The Best Low-Interest Small Business Loans For 2018
Interest rate is arguably the most important metric on any loan. You’ll usually have to contend with various other loan fees as well, but in most cases, interest rate is the biggest determinant of the total cost of a loan.
The interest rates you get are dependent on the strength of your business. Strong businesses with excellent credit scores and established histories will qualify for low interest rates. However, even the strongest businesses cannot get good rates unless they’re applying to the right lenders. Long-term loans and government-backed (SBA) loans typically have low interest rates, whereas online loans and short-term loans will have higher interest rates.
With that in mind, here are the best low-interest small business loans we know of!
Table of Contents
1. SmartBiz
SmartBiz (see our review) offers SBA-guaranteed, long-term installment loans, with low but variable interest rates. SmartBiz offers three loan products: debt refinancing, working capital, and commercial real estate loans. With these government-backed, long-term loans, you’ll pay the prime rate plus 1.50% to 3.75%, depending on your borrowing amount and loan type.
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| Borrower requirements: • In business at least 2 years • Owner’s personal credit score is 600 or above • No specific revenue requirements | |
| Visit the SmartBiz website Read our SmartBiz review | |
SmartBiz Debt Refinancing & Working Capital Loan Terms
- Borrowing amount: $30K – $350K
- Term length: 10 years
- Interest rate: Prime rate + 2.75% – 3.75% (depending on borrowing amount)
- APR: 5.85% – 8.95%
- Repayments: Monthly
SmartBiz Commercial Real Estate Loan Terms
- Borrowing amount: $500K – $5 million
- Term length: 25 years
- Interest rate: Prime rate + 1.50% – 2.75%
- APR: 5.85% – 8.95%
- Repayments: Monthly
Is SmartBiz Right For You?
SmartBiz offers some of the lowest interest rates around on small business loans. They also provide a quicker, easier way to get an SBA loan than most other SBA lenders. The interest rates are variable, which means that rates will fluctuate if the prime rate rises or falls. Because the term lengths are so long, SmartBiz a smart choice for a growing small business looking to make a long-term investment.
SmartBiz’s qualifications are not particularly strict, and are less stringent than those typically required for a bank loan. To qualify for a SmartBiz debt refinancing/working capital loan, you need a credit score of at least 600 and 2 years in business; for a commercial real estate loan, you need a score of 675 and 3 years in business.
2. Lending Club
With Lending Club’s P2P lending model, medium-term installment loans are funded through an online marketplace of investors. Lending Club (see our review) offers personal loans, which can be used for entrepreneurial and business startup purposes. If you already have an established business, Lending Club also offers installment loans specifically for business purposes.
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| Borrower requirements: • Must be in business at least 12 months with a revenue of $50,000 per year. • Must have fair personal credit. | |
| Visit the Lending Club website Read our Lending Club review | |
Lending Club Installment Loan Terms
- Borrowing amount: $1K – $40K for personal loans; $5K – $300,000 for business loans
- Term length: 3 or 5 years for personal loans; 1 – 5 years for business loans
- Interest rate: 5.32% – 30.99% for personal loans; 5.9% – 25.9% for business loans
- APR: 5.98% – 35.89% for personal loans; 9.77% – 35.71% for business loans
- Repayments: Monthly
Is Lending Club Right For You?
Lending Club’s social lending model allows small businesses to secure financing at competitive interest rates. There is a pretty wide range of possible interest rates, however, and only borrowers with excellent credit will be eligible for the lowest rates.
For Lending Club’s business loans and lines of credit, you must have been in business for at least a year and have annual revenues of at least $50,000. For personal loans, there are no revenue or time-in-business requirements; you just need to have fair credit.
Lending Club’s rates are still a little higher than you might get with a traditional bank, but these loans are easier and faster to get. The diverse array of loan options mean that Lending Club’s loans might be useful for businesses with many different financing needs.
3. Prosper
Prosper (see our review) is another P2P loan marketplace offering personal loans that can be used for business. These are medium-term installment loans of up to $35,000. Prosper loans are suitable for startups. You don’t need a proven track record in business or consistent business revenue to qualify for a low interest rate; your ability to qualify is based on the strength of your personal profile and not that of your business.
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| Borrower requirements: • Must have a personal credit score of 640 or above. • No time in business or revenue requirements. | |
| Visit the Prosper website Read our Prosper review | |
Prosper Loan Terms
- Borrowing amount: $2K – $40K
- Term length: 3 or 5 years
- APR: 5.99% – 35.99%
- Interest rate: 5.32% – 31.90%
- Repayments: Monthly
Is Prosper Right For You?
Not every business will qualify for a low interest rate with Prosper, but since rates are based solely on your personal creditworthiness and not the credit history of your business, new businesses may be able to qualify for much lower rates than they could with other lending institutions. To qualify, you just need to have a credit score of at least 640.
Prosper is also very easy to apply for. You can check to see what interest rate you qualify for in just a couple minutes.
4. Funding Circle
Funding Circle (see our review) offers medium-term installment loans for established small- and medium-sized businesses. Funding Circle has a P2P lending model, similar to Lending Club’s. The main draw of Funding Circle is that it typically takes ten days or fewer from application to funding.
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| Borrower requirements: • Must have been in business at least 2 years. • Must have a credit score of 620 or higher. | |
| Visit the Funding Circle website Read our Funding Circle review | |
Funding Circle Loan Terms
- Borrowing amount: $25K – $500K
- Term length: 6 – 60 months
- Interest rate: 4.99% – 26.99%
- APR: 7.4% – 36%
- Repayments: Monthly
Is Funding Circle Right For You?
Funding Circle is a suitable lender for established small businesses that might be eligible for a bank loan, but want a faster, easier source of funding. Funding Circle is a popular lending option for franchise businesses in particular.
Funding Circle requires that you have at least two years in business and a credit score of 620. As with the other online lenders on this list, only the strongest businesses will qualify for the lowest interest rates.
5. Kiva U.S.
P2P microlender Kiva U.S. (see our review) is as low-interest as you can go—0% interest! Granted, you can only borrow up to $10K, and you must recruit a certain number of lenders from your own social circle, but still—it’s the only 0% interest small business loan we know of. Kiva offers short- and medium-term installment loans.
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| Borrower requirements: • No specific time in business, revenue, or credit score requirements. | |
| Visit the Kiva U.S. website Read our Kiva U.S. review | |
Kiva Loan Terms
- Borrowing amount: $25 – $10K
- Loan term: 6 — 36 months
- Interest rate: 0%
- APR: 0%
- Repayments: Monthly
Is Kiva Right For You?
Kiva could be right for your small business if you only need to borrow a few thousand dollars ($10K or less) and don’t mind asking some of your own friends/family/colleagues to lend to you. The process also takes a little longer than it would with some other online loans; it could be at least a month or two until you see the funds come through.
One great thing about Kiva is there are virtually no borrower requirements. You must have a legit business, of course, but otherwise, there is no required time in business, annual revenue, or credit score. In fact, they don’t even check your credit at all. All you really need is a nice business profile and backstory that makes people want to lend to you.
StreetShares (read our review) is a peer-to-peer (P2P) lender offering short-term business installment loans, lines of credit and, contract financing (a service similar to invoice factoring). In addition to having low interest rates for small and medium businesses, StreetShares is a veteran-friendly lender. While you do not have to be a veteran to use StreetShares, veteran-owned businesses will likely qualify for lower interest rates.
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| Borrower requirements: • Must be in business at least 12 months with a revenue of $25,000 per year (sometimes StreetShares will make exceptions for high-earning businesses at least 6 months old). • Must have a personal credit score of 620 or above. | |
| Visit the StreetShares website Read our StreetShares review | |
StreetShares Installment Loan Terms
- Borrowing amount: $2K – $100K
- Term length: 3 – 36 months
- Interest rate: About 6% – 14%
- APR: 7% – 39.99%
- Repayments: Weekly
StreetShares Line Of Credit Terms
- Borrowing amount: $5K – $100K
- Draw term length: 3 – 36 months
- Interest rate: About 6% – 14%
- APR: 7% – 39.99%
- Draw fee: 2.95%
- Repayments: Weekly
Is StreetShares Right For You?
StreetShares has relatively low APRs compared to many other online lenders and low borrower qualifications as well. StreetShares’ application process is painless, customer service is excellent, and time to funding is prompt. But given that you can only borrow up to 20% of your annual revenue, larger businesses will probably need to look elsewhere for financing.
7. Fundation
Fundation (read our review) is a leading online business lender offering short- and medium-term installment loans and lines of credit. With quick and easy business funding, interest rates are lower than you’ll get with just about any other lender outside of a bank or credit union. Borrower qualifications are more relaxed than those for bank loans, but more stringent than those for some other alternative lenders.
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| Borrower requirements: • Must be in business at least 12 months and make at least $100,000 annually. • Must have a personal credit score of 600 or above. • Must have at least three full-time employees (yourself included). | |
| Visit the Fundation website Read our Fundation review | |
Note that Fundation does not list interest rates on their website, but APRs are as low as 7.99%.
Fundation Installment Loan Terms
- Borrowing amount: $20K – $500K
- Term length: 1 – 4 years
- APR: 7.99% – 29.99%
- Repayments: Bi-weekly
Fundation Line of Credit Loan Terms
- Borrowing amount: $20K – $100K
- Draw term length: 18 months
- APR: 7.99% – 29.99%
- Draw fee: 2%
- Repayments: Monthly
Is Fundation Right For You?
Fundation has more stringent borrower qualifications than a lot of other online lenders. It’s not suitable for startups, for example. But if you’ve been in business a year, have a credit score of 660, and have at least three full-time employees, this is a good business loan to apply for. Interest rates are lower for most borrowers compared to other short-term lenders, and the time-to-funding is a week or less.
8. Bank and SBA loans 
Generally, bank loans have the lowest interest rates. However, they are notoriously difficult for small businesses to obtain, with very low approval rates. If you are approved, it can take many months for the funds to come through. That said, if you are indeed eligible for a bank loan, it is definitely worth applying for one. You’ll almost certainly get the lowest interest rates that way.
Loans from the Small Business Administration (SBA) are similar to bank loans — they’re difficult to qualify for and have a long time-to-funding. However, they are slightly easier to qualify for compared to a bank loan, and you could potentially get an interest rate as low as 4 percent. In addition to online-SBA loan hybrids like SmartBiz, traditional banks such as Chase and Wells Fargo also offer SBA loans. Check out our SBA Loan Rates Guide for current SBA loan rates.
You can use this online tool to find SBA lenders through the SBA.
Where Should I Apply?
Feeling overwhelmed with all your loan options? Not to worry. Here’s the quick and dirty on which businesses should apply for which type of low-interest loan.
Newer businesses needing smaller amounts of capital should apply to:
- Lending Club Personal Loans
- Prosper
- Kiva
- StreetShares
More established businesses needing larger loans should apply to:
- SmartBiz
- Lending Club Business Loans
- Funding Circle
- Fundation
- Bank/SBA loan
A Note On Loan Aggregators
To evaluate multiple low-interest lenders at once, it’s a good idea to use a free loan matchmaking service, often called a “loan aggregator.”
Merchant Maverick has partnered with Mirador Finance, a financial technology company, to offer one such service: the Merchant Maverick Community of Lenders.
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| Borrower requirements: • Free loan aggregation service; requirements vary by area and lender. | |
| Check your eligibility Learn more about the Community of Lenders | |
With just one application, you can check your eligibility with banks, credit unions, nonprofits, and other lenders across the United States. The initial application only takes a few minutes, and the service is completely free. Other popular loan aggregators include Fundera (read our review) and Lendio (read our review).
Final Thoughts
What’s great about low-interest loans, including the ones on this list, is they also usually have other customer-friendly terms, like longer repayment periods and fewer fees.
Finally, it’s important to know that your creditworthiness is the most important factor in determining your small business loan interest rate. Most of the above loan options only require that you have fair credit to qualify for an offer, but in order to get a low interest rate, you’ll need to have good or excellent credit (Kiva is the only exception). If you don’t have good credit, then you might want to look into alternative financing options like crowdfunding—companies like Kickstarter, Fundable, Indiegogo, etc. are good options if you’re looking for a business crowdfunder.
Need more help? Contact us and we’ll be happy to help match you with quality low-interest small business loans.
Shannon Vissers
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