What Is the Average Business Loan Interest Rate?

Wondering what the average business loan interest rate is? Well, for new fixed-rate bank loans in 2022, it’s about 4.28%―but that number only gives you part of the picture.¹ (A very small part, as it turns out.)

Want the rest of the picture? In this article, we’ll give you more context for that number, give you estimates for other kinds of business loans (like online loans and SBA loans), and help you figure out what kind of interest rate you might qualify for.

As we start talking about average loan rates, we need to make something clear: there really aren’t any stats that average all the business loans in the country or anything. There simply isn’t data averaging microloans from online lenders with multimillion-dollar loans from banks.

Instead, we have to talk about average interest rates for different kinds of business loans (and even that can get hairy, as you’ll see).

So we’ll break down average interest rates on business loans from banks (a.k.a. traditional lenders), online lenders (a.k.a. alternative lenders) and SBA lenders.

The nice thing about banks? Many of them report to the Federal Reserve, meaning we can get really concrete numbers.

That’s why we can tell you that as of 2022, the average (median) interest rate on a new term loan is 4.281% for fixed-rate loans and 4.5% for variable rate loans.¹

And as of 2022, new business lines of credit had an average interest rate of 4.16% (for fixed-rate lines) or 4.49% (for variable-rate lines).²

Now, you might be thinking, “Wow, glad I can expect a great interest rate on my next loan!” And we don’t want to burst your bubble, but we do need to give you some more context for these numbers.

So first of all, as we said, these averages are from banks―not online lenders. That means you need to be able to qualify for a bank loan (which is usually harder than qualifying for an online loan) to get these kinds of rates.

More importantly, these averages take into account at least some PPP loans, or loans offered as part of the Paycheck Protection Program. As you may have heard, those loans came with a 1% interest rate. In other words, these averages look much lower than they would in normal years.

And finally, these loans for “small business” include businesses that make up to $5 million in gross annual revenue. As we’ll discuss later, more revenue can mean a lower interest rate. So keep in mind that the average rate for, say, businesses with $200,000 in annual revenue would likely look a lot different.

After researching dozens of lenders (and even more loans), we’ve gotten a pretty good idea of what you can expect from online lenders―both for low rates and high rates. The table above shows you both the low end and the high end of things from all the lenders we’ve reviewed.

As you can see, there’s a pretty big spread for interest rates and fee rates from online lenders. Rates vary pretty widely from lender to lender, and some lenders have large ranges of potential rates.

But simply put, online lenders tend to cost more than traditional lenders even if they seem easier to access and work with like Lendio, for example. 

That’s why you need to know what it takes to get a lower rate―and we’ll talk about that in just a minute.

But first, let’s look at SBA loan rates, or rates on loans backed by the U.S. Small Business Administration.

Like with online lenders, we don’t have a good stat for the average SBA loan interest rate―just ranges. But the ranges for SBA loan rates look a whole lot smaller. That’s because the SBA sets maximum interest rates for its loan programs.

So for an SBA 7(a) loan (which is a multi-purpose working capital loan), maximum interest rates have to stick to the following range:

• Prime + 2.25% to Prime + 4.75%

The maximum on your specific 7(a) loan will depend on your loan size, repayment term length, and loan purpose.

But with a current prime rate of 7% (as of November 2022), you’re looking at a maximum interest rate somewhere between 9.25% and 11.75% on your SBA 7(a) loan. Not bad, right?

So now that we’ve given you some numbers, we’re going to tell you that those numbers really don’t matter―because the average doesn’t tell you much about what kind of rate you’ll personally get. (Again, think of the ranges we showed you on loans from online lenders.)

As you’ve already noticed, interest rates depend on what kind of lender you go with and what kind of financing you choose. But those are just a couple of the factors that go into your rate. Lenders will also consider factors like these:

• Your personal credit score
• Your business credit score
• Your business revenue
• Your business’s age
• Your loan’s repayment term
• Whether you want a fixed or variable interest rate

Obviously you can’t control all those factors. If you need a loan right away, for example, you can’t magically improve your business credit score overnight, and you definitely can’t change your business’s age.

But you can definitely try to get a cheaper financing type (like a term loan or line or credit) rather than settling for expensive cash flow options (like merchant cash advances). Likewise, you can look for lenders that offer low starting rates on their loans and lines of credit.

And you should absolutely work on improving your personal credit score and business credit score over time. Because the better you look to lenders, the more likely they are to give you a great interest rate on your next business loan.

While the average small-business loan rate for new fixed-rate loans from banks is around 2.7%, the average interest rate from all types of lenders is much harder to pin down.

Generally speaking, we expect traditional lenders (banks) and SBA lenders to have lower interest rates than online lenders.

So if you’re looking for a good interest rate on your business financing, look for a traditional lender or an online lender with low starting rates, choose a term loan or line of credit, and make sure your borrower qualifications (like your credit score) are up to snuff.

Ready to find a loan with low interest? Check out our list of the best low-interest small-business loans.

Enter your loan needs and qualifications to get matched with a list of lenders best suited to you. Then, sort by the financing factor that you find most important. (Note: not all lenders allow personal loans for business use.)

Your interest rate simply tells you how much you’ll pay in interest, while your APR (annual percentage rate) shows you how much you’ll pay in interest and fees (such as origination fees) in a year.

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.