The interest rate on a business loan can vary depending on the type of loan, the lender, and the borrowers qualifications. According to the latest data from the Federal Reserve Bank of Kansas City, the average interest rate for all small business term loans in the fourth quarter of 2022 was 6.44 percent for fixed-rate loans and 7.44 percent for variable-rate loans. However, the average business loan interest rate ranges from 5.26% to 11.32% at banks. The interest rate you receive varies based on loan type, lender, and your qualifications as a borrower. Here are some examples of interest rates for different types of business loans:
- Traditional bank loans: 6.75% or more
- Alternative, online loans: 3.49% – 30.12%
- SBA loan: 10.5% – 13%*
- Business line of credit: 10% – 99%
- Invoice factoring or financing: 10% – 79%
- Merchant cash advance: 40% – 350%
Low interest rates are possible for business loans, but it depends on your business’s — and in many cases personal — credit history. To find low-interest business loans, you'll want to shop around, because the interest rates also vary widely based on where you get the business loan.
