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.