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4 Best Low-Interest Loans for Your Small Business In 2021

    Erica Seppala
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Advertiser Disclosure: Our unbiased reviews and content are supported in part by affiliate partnerships, and we adhere to strict guidelines to preserve editorial integrity.
low interest small business loans

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. Ideally, you’ll want a low-interest rate business loan that won’t load you down with unnecessary expenses.

While traditional bank lenders typically offer the cheapest interest rate for business loans, they may not be a viable option for every business. Nowadays, there are a lot of non-bank lenders claiming to offer competitively low rates, but uncovering the right one can take some time and scrutiny. Luckily, we’re here to help you narrow down your options.

Let’s take a look at how you can find a cheap business loan right now.

Learn More About Our Top Picks

CompanySummaryNext StepsSummary

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Best for low-interest SBA loans.
Best for low-interest SBA loans.

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Best for low-interest business loans for strong credit.
Best for low-interest business loans for strong credit.

Apply Now

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Best for low-interest loans for less than 12 months in business.
Best for low-interest loans for less than 12 months in business.

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Best for low-interest loans for bad credit.
Best for low-interest loans for bad credit.

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Read more below to learn why we chose these options.

What Are Low-Interest Loans For Businesses?

Low-interest business loans are, simply, loans with interest rates that fall below the median within their particular category.

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 rates play 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 stable revenues.

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.

Best Low-Interest Business Loan Options

Businesses went through a lot in 2020, and a cheap business loan may be just the ticket to help business owners to keep going. Here are our recommendations for the best low-interest business loans, including SmartBiz, Funding Circle, LoanBuilder, and more.

1. SmartBiz: Best For Low-Interest SBA Loans

SmartBiz



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SBA loans are an excellent option for businesses that need a loan with a long-term length and competitive rate. You may be surprised to hear that you don’t need to go through a bank to get one. SmartBiz can help guide you through the long, arduous process of securing an SBA loan.

With a SmartBiz working capital/debt refinancing loan, you can apply for $30,000 to $350,000. APRs are between 9.02% and 10.26%, with repayment terms of 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 seven days after approval.

For business expansion, SmartBiz also offers SBA loans for commercial real estate. You can borrow from $500,000 up to $5 million with APRs of 6.62%-6.66%. 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 two years. You must have a personal credit score of at least 650 and enough cash flow to cover your new loan payment. Your credit report must also be free of bankruptcies or foreclosures within the last three years, outstanding tax liens, and prior defaults on government loans.

Pros

  • Rates tend to be inexpensive
  • Excellent terms and fees
  • Multiple avenues of customer support

Cons

  • Some additional fees charged
  • The application process is slow and involved

Get Started with SmartBiz

Read our in-depth review

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2. Funding Circle: Best Low-Interest Business Loan For Strong Credit

Funding Circle



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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 from $25,000 up to $500,000, with repayment terms between six and 60 months. Interest rates for the most creditworthy borrowers start at just 4.99%. Less creditworthy borrowers may qualify for rates up to 22.99%.

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 two years. Your personal credit score must be at least 620. Borrowers with higher scores will be eligible for the lowest interest rates. Most borrowers receive their funds within ten days of applying with this lender.

Pros

  • High borrowing amounts
  • Monthly repayments
  • No prepayment penalties
  • Few additional fees

Cons

  • Borrower qualification might be hard to meet
  • Financing not available in every state

Get Started with Funding Circle

Read our in-depth review

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3. LoanBuilder: Best Low-Interest Loan For Less Than 12 Months In Business

LoanBuilder



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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. Borrowers with high credit can get approved for higher amounts with lower fees.

LoanBuilder is a bit different from some 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 been in business for at least nine 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.

Pros

  • Low credit score requirements
  • No extra fees
  • The application process is fast and easy

Cons

  • No early repayment discounts
  • A blanket lien is required

Read our in-depth review

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4. Accion: Best Low-Interest Business Loan For Bad Credit

Accion



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Accion is a nonprofit lender with low entry barriers for small businesses, particularly those falling into one of its specialty areas. Initially, the organization specialized in offering microloans and financial education to low-income communities across the globe. Since then, Accion has continued its mission to improve local communities by lending capital to startups and other businesses that may not qualify for other lending options.

To qualify, you’ll just need a credit score of 575 (550 in some places), enough cash flow to be able to repay your loan, and be up to date on your bills.

Accion offers loans from as small as $300 to as high as $250,000. APRs range from 7% to 34%, which takes into account a 3% to 5% origination fee.

Pros

  • Low credit score requirements
  • Financing is available to qualified startups
  • Monthly repayments
  • Fast and easy application

Cons

  • Some additional fees charged

Read our in-depth review

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Low-Interest Business Loan FAQs

What is the typical interest rate for small business loans?

The typical interest rate for a small business loan, as expressed as an APR, falls somewhere between 3-30%. The exact range varies by type of lender and type of loan.

What is a good interest rate for a business loan?

A good interest rate is the best rate you can get for the type of loan you want with your borrower profile. Anything on the low side of the median for that product could be considered “good.”

What lender offers the lowest rates for business loans?

The lowest rate possible is at or slightly above prime. Chase Bank is frequently cited as having the lowest business loan rates but is also very selective in who it approves.

How do I get a low-interest business loan?

You can get a low-interest business loan by selecting a lender that specializes in lending to borrowers similar to yourself. Check out reviews (such as those on Merchant Maverick) to find out what kinds of rates you can expect from that lender.

Low-Interest Loans For Businesses: Final Thoughts

One of the most crucial 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 for cheap business loans and take the time to apply with a reputable lender to find the best loan for growing or launching your small business.

When you’re ready to get started, check out our step-by-step guide to getting a business loan.

In Summary: Best Low-Interest Business Loan Options

  1. SmartBiz: Best for low-interest SBA loans.
  2. Funding Circle: Best for low-interest business loans for strong credit.
  3. LoanBuilder: Best for low-interest loans for less than 12 months in business.
  4. Accion: Best for low-interest loans for bad credit.
Erica Seppala

Erica Seppala

Expert Analyst & Reviewer at Merchant Maverick
An expert in accounting, finance, and point of sale, Erica has been researching and writing about all things small-business since 2018. Erica's insights into personal and business finance have been cited in numerous publications, including MSN, Real Simple, and Reader's Digest. She is a graduate of Limestone College.
Erica Seppala
View Erica Seppala's professional experience on LinkedIn.
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