8 Best Low-Interest Small-Business Loans 2022

Like any other type of loan, business loans can get pricey―and that’s unlikely to change anytime soon. Alternative lenders (aka online lenders) in particular often come with shockingly high interest rates.

So what’s a thrifty small-business owner supposed to do? Stick with more affordable, low-interest business loans, when possible.

We’ve rounded up the best small-business loans with (starting) interest rates under 9% (and some under 5%), so you can save money on your loan and still get the funding you need. We recommend most business owners use Lendio to shop around and compare offers, but our other seven picks also have plenty to offer.

When you’re looking for low-interest business financing, you’ll usually want to stick to a few types of funding:

• Commercial real estate loans
• Equipment loans
• Lines of credit
• Long-term loans
• SBA loans

Other types of financing, like merchant cash advances, invoice financing, and short-term loans tend to have much higher interest rates.

Take note, though, that in

some circumstances, you can get even lower rates through special SBA loans.

Take SBA disaster loans, including Economic Injury Disaster Loans (EIDLs). These can have special low rates. For example, recent EIDLs issued in response to the COVID-19 pandemic had rates between 2.75% and 3.75%.

Likewise, Paycheck Protection Program (PPP) loans have a low interest rate of 1%. (This includes both first and second-round PPP loans.) And, of course, they qualify for loan forgiveness in some circumstances, saving you even more money.

If you qualify for these special low-interest loans, they’ll likely be the cheapest financing options you can get. So by all means, get them. But if they’re not available to you, the working capital loans above provide a good alternative.

Lendio offers our overall favorite source of low-interest business loans.

It mostly comes down to Lendio’s model. See, it’s a lending marketplace rather than a lender. That matters. It means that Lendio actually partners with lenders rather than offering its own financing.

When you put in a loan application with Lendio, it uses that application to shop around with its partner lenders and find you the best deal. And we all know that comparison shopping is one of the best ways to save money. So when Lendio comes back with loan offers, you can compare things like interest rate, repayment term, and other factors to choose the one you like best.

Lendio works with quite a list of other lenders (including some that appear later in this list). It also has many different loan options. In other words, Lendio can help you get a lower rate by matching you with a loan option you might not have thought of yourself.

With loans and lenders galore, Lendio offers business owners a great way to save on interest rates through comparison shopping.

Fundera by Nerdwallet is another lending marketplace like Lendio―but it offers SBA microloans, unlike Lendio.

As you may know, SBA microloans are a type of government-backed loan that you can use for pretty much any working capital need you have, like buying equipment or inventory. And while they’re not the cheapest type of SBA loan, microloans do have starting rates around 8% interest―and microloans may be easier to qualify for than other types of SBA loans.

Of course, Fundera by Nerdwallet can help you compare other kinds of low-interest business loans too. Just keep in mind that lending marketplaces, as a rule, can make loan applications take longer than other lenders―and SBA loans can take a long time on top of that.  

Even so, the low rates on SBA microloans through Fundera are very likely worth your wait.

Think you might prefer a business line of credit to a term loan? Then Bluevine might be the lender you’re looking for.

Bluevine offers very affordable lines of credit. (It offers invoice factoring too, but that tends to be a costlier financing option.) Unlike term loans, lines of credit let you repay the money you borrow and then borrow again (not unlike a credit card). That makes credit lines a great solution for cash flow problems, as you can keep borrowing and repaying as much as you need.

Like we said, Bluevine credit lines don’t have to cost a ton. Interest rates on Bluevine lines of credit start at less than 5%―one of the lowest starting rates on this list. Just keep in mind that Bluevine credit lines come in smaller loan amounts than other lenders here. For basic cash flow needs, that shouldn’t be a problem. For a big, pricey project, though, you might prefer a larger bank loan.

But if cash flow financing sounds good to you, then you’ll like the low interest on Bluevine lines of credit.

Don’t have time to sit around and wait for a small-business loan? Let’s talk Funding Circle.

While lending marketplaces like Lendio and Fundera are great, they can take days to match you―and that’s before you submit a final loan application and get approved. Funding Circle works faster. It’s a direct lender, so it makes its own lending decisions. In fact, you can get approved in less than 24 hours, and funded the day after that. (Bluevine also has fast funding, but it doesn’t do term loans.)

Don’t worry, though. This isn’t one of those times where you have to pay for speed and convenience. Funding Circle term loan rates start under 5%. So you’re still able to get a great deal on your business financing―you’re just getting a great deal faster than you would from other lenders.

So go ahead and submit your loan application with Funding Circle, and enjoy getting faster financing.

Kiva works really, really differently than other lenders on this list―as shown by the fact that it doesn’t charge any interest.

You read that right. Kiva has the lowest loan rates of any lender on this ranking, because it doesn’t actually charge interest (or fees, for that matter). You simply repay your loan amount. Yes, you still have to make regular payments and repay your loan balance within your repayment term. You just don’t have to worry about an interest rate―high or otherwise.

There are some catches. First, Kiva loans come in small loan amounts. Like microloans of less than $15,000 small. Second, Kiva uses a crowdfunding process to fund your loan. It takes over a month to get through its financing process, and you’ll have to convince people your business deserves to get funded. (On the plus side, that means that Kiva doesn’t really care about things like your credit score or revenue.)

Still, if you can handle small loan amounts and a long funding time, you won’t find a cheaper loan option than Kiva’s no-interest microloans.

The lenders above offer the best balance of interest rates, borrower requirements, and customer reviews. But we’ve found a few more lenders that might work for your low-interest loan needs.

SmartBiz focuses on SBA 7(a) loans, which get backed by the US Small Business Administration. Like other types of SBA loans (including those offered by Fundera), that means that you’ll benefit from low starting loan rates―not to mention interest rate caps. While specific rates change over time (SBA rates are tied to the Prime Rate), working capital 7(a) loans often start around 6% to 7%.

By the way, SmartBiz works kind of like Lendio and Fundera. It’s another lending marketplace, but (as we said) it specializes in SBA 7(a) loans. That means you get all the benefits of a lending marketplace (like competitive offers).

So if you’re interested in SBA 7(a) loans, start your loan application with SmartBiz.

If you want the lowest possible rates (and have the credit score and other requirements to qualify), then you need to look at Bank of America business loans. Bank of America offers both term loans and lines of credit, with both types of financing starting at rock-bottom rates beneath 5%―and that goes for both secured and unsecured loans (loans that do and don’t require collateral).

As an added bonus, Bank of America power users can earn further interest rate discounts through the Relationship Rewards program. (You need $20,000 in Bank of America bank accounts to qualify.)

For ultra-low loan rates on several types of financing, you need to check out Bank of America.

Has your business been around for years? Do you have a great personal credit score―and maybe strong business credit as well? Then you just might qualify for Wells Fargo business loans. Wells Fargo is one of the pickiest lenders out there. For example, while it no longer lists a specific time-in-business requirement, it’s historically required businesses to be at least three years old to get a bank loan.

Of course, the upside is that Wells Fargo offers many types of financing, most of which come with very low, competitive rates. It’s a very affordable lender―but with such strict borrower requirements, it’s not always worth submitting a loan application.

If you’ve got the credentials, though, a Wells Fargo term loan or line of credit can get you affordable financing at low rates.

You can save a lot of money by looking for low business loan rates. And we’ve done the hard part for you, rounding up lenders that offer affordable interest rates on  small-business financing.

Lendio has the best low-interest loans for most businesses, especially since you can use it to compare personalized offers. If you like Lendio’s marketplace but have a special interest in microloans, you can’t go wrong with Fundera by Nerdwallet. Bluevine can give you a great line of credit, while Funding Circle offers fast term loans. And for business owners that want truly rock-bottom rates, Kiva offers an unbeatable 0% interest rate.

So go ahead and get that working capital loan―and enjoy your low rate.

Want to see more business loan options? Check out our roundup of the best-small business loans to see our favorites.

To score and rank our lenders, we looked at factors such as loan options, interest rates, borrower requirements, and customer reviews. We stuck to lenders that offer interest rates below 9%―meaning they have lower interest rates than the average lenders we’ve found. 

Banks change and adjust their interest rates from time to time, so it’s hard to say which bank has the absolute lowest business loan rates.

That said, we consistently see very low interest rates from Bank of America and Wells Fargo, even when compared to other big banks.

Unfortunately, we can’t give you a specific average interest rate for business loans―because the data simply doesn’t exist. (Trust us, we’ve tried to find a reliable stat many, many times.)

And frankly, the average interest rate might not be as helpful as you think. After all, interest rates depend on your loan type, repayment terms, loan amount, borrower qualifications, and more. So comparing interest rates on a $4 million business loan with a 10-year repayment term and a $10,000 business loan with a 6-month repayment term really won’t tell you that much.

We can give you some general ranges though. Bank loans generally have starting rates under 8%, with loan rates maxing out in the high 20s. Business loans from alternative lenders usually start and end at a slightly higher range―think 9% to 40% or so.

(Other types of financing, like merchant cash advances and invoice factoring, don’t use interest rates―but they almost always cost way more than term loans.)

Whether or not a business loan is a good idea really depends on your specific situation.

If you’re using your business loan to do something that will increase your revenue―like hire a new employee or two, boost your inventory, or invest in marketing―then a business loan can make a lot of sense. Well, as long as it fits in your budget.

But if you’re getting a business loan to avoid financial disaster or bankruptcy, you should think carefully before submitting a loan application. The last thing you want is to end up with more debt you can’t pay―not to mention your business and personal assets at risk (if your loan has a personal guarantee).

For most business owners, we recommend a Fundbox line of credit as one of the easiest types of business financing to qualify for.

Fundbox has very low borrower requirements. It accepts a credit score as low as 500, for example, and a business age of less than six months.

Keep in mind that easy-to-get business loans usually cost more, and Fundbox is no exception. But if you’re just concerned about qualifying, you’ve got a good shot with Fundbox.

Disclaimer

At Business.org, our research is meant to offer general product and service recommendations. We don't guarantee that our suggestions will work best for each individual or business, so consider your unique needs when choosing products and services.