If you've looked up business loan rates and landed on a range so wide it felt useless, you're not imagining things. Small business loan interest rates genuinely range from about 7% to 50% APR depending on the loan type, the lender, and how your business qualifies. That spread reflects the variety of products, lender types, and borrower profiles in the market.

Understanding where you fall in that range -- and why -- is what turns a confusing number into a useful one. This guide breaks down current average rates by loan type, the factors that determine what you'll pay, and how to calculate your true loan cost before you sign.

Current small business loan interest rates.

Loan type Average interest rates (APR)
Business term loan (bank) 5.35%-11.00% fixed, 5.55%-10.50% variable
Business term loan (online lender) 10%-36% APR*
7(a) SBA loan Variable: 9.75%-13.25%**, Fixed: 11.75%-14.75%
Business line of credit (bank) 6.99-8.10% depending on fixed or variable
Business line of credit (online lender) 7.8%-36%
Equipment financing 9.9%-24%
Accounts receivable financing 24%-36%
Revenue-based financing 10%-40%

* Online lender rates typically range from 10%–36% APR for qualified borrowers. Rates above 36% are available from some lenders depending on credit profile, time in business, and loan structure. Individual rates vary.

** Rates calculated using a prime rate of 6.75%. Updated April 2026. Individual rates vary based on creditworthiness, loan term, and lender. Read our guide to SBA loan interest rates by program type for more information.

How do business loan interest rates work? 

When you borrow money for your business, you don’t just repay the amount you received. You also pay the lender a cost for using that money. That cost is the business loan interest rate, and it's the key number that determines how much financing really costs you.

Think of the interest rate as the price of capital. A lower rate means you’ll repay less over the life of the loan, while a higher rate can make financing more expensive. However, hit may also come with faster access to funds or easier approval requirements when you need capital quickly.

To estimate the basic interest you’ll pay (assuming you don’t pay off early):

Interest paid formula

Principal of the loan X interest rate X years of term = total interest paid

Example: $50,000 x 12$ x 3 years = $18,000 in total interest over the life of the loan.

The term of your loan, the loan type, and the interest rate all shape your total cost, as do the factors below.

Factors that influence business loan interest rates.

No two businesses get quoted the exact same loan rate. Lenders weigh several factors when deciding what you’ll pay. Understanding them helps you see your rate as a reflection of your current profile, not a fixed ceiling.

Credit profile

Both your personal and business credit scores matter. A higher score signals lower risk to lenders, which typically results in lower rates. These aren’t judgments on your business, they’re the benchmarks lenders use to price risk across their portfolio:

  • 740+ Qualifies for the most competitive rates (7%-10% at banks)
  • 680-739: Solid options with slightly higher rates
  • 620-679: More limited lender options, higher rates
  • Below 620: Primarily online or alternative lenders (20%-50%+ APR)

Time in business

Startups and younger businesses often face higher borrowing costs because they haven’t yet built an operating track record. Most traditional lenders look for at least two years in business.

Revenue and cash flow

Lenders want to see consistent, predictable income. Stronger revenue can unlock more competitive rates and higher loan amounts.

Collateral

Loans backed by assets (commercial real estate, equipment, or receivables) generally carry lower rates than unsecured financing. Collateral reduces the lender’s risk, and that savings get passed on to the borrower.

Loan product type

An SBA loan may come in near 11%, while revenue-based financing could cost 30% or more. Different products carry fundamentally different pricing models.

Economic environment

The Federal Reserve’s rate decisions directly influence business loan pricing, particularly for variable-rate products tied to the prime rate or SOFR (Secured Overnight Financing Rate).

Industry

Some lenders price by industry. Businesses in sectors with higher historical failure rates or volatile revenue cycles may see higher rates, regardless of individual creditworthiness.

While you can’t control the economy, improving your business credit profile, building revenue history, and offering collateral are levers you can pull to move your rate in the right direction.

Types of business loan interest rate structures

Lenders may use a variety of rates depending on loan type or financing structure. APR, or annual percentage rate, is the most common. However, many others rely on factor rates, flat fees, weekly charges, or the prime rate. Understanding the differences will help you compare offers as you grow your business.

Annual Percentage Rate (APR)

APR is the all-in cost of borrowing expressed as a yearly percentage. It includes interest plus certain fees, which makes it the most reliable basis for comparing loan products.

Example: A 12% APR on a $100,000 loan means you'll pay about $12,000 per year in interest (before principal repayment).

Where it's used: Term loans, SBA loans, business credit cards, lines of credit from traditional lenders.

Tip: If you can get APR quotes from multiple lenders, they're your most straightforward comparison tool.

Factor rate

A factor rate is expressed as a multiplier (e.g., 1.3x). Instead of interest, you agree to repay a fixed multiple of what you borrow -- regardless of how quickly you pay it back.

Example: You borrow $100,000 at a 1.3x factor rate. You repay $130,000 total.

Where it's used: Revenue-based financing, some equipment leasing.

Tip: Factor rates can translate to high APRs if you repay quickly. To convert: subtract 1 from the factor rate (1.3 - 1 = 0.3 = 30% total financing cost), then divide by your repayment term in years. Repay in 12 months: 30% APR equivalent. Repay in 6 months: 60% APR equivalent.

Factoring fees

Factoring fees are a one-time charge calculated as a percentage of the invoice value you're factoring.

Example: A 2.5% fee for every 30 days an invoice is outstanding works out to roughly 30% APR over a full year.

Where it's used: Accounts receivable factoring, invoice financing.

Tip: The longer your customers take to pay, the more expensive invoice factoring becomes. Factor in your average day's sales outstanding (DSO) before committing.

Fixed vs. variable interest rates

When comparing business loans, you’ll often choose between fixed rates and variable rates. Both can be the right option, they just work differently.

Fixed rate loans

The interest rate stays the same for the entire term of the loan, making your payments predictable and easy to budget for. 

Where it’s used: term loans, equipment financing, and some lines of credit

Variable rate loans

The interest rate can go up or down over time, as it’s tied to a benchmark like the prime rate or SOFR (Secured Overnight Financing Rate). Payments may start lower than a fixed-rate loan, but they can increase if market rates rise.

Where it’s used: SBA loans and some bank-issued credit lines.

Tip: Choose a fixed rate if you value predictability and stable payments, and choose a variable rate if you can handle some payment fluctuation and want the chance to save if market rates fall.

Monthly or weekly interest rates

Some alternative lenders quote rates as a percentage per month or per week instead of APR. 

Example: 1.5% per month is approximately 18% APR. 0.5% per week is approximately 26% APR.

Where it's used: Short-term loans, some fee-based lines of credit.

Tip: Always convert monthly or weekly rates to APR before comparing them to other offers. Lenders that don't volunteer the APR may be making the true cost harder to see.

A note on term length and interest rates.

A 30% or 40% rate can sound alarming. But term length changes the picture significantly. Many business loans are repaid in six months to a year, which means the total interest paid often ends up comparable to a longer loan with a much lower rate.

Loan type Interest % Amount financed Total interest paid
5-year loan 8.95% $30,000 $7,325
6-month loan 26% $30,000 $7,800

Calculating the true cost of a business loan

Your interest rate is only one portion of the cost of a loan for your business. Depending on the type of loan and the lender, there may be additional fees that you’re responsible for paying.

These fees may include:

  • An origination fee to process your loan application
  • An underwriting fee
  • Closing costs
  • Early payoff fee or a charge to refinance the loan later. It’s worth noting that with factor rate products, paying off early doesn’t reduce the total amount owed.

The best single number to look at is APR -- it folds in the interest rate plus standard fees into one comparable figure. Not all lenders provide APR upfront. If they don't, ask how they calculate the cost before comparing offers. Transparency on pricing is something any reputable lender should be willing to provide.

A business loan calculator is one of the most useful tools for comparing options before you commit. Plug in the loan amount, term, and rate to see:

  • Monthly or weekly payment
  • Total repayment amount
  • Total financing cost
  • Amortization schedule

Use Lendio's loan calculators to estimate your numbers

How to get the best loan rate for your business.

Your final rate depends on your credit history, time in business, revenue, and the type of financing you're after. Here's what you can do to put your best application forward:

Start with your credit. Pull your personal and business credit reports before you apply. Dispute any errors -- they can cost you significant rate points. If your personal score is below 680, a few months of focused improvement before approaching traditional lenders can meaningfully change your options.

Know your numbers. Lenders will ask for bank statements, tax returns, and often a P&L. Having these ready -- and understanding what they show -- signals a prepared borrower and speeds up the process.

Compare lenders, not just rates. A lower rate paired with high fees, a prepayment penalty, or a restrictive covenant isn't always the better deal. Use APR and total repayment amount as your apples-to-apples benchmarks.

Consider prequalification. Some online lenders can prequalify you with a soft credit pull, giving you a rate estimate before a hard inquiry hits your report. This lets you shop without damaging your score.

Use a lending marketplace. Applying through a marketplace like Lendio lets you compare multiple loan offers from a single application -- without approaching each lender individually. More options, less legwork.

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