BEST OF
Best Low-Interest Business Loans of 2021
Low-interest business loan options include SBA loans and online loans. You'll need good credit and strong finances to qualify.
As a business owner with good personal credit and strong financials, it’s easier to qualify for cheap financing — meaning you can borrow money at a lower annual percentage rate. APR is an accurate measure of the cost of financing. It includes the interest rate as well as all the fees you’ll pay over the life of the loan.
Even if you can’t qualify for a loan from a traditional bank, which typically offers the best rates, there are alternative lenders that offer low rates on small-business loans.
LOOKING FOR CORONAVIRUS BENEFITS INFORMATION?
As a business owner with good personal credit and strong financials, it’s easier to qualify for cheap financing — meaning you can borrow money at a lower annual percentage rate. APR is an accurate measure of the cost of financing. It includes the interest rate as well as all the fees you’ll pay over the life of the loan.
Even if you can’t qualify for a loan from a traditional bank, which typically offers the best rates, there are alternative lenders that offer low rates on small-business loans.
LOOKING FOR CORONAVIRUS BENEFITS INFORMATION?
Easily get real, personalized small business loan rates to compare — not just ranges or estimates.
It’s free and won’t affect your credit.
on Fundera's website
Our pick for
Lowest-cost loans
Live Oak Bank - SBA loan
Est. APR
5.50 - 8.25%
Min. Credit Score
650
Pros
- Competitive rates among online lenders.
- Faster than getting an SBA loan from a bank.
Cons
- Must have strong financials, supported by personal and business tax returns for the past 3 years.
- Only for specific industries.
- Stringent rules on use of proceeds.
- Requires business lien and personal guarantee.
Qualifications
- Minimum credit score: 650.
- Cash flow must be able to support the debt.
- No bankruptcies or foreclosures.
- No outstanding tax liens.
Our picks for
Businesses two or more years old
Credibility Capital - Online term loan
Est. APR
19.99 - 24.99%
Min. Credit Score
680
Pros
- Competitive rates among online lenders.
- No prepayment penalty.
- Extra monthly payments can save interest cost.
Cons
- Short repayment term results in higher payment amounts.
- Requires high minimum credit score and revenue.
- Requires business lien and may require personal guarantee.
- Not available in Nevada, North Dakota, South Dakota or Vermont.
Qualifications
- Minimum credit score: 680.
- Minimum time in business: 2 years.
- Minimum annual revenue: $250,000.
- No bankruptcies in the past 5 years.
Funding Circle - Online term loan
Est. APR
12.18 - 36.00%
Min. Credit Score
660
Pros
- Cash can be available within 3 business days.
- Competitive rates among online lenders.
- No minimum revenue requirement.
Cons
- Requires business lien and personal guarantee.
Qualifications
- Minimum credit score: 660.
- Minimum time in business: 2 years.
- Minimum annual revenue: None.
- No bankruptices in the past 7 years.
Easily get real, personalized small business loan rates to compare — not just ranges or estimates.
It’s free and won’t affect your credit.
on Fundera's website
Summary of Best Low-Interest Business Loans of 2021
| Lender | Best For | Est. APR | Min. Credit Score |
|---|---|---|---|
Live Oak Bank - SBA loan | Best for Lowest-cost loans | 5.50 - 8.25% | 650 |
Credibility Capital - Online term loan | Best for Businesses two or more years old | 19.99 - 24.99% | 680 |
Funding Circle - Online term loan | Best for Businesses two or more years old | 12.18 - 36.00% | 660 |
Types of low-interest business loans
SBA loans: If you’re looking for the lowest-cost loan, SBA loans are by far your best bet for the lowest possible rates if your business is strong. With the SBA guaranteeing 75% to 85% of the financing, lenders can offer SBA loan rates of about 7% to 9% that are based on the prime rate.
But the application process at banks is a major time commitment — we’re talking months — and small-business owners may not have time for that. You can also turn to SBA-approved online lenders that offer a streamlined and quicker loan process.
Term loans: You can get a business loan with competitive rates at traditional banks and other lenders. Many traditional lenders, such as banks, require at least two years of business history and solid personal and business finances to qualify for a loan.
If don't qualify for a term loan at a bank, you can turn to online lenders, which have less stringent qualifications and a quicker application process.
If you’re looking for business loan alternatives
Outside of traditional business loans, you can also consider using a personal loan for business or a business credit card. You typically need to have good to excellent credit to get the lowest APRs.
Personal loan: Using a personal loan for business is typically best for starting your company. Since your company is brand new, you won’t have any business or revenue history, which are two key components that small-business lenders consider. Instead, personal loan providers will qualify you based on your personal credit score and income.
Personal loans also tend to have lower APRs than many online alternative lenders, but defaulting on them could hurt your personal credit score.
Business credit card: Using a business credit card not only gives you access to a revolving line of credit, but you can also earn valuable rewards, like cash back. Credit limits on business credit cards are typically higher than what’s offered for personal credit cards.
Business credit cards are a good option for recurring or everyday purchases. You can qualify based on your personal credit even if you don’t have an established business history.
Find and compare small-business loans
If none of these options seems like a good fit, NerdWallet has created a comparison tool for the best small-business loans to meet your needs and goals. We gauged lender trustworthiness, market scope and user experience, among other factors, and filtered them by categories that include your revenue and how long you’ve been in business.
Last updated on January 27, 2021
To recap our selections...
NerdWallet's Best Low-Interest Business Loans of 2021
- Live Oak Bank - SBA loan: Best for Lowest-cost loans
- Credibility Capital - Online term loan: Best for Businesses two or more years old
- Funding Circle - Online term loan: Best for Businesses two or more years old
Frequently asked questions
Online business loan rates range from 6% to 99% APR, while SBA loans have a fixed-rate ranging from 5.50% to 8% APR, based on the size of the loan and repayment period. The rate you receive depends on factors such as your credit score, annual revenue and time in business.
