capped between 11.5% and 16.50%. However, you could expect to pay 56.1% APR or higher with a bad credit business loan.

Shop around to find the best rate for your credit profile, making sure to include extra costs like origination and servicing fees.

The Small Business Administration (SBA) determines the maximum fixed and variable rates for SBA loans, which lenders must follow. The current SBA interest rates are based on the prime rate, LIBOR rate or an optional peg rate.

Commercial mortgage rates can vary based on the lender, property type and value, and how much you can provide as a loan down payment. Lenders like Funding Circle offer commercial loan rates as low as 15.22%, while traditional lenders like Bank of America offer bank loan rates starting at 6.50%.