What are the Best Small Business Loan Interest Rates?

Interest rates on commercial loans can vary greatly, from a low of 3% for traditional banks to a high of 150% for alternative lenders.

SBA 7 (a) loans

, one of the most affordable commercial loan products available today, have loan rates that range from 6% to 8%. Online business loans are known for their lenient eligibility requirements and fast approval and funding deadlines. Kiah Treece, a licensed attorney and small business owner with experience in real estate and financing, explains that it is difficult to determine the average interest rate on business loans due to the wide range of rates offered by different lending institutions.

A prepayment fee or penalty may be charged by a lender when you pay off your loan before it is due. The range of interest rates can be anywhere from 3%, the best rate that banks can offer for small businesses, to 150%, which some companies can charge for cash advances. The higher your credit score, the less risky it seems to a commercial lender, which could result in low-interest financing. Online lenders also offer commercial lines of credit; however, the interest rates on these products may be higher, especially for an unsecured line of credit.

Collateral may also be required to secure the loan, which could include assets such as commercial property, equipment, or inventory. Finding the best small business loan rates will help you finance the growth of your business and make worthwhile investments. LendingTree doesn't include all lenders, savings products, or lending options available on the market. The interest rate on your small business loan ultimately depends on how confident the lender can say that you will repay the loan in full.

Working capital loans can offer quick financing in the form of short-term loans, lines of credit and more to cover operating costs, such as rent or payroll. SBA loans offer more affordable rates than many other forms of business financing. Current small business loan rates can start at around 3% for the most qualified applicants in conventional banks and around 7% for online lenders.