Top Small Business Loan Rates Compared

Comparing small business loan rates is no simple task.

Firstly, there is more than one rate you need to compare; you’ve got the interest rate or factor rate, of course, but there is also the APR, the origination fee, and sometimes other fees as well. Also, as you probably already suspect, not all borrowers are offered the same loan rate. Your credit score, time in business, loan term length, type of loan, and other factors will all play a part in what rate you’ll receive from any given lender.

You can quickly compare small business loan rates at-a-glance with our loans comparison chart. But since small business loan rate comparison is so complex, those with a few minutes to spare might want to keep reading for a more detailed look at the different loan rates across the top small business lenders.

Before We Get Started

Here are just a few quick need-to-knows before we start comparing rates.

Types of Small Business Loans

The most common types are installment loans (also called “term loans”), lines of credit, and short-term loans. Here’s more info on each:

• Installment loans
• Lines of credit
• Short-term loans

A Note on APR and Small Business Loan Rates

Typically, the APR is the most important number to look at when comparing small business loan rates. This number tells you the total cost of a loan over a period of a year, including the interest rate, the origination fee (percentage of the loan amount the lender takes off the top), and any other fees associated with the loan. It doesn’t always give a complete picture, however, when calculating short-term loans with a period of less than a year or with loans that have variable interest rates.

Before comparing rates, make sure you understand APR and the various types of small business loan fees charged by lenders.

1) Fundation (7.99%-29.99% APR)

This highly rated small business lender sells medium-term installment loans and lines of credit.

Fundation Installment Loans

• Borrowing Amount: $20K-$500K
• Term Length: One to four years
• APR: 7.99% to 29.99%
• Origination Fee: Up to 5%
• Fixed-rate
• No prepayment penalty
• Bi-weekly repayments

Fundation Lines Of Credit

• Borrowing Amount: $20K-$100K
• Term Length: 18 months
• APR: 7.99% to 29.99%
• $500 closing fee
• 2% draw fee deducted from each draw
• No prepayment penalty
• Monthly repayments

More About Fundation Loan Rates

Fundation states on its website that its APR takes into account both origination fees and draw fees (as well as the interest rate). Note that you will have to have good personal credit to get a loan from Fundation, have been in business for at least one year, and have three full-time employees, including yourself. Your credit history and time in business will also affect what rate you qualify for. Fundation notes on its website: “Our rates are risk-based, meaning that we determine an interest rate according to the estimated credit risk of each borrower.” Of course, this is true of most lenders.

See if you qualify for a Fundation loan

2) SmartBiz (5.75%-8% APR)

SmartBiz offers SBA-guaranteed, long-term installment loans (with a variable interest rate). Specifically, it sells debt-refinancing and working-capital loans; additionally, it offers a 25-year commercial real estate loan.

SmartBiz Debt Refinancing & Working Capital Loans

• Borrowing Amount: $30K-$350K
• Term Length: 10 years
• APR: 7%-8%
• Interest Rate: Prime rate + 2.75%-3.75% (depending on borrowing amount)
• Referral Fee: 2%
• Packaging Fee: 2%
• Guarantee Fee: 0%-2.25%
• Bank Closing Costs: ~$450
• Monthly repayments

SmartBiz Commercial Real Estate Loans

• Borrowing Amount: $500K-$5 million
• Term Length: 25 years
• APR: 5.75%-7%
• Interest Rate: Prime rate + 1.50%-2.75%
• Referral Fee: 0.5%
• Packaging Fee: 0.5%
• Guarantee Fee: 2.25%-2.8125%
• Bank Closing Costs: ~$5K
• Monthly repayments

More About SmartBiz Loan Rates

SmartBiz has some of the best rates for a long-term small business loan. However, note that because of their variable interest rate structure, your APR is affected by changes to the prime rate. SmartBiz APRs on 10-year term loans range from 7 to 8% but may fluctuate if the prime rate goes up or down. For comparison, other online lenders typically have APRs as high as 36% on similar loans.

Visit SmartBiz website

3) OnDeck (29.9%-99.9% APR)*

This very popular online lender provides short-term installment loans and lines of credit.

OnDeck Term Loans

• Borrowing Amount: $5K-$500K
• Term Length: 3-36 months
• APR: 29.9%-97.3%*
• Factor Rate: x1.003-x1.04 per month
• Origination Fee: 2.5%-4%
• No prepayment penalty
• Daily or weekly repayments

OnDeck Line Of Credit

• Borrowing Amount: $15K-$100K
• Six-month draw term
• APR: 29.9%-65.9%*
• $20/month maintenance fee
• No draw fee
• No prepayment penalty
• Daily or weekly repayments

* Based on loans originated in the half-year ending March 31, 2022

More About OnDeck Loan Rates

The reason why OnDeck’s APRs can be so high (up to 99.9%) is that you’re paying a lot of money back in the short term, which translates to a high estimated APR. In addition to the APR, you’ll want to look at the factor rate to get a full understanding of the cost of the loan.

Simply multiply your borrowing amount by your factor rate to get the total cost of the loan. For example, if you have a factor rate of x1.25 and you are borrowing $50K, you will have to repay $62.5K ($50,000 x 1.25 = $62,500). This amount is calculated only once at the start of the loan and does not compound the way an interest rate does.

Apply for an OnDeck loan

4) Accion (9.5%-33% APR)

Accion is a nonprofit microfinancer offering short- and medium-term installment loans.

Accion Term Loans

• Borrowing Amount: $500-$50K
• 6-60 month terms
• APR: 9.5%-33%
• Interest Rate: 8%-22%
• Closing Fee: 3%-5%
• $135 processing fee
• No prepayment penalty
• Monthly repayments

More About Accion Rates

Accion has pretty relaxed borrower qualifications, but a borrower with bad credit will likely have a much higher loan rate than another borrower with excellent credit (though this is true with almost all lenders, not just Accion). Accion’s short-term loans that are repaid in less than a year will also have a higher APR than their medium-term loans. Loan and rate offerings also vary a lot from state to state. Accion’s rates are somewhat higher than those of their peers, though their terms are very fair – for example, you’ll have a reasonable amount of time to repay the loan and can make monthly payments.

Visit Accion website

5) Funding Circle (7%-33% APR)

Funding Circle is a P2P small business lending platform similar to StreetShares, offering medium-term installment loans.

Funding Circle Term Loans

• Borrowing Amount: $25K-$500K
• Term Length: One to five years
• APR: Approx. 7%-33%
• Interest Rate: 4.99%-27.79%
• Origination Fee: 0.99%-5.99%
• Monthly repayments
• No prepayment fee

More About Funding Circle Loan Rates

While Funding Circle is a P2P lending platform, loan rates are determined not by investors with an auction model but on a fixed-interest basis before the loan goes to auction. As with the other lending institutions on this list, your interest rate is determined by your risk of default, based on factors like your credit score, your industry, the age of your business, and loan term length. As you can see, the rates offered are very competitive; however, in order to qualify for a loan with Funding Circle, you must be an established business with strong cash flow and good credit history.

Best Rates on Each Type of Small Business Loan

While these “best rates” won’t apply to every single borrower, in general, here are lenders that offer the lowest possible APRs for each category of small business loan.

• Best Rate For A Medium-Term Loan: Funding Circle (as low as 7% APR)
• Best Rate For A Long-Term Loan: SmartBiz (as low as 7% APR)
• Best Rate For Commercial Real Estate Loan: SmartBiz (as low as 5.75% APR)

Final Thoughts

I hope I’ve given you a good overall view of what kind of rates you can expect from the top small business lenders. Please also keep in mind that the cost of a loan isn’t always the be-all and end-all when it comes to getting the best loan. In addition to getting a fairly priced loan, you also want a reasonable amount of time to pay that loan off. Further, you need to be wary of lenders that advertise that they have the “lowest rates” — in most cases, these guys more than make up for their “low, low-interest rates!” in the form of sneaky hidden fees and charges.

To see what rate(s) you qualify for from any of these lenders, use the green buttons above to visit the lender’s website and apply online. The great thing about these small business loans is that you can find out within minutes if you prequalify without impacting your credit. This makes it possible to preapply for several loans at the same time so you can shop rates. 🙂