The Best Low-Interest Small Business Loans For 2020

Whether you need extra capital for emergency expenses or you’re ready to expand, a small business loan may be the logical next step for your business. Before you fill out that application, though, you need to consider the total cost of borrowing. One of the most important factors in determining the cost of your loan is your interest rate.

While fees, your total borrowing amount, and the repayment terms of your loan also contribute to your payment amounts and the total cost of your loan, interest rate plays a significant role in determining your cost of borrowing.

The lowest interest rates are reserved for the most creditworthy borrowers that have established businesses with solid revenues. However, even the most qualified business can get sucked into a high-interest loan if the business owner doesn’t know where to look. The promise of instant approvals, quick funding, and low paperwork requirements make it easy to sign on for a loan that’s too expensive.

Before you fall into that trap, hit the brakes and consider your options. We’ve done the heavy lifting already by compiling our list of the best low-interest small business loans. From personal loans for business to Smart Business Administration loans made easy, read on to learn more about the most affordable loan options to consider in 2019.

1. OnDeck

Want a loan that delivers a lump sum payment to cover your business expenses? OnDeck has you covered. Or perhaps a more flexible line of credit would better meet your financial needs? OnDeck has that covered, too.

Through OnDeck, you can apply for a term loan or line of credit for your business. You can receive your approval decision in just minutes with no impact to your credit score. With OnDeck’s financing, you could have the money you need in your bank account in as little as 24 hours.

If this sounds like financing that would work for your business, the first step is to choose your product. OnDeck offers term loans up to $500,000 for any business expense. For short-term financing needs like inventory or seasonal hiring, you could qualify for a short-term loan with terms of 3 to 12 months. These loans come with simple interest rates starting at 9%. This means that you pay a set price based on your borrowing amount. If you borrow $20,000 at a 9% rate, you’ll repay $21,800. Additional fees may apply.

For long-term business needs, consider a long-term loan with repayment terms of 15 to 36 months. These loans are best for larger projects such as equipment purchases or business expansions. The annual interest rate starts at 9.99%.

OnDeck’s term loans have an origination fee of 0% to 4%. Fixed daily or weekly payments will be deducted from your business bank account.

To qualify, you must be in business for at least 1 year, have at least $100,000 in annual revenue, and have a personal credit score of at least 600. The most creditworthy borrowers will receive the lowest rates.

If you want more flexible financing to use as working capital, cover payroll, or pay for emergency expenses, apply for OnDeck’s line of credit. Lines of credit are available up to $100,000. APRs start at just 13.99% for the most qualified borrowers. There are no draw fees, but a monthly maintenance fee of $20 is required. However, this fee is waived if you withdraw at least $5,000 within 5 days of opening your line of credit. Weekly payments are automatically deducted, and maximum repayment terms are 12 months.

To qualify for an OnDeck line of credit, you must be in business for at least 1 year. You must also have at least $100,000 in annual revenue. The minimum credit score required to qualify is 600.

2. SmartBiz

It’s no secret that qualifying for a Small Business Administration loan is difficult. The process can be long and arduous, but qualified borrowers will be rewarded with extremely affordable and flexible loans with long repayment terms.

While SBA loans are available through banks, credit unions, and other traditional lenders, more people are turning to online intermediaries to simplify and expedite the process. One of the most popular online SBA lenders is SmartBiz.

Through SmartBiz, you can apply for a working capital/debt refinancing or commercial real estate loan.

With a SmartBiz working capital/debt refinancing loan, you can apply for $30,000 to $350,000. Interest rates are between 8% and 9% with repayment terms up to 10 years. Loan proceeds can be used to purchase inventory or equipment, launch a marketing campaign, pay operating expenses, or hire more employees. You can also use your funds to refinance high-interest business debt. You may receive funds as quickly as 7 days after approval.

To qualify, you must be in business for at least 2 years. You must have a personal credit score of at least 640 and enough cash flow to cover your new loan payment. Your credit report must also be free of bankruptcies or foreclosures within the last 3 years, outstanding tax liens, and prior defaults on government loans.

For your business expansion, SmartBiz also offers SBA loans for commercial real estate. You can borrow $500,000 up to $5 million with interest rates at 6.75% to 8%. Repayment terms are up to 25 years. Loan proceeds can be used to purchase commercial real estate or refinance your existing commercial mortgage. You can receive funding as quickly as 30 days after credit approval.

To qualify, you must be in business for at least 2 years. Your personal credit score should be at least 675, and you must have enough cash flow to pay your loan payments. The property being purchased or refinanced must be at least 51% owner-occupied. Your credit report must be free of bankruptcies or foreclosures within the last 3 years, outstanding tax liens, and past defaults on government loans. Investment properties and new construction cannot be funded by this type of loan.

3. American Express Business Loans

As an American Express Business Card holder, you may be eligible to apply for an American Express Business Loan.
With an Amex Business Loan, you may be eligible to receive $3,500 to $50,000 to use for any business purpose. All loans come with fixed interest rates of 6.98% to 19.97%. Repayment terms of 12, 24, or 36 months are available. No collateral is required to secure your loan.

Only preapproved Business Card holders are eligible to apply. One of the unique features of this loan is that there is no impact on your credit. Because American Express has your information on file, no additional credit check is required to receive your loan.

4. Fundation

Banks and credit unions offer some of the most competitive terms and fees. However, many qualified business owners avoid these loans due to the long and sometimes difficult application process and the time it takes to receive funds. Alternative online loans are more convenient, but those come at a higher cost, right? Not with Fundation.

Fundation offers installment loans and lines of credit with rates and terms comparable to bank loans. These products are available to the most creditworthy borrowers, and if you qualify, you can receive an affordable loan weeks (or even months) sooner than you’d get a bank loan.

With a Fundation installment loan, you can apply for $20,000 to $500,000 to be repaid bi-weekly over terms of 1 to 4 years. APRs range from 7.99% to 29.99%.

Fundation’s lines of credits are available in amounts from $20,000 to $100,000. Repayment terms are monthly over a period of 18 months. APRs are 7.99% to 29.99%, and you must pay a $500 closing fee and 2% draw fee.

To qualify for either financial product, you must have a personal credit score of 660 and an annual revenue of $100,000. You must be in business for at least 1 year and have a minimum of three full-time employees.

The time it takes to receive your funds is significantly shorter than it would be with a traditional bank loan, with most borrowers receiving their funding within 2 to 7 days of submitting their applications.

5. Funding Circle

For many business owners, peer-to-peer lending has opened up new opportunities to receive affordable loans. If you’re looking for competitive interest rates, one of the top choices is Funding Circle.

Through Funding Circle, you can borrow $25,000 up to $500,000 with repayment terms between 6 and 60 months. Interest rates for the most creditworthy borrowers start at just 4.99%. Less creditworthy borrowers may qualify for rates up to 26.99%.

Funds from a Funding Circle loan can be used for any purpose. These loans are particularly popular with franchise owners.

To qualify, you must be in business for at least 2 years. Your personal credit score must be at least 620, but borrowers with higher scores will qualify for the lowest interest rates. Most borrowers receive their funds within 10 days of applying with this lender.

6. Lending Club

Lending Club is also a P2P lender that is a popular option for business owners. This funder offers personal loans and business loans for qualified borrowers.

With a Lending Club business loan, you can borrow $5,000 to $300,000 that is repaid in monthly installments for 1 to 5 years. Interest rates are 5.9% to 25.9% with the best interest rates reserved for the most creditworthy borrowers.
For business loans, you must have a time in business of at least 1 year and annual revenue of $50,000. All borrowers must have at least a fair credit score in the 600s to qualify.

One great thing about Lending Club is that you can receive a personal loan to use for business. If you have a short time in business or low annual revenue, you can still receive the funding you need with a personal loan.

Personal loans are available from $1,000 to $40,000 with repayment terms of 3 to 5 years. Interest rates start at 5.32% for borrowers with excellent credit. Borrowers with lower scores may be approved for loans with interest rates up to 30.99%.

To qualify for a personal loan, the only requirements are to be the holder of a verifiable bank account and have a fair credit score.

7. Credibility Capital

If you want a bank loan without having to spend time in your local branch, Credibility Capital offers a solution.
With Credibility Capital, you can receive a bank-funded loan from the comfort of your home or office. Qualified borrowers can receive loans from $10,000 to $350,000 with annual interest rates starting at just 8%. Repayment terms are between 1 and 3 years, and you can pay your loan early with no prepayment penalties.

To qualify for a bank-funded loan from Credibility Capital, you must be in business for at least 2 years. The lender does not specify minimum credit score requirements, but all borrowers should have “strong personal credit.” There are also no specific revenue requirements, but your business must be currently generating some revenue in order to qualify.

Businesses in the states of Nevada, North Dakota, South Dakota, or Vermont are not eligible to receive Credibility Capital loans. If you have filed for personal or business bankruptcy within the last 5 years, you will be disqualified.

If your personal credit score or another factor disqualifies you from receiving a bank-funded loan, Credibility Capital has a network of partners that you can connect with to find the right financing solution for your small business.

8. LoanBuilder

PayPal’s LoanBuilder is a service that allows you to “build” a business loan with the borrowing amount and terms that work for your business. LoanBuilder is available to borrowers with credit scores as low as 550, but borrowers with high credit can be approved for higher amounts with lower fees.

LoanBuilder is a bit different from other lenders on this list because its loans do not have an annual interest rate. Instead, you’ll pay one fixed fee for borrowing.

LoanBuilder loans are available in amounts from $5,000 to $500,000, and you can receive funds as soon as one business day after approval. There are no origination fees or hidden fees. Instead of interest, you’ll pay one fixed fee starting at just 2.9% of the borrowing amount. Less qualified borrowers may qualify for loans with fees up to 18.72%.

To qualify for a LoanBuilder loan, you must have a time in business of at least 9 months and a minimum annual revenue of $42,000. You must not have any open bankruptcies on your credit report, and your personal credit score should be at least 550, although the lowest fees are reserved for borrowers with good to excellent credit.

9. StreetShares

StreetShares is an online lender that offers short-term installment loans and lines of credit. This lender is veteran-friendly, but you do not have to be a veteran to apply.

StreetShares installment loans are available in amounts from $2,000 to $100,000 with repayment terms of 3 to 36 months. Installment loan APRs start at 7% for the most creditworthy borrowers, with rates up to 39.99%. Your installment loan is paid back through weekly payments.

You can also apply for a line of credit from $5,000 to $100,000. Repayment terms are 3 to 36 months. Lines of credit have APRs of 7% to 39.99%. With each draw from your line of credit, you’ll pay a fee of 2.95% of the total borrowing amount. Line of credit draws are paid back through weekly payments.

To qualify for StreetShares financial products, you must be in business for at least 1 year. A minimum revenue of $25,000 is required. You can only borrow up to 20% of your annual revenue. You also need a minimum credit score of 620 to qualify.

Low-Interest Financing For Business Startups

Even with good credit, you may run into challenges when applying for small business loans as a startup. This is because most lenders — particularly those that offer loans with competitive rates — require a minimum time in business and annual revenue. If you’re a new business just getting off the ground, are you stuck with loans with less-than-desirable rates and terms?

While you may not qualify for some business loans, there are low-interest options for business startups. If you have a high personal credit score, one of the best ways to fund your business is with a personal loan for business. With a personal loan, your personal credit score and income are factors for approval. If you meet a lender’s requirements, you can score a low-interest personal loan to cover your startup costs. Some lenders have restrictions on how funds are used, so make sure you only apply with lenders that don’t restrict personal loans for business use. Check out our comparison of top personal loans for business to get a side-by-side overview of the low-interest options available to you.

For smaller capital needs, consider applying for a microloan. Many nonprofits provide microloans up to $50,000 for qualified startups. One loan to consider is the SBA Microloan program, which is available through nonprofit intermediary lenders. Loan amounts up to $50,000 are available to qualified small businesses, although the average microloan distributed is $13,000. SBA microloans can be used to purchase inventory, supplies, or equipment. Loans can also be used as working capital. Repayment terms of up to 6 years are available, and interest rates are around 8% to 13%.

Some startups may also qualify for small business grants, which provide funds that don’t have to be repaid. Before you apply, know that competition is very tough and most traditional small businesses won’t qualify. However, there are grants available for innovative companies, businesses located in rural areas, or businesses that are owned by women, veterans, and minorities. Learn more about qualifying for startup grants.

Compare Offers From Multiple Lenders With Lendio

Any smart business owner knows you have to shop around to find the best rates and terms. But filling out multiple loan applications and comparing small business loans can be extremely time-consuming for the busy entrepreneur. This is when a loan aggregator comes in handy.

Consider a loan aggregator as a type of loan matchmaker. One of the most reputable is Lendio. With just one application, you’ll find the loans that are best for your business. You can apply for SBA loans, short-term loans, equipment financing, commercial mortgages, and other types of business loans through Lendio. Lendio works with a network of over 75 lenders, so you’ll be matched with the lender that offers the best rates and terms for your financial needs.

Final Thoughts

One of the most important steps in applying for and accepting a loan is to understand the total cost of borrowing. Even if you’re in a sticky financial situation, accepting a high-interest loan with lots of added fees can be financially destructive for your business. If you have a high credit score, there’s no reason to accept a high-cost loan. Explore different options and take the time to apply with a reputable lender to find the best loan for growing or launching your small business.