Best Low-Interest Business Loans of 2020

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 is a major time commitment — we’re talking months — and small-business owners may not have time for that.

SmartBiz and Live Oak streamline the SBA loan process, giving business owners access to financing at low interest rates with less hassle.

SmartBiz provides SBA loans that can be used for working capital, inventory, expansion and debt consolidation.

If you do business in one of these 17 highly specialized industries, you can turn to Live Oak Bank for SBA loans. The North Carolina-based online bank can help get you an SBA loan in just 45 days.

If you’ve been in business less than two years

Many traditional lenders, such as banks, require at least two years of business history to qualify for a loan. But if you have just one year under your belt, consider StreetShares for financing.

StreetShares offers term loans and a standard line of credit of up to $250,000. The lender is takes a different spin on peer-to-peer lending, matching borrowers with investors who share similar interests.

If you’ve been in business two or more years

With two years in business, you may have an additional financing option that comes with competitive rates and quick funding.

Credibility Capital requires at least 24 months in business. It has minimum credit and revenue requirements — 680 and $250,000, respectively — but it also uses a “holistic” approach to underwriting, meaning it may be flexible on some requirements if you are outperforming in other areas.

Funding Circle offers competitive interest rates for established companies. Typical borrowers have at least 10 employees and have been in business for 10 years.

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.

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