Short answer: the rate you pay depends far more on the type of lender than on anything else. Banks and SBA loans are the cheapest, with rates around 6% to 13.5% in 2026. Online lenders charge more, commonly 14% to 99% APR for term loans. Merchant cash advances cost the most once their factor rates are converted to an APR. Each figure below shows its date and source, because rates move with the Prime Rate.
Business loan rates at a glance
| Lender or product | Typical rate | As of |
|---|---|---|
| Bank term loans (average) | About 6.4% to 11% | Q1 2026 |
| SBA 7(a) loans (variable, maximum) | Prime + 3% to 6.5%, about 10% to 13.5% | October 2026 |
| SBA 504 loans (25-year, SBA portion) | About 7% | October 2026 |
| Online term loans | 14% to 99% APR | April 2026 |
| Online lines of credit | 10% to 99% APR | April 2026 |
| Equipment financing | 4% to 45% APR | April 2026 |
| Invoice financing | 10% to 79% APR | April 2026 |
| Merchant cash advance | 40% to 350% APR equivalent | April 2026 |
Bank, online and cash advance ranges are from NerdWallet. SBA figures are explained below. Your own rate will depend on your credit, revenue, time in business and collateral.
SBA loan rates
The SBA does not set your rate, but it caps how much lenders can charge on 7(a) loans. Variable-rate caps are set as a spread over the Prime Rate, which was 7.00% in October 2026 (Bankrate):
| Loan amount | Maximum variable rate | At a 7.00% Prime Rate |
|---|---|---|
| Over $350,000 | Prime + 3% | 10.0% |
| $250,001 to $350,000 | Prime + 4.5% | 11.5% |
| $50,001 to $250,000 | Prime + 6% | 13.0% |
| $50,000 or less | Prime + 6.5% | 13.5% |
These are maximums from the SBA. Lenders can charge less, and fixed-rate 7(a) loans have their own caps. Because most 7(a) loans are variable, your rate moves when the Prime Rate does.
SBA 504 loans for real estate and major equipment are usually cheaper, because part of the loan comes from a fixed-rate debenture sold to investors. The SBA portion of a standard 25-year 504 loan priced at 6.97% in October 2026, up from 6.54% in September (SomerCor). Our SBA loan rates page has the full tables for every SBA program and the current SBA fees. See our SBA 7(a) guide and SBA loan requirements for who qualifies.
Bank loan rates
Banks offer the lowest rates to borrowers with strong credit, two or more years in business and collateral. NerdWallet puts average bank rates at about 6.4% to 11% in the first quarter of 2026. The Federal Reserve Bank of Kansas City's lending survey found that urban banks averaged about 6.7% on fixed-rate and 7.1% on variable-rate small business term loans in the same quarter (Kansas City Fed).
The trade-off is approval. Banks turn down more applicants and take weeks to decide. Our small business loan lenders guide compares lender types.
Online lender rates
Online lenders approve more businesses and fund in days, and they price that in. NerdWallet's April 2026 ranges are 14% to 99% APR for term loans and 10% to 99% APR for lines of credit. Rates at the low end go to businesses with good credit and steady revenue. The high end goes to newer businesses or weaker credit. Many online loans are repaid daily or weekly, which raises the effective cost compared with a monthly loan at the same headline rate.
Factor rates and merchant cash advances
Merchant cash advances and some short-term loans are priced with a factor rate, such as 1.3, instead of an interest rate. You repay the advance times the factor rate, so a $100,000 advance at 1.3 means repaying $130,000. That 1.3 is not 30% a year. Because the cost is fixed and repaid quickly, a 1.3 factor rate repaid with daily payments over six months works out to about 109% APR, and about 55% over twelve months. Our business loan calculator converts any factor rate to an APR. See our merchant cash advance guide for how they work, and merchant cash advance debt help if payments on one are already a strain.
What a rate means in dollars
The same $50,000 loan repaid monthly over three years costs very different amounts at different rates:
| APR | Monthly payment | Total interest |
|---|---|---|
| 10% | $1,613 | $8,081 |
| 15% | $1,733 | $12,398 |
| 20% | $1,858 | $16,894 |
| 30% | $2,123 | $26,413 |
| 50% | $2,706 | $47,405 |
These figures are before fees. Our post on the monthly payment for a $50,000 business loan walks through more examples.
What determines your rate
- Lender type. The biggest factor by far, as the table above shows.
- Credit score. Higher personal and business credit gets lower rates, especially at banks.
- Revenue and time in business. Steady deposits and a longer history reduce the lender's risk.
- Collateral. Secured loans usually cost less than unsecured ones. See unsecured business loans.
- Loan size and term. Small, short loans often carry higher rates, as the SBA caps show.
- The Prime Rate. Variable rates rise and fall with it.
Fees: why APR matters more than the rate
The interest rate is not the whole cost. Origination fees, SBA guarantee fees, packaging fees and draw fees all add to what you pay, and some are taken out of the loan before you receive it. The APR folds those costs into one yearly figure, so compare APRs, not headline rates. Interest on a business loan is also generally tax deductible, which lowers its real cost; see are business loan payments tax deductible? Some states, including California and New York, now require many business lenders and cash advance providers to disclose an estimated APR.
How to get a lower rate
- Check bank and SBA options first if you have two or more years in business and decent credit.
- Improve the numbers lenders see: pay down card balances, fix credit report errors and keep bank statements clean.
- Offer collateral if you have it.
- Get more than one offer and compare the APR and total repayment, not the payment amount.
- Avoid stacking a second advance or short-term loan on top of the first.
Our instant quote shows a realistic range for your profile in about a minute without a credit pull.
Frequently Asked Questions
What is the average interest rate on a small business loan?
It depends on the lender. Banks averaged about 6.4% to 11% in the first quarter of 2026, according to NerdWallet. Online term loans ranged from 14% to 99% APR as of April 2026. SBA 7(a) loans were capped at about 10% to 13.5% for variable rates in October 2026.
What are SBA loan rates right now?
SBA 7(a) variable rates are capped at Prime + 3% to Prime + 6.5% depending on loan size. With the Prime Rate at 7.00% in October 2026, that is about 10% to 13.5%. SBA 504 loans priced at about 7% for a 25-year loan in October 2026.
What is a good interest rate for a business loan?
A rate close to bank or SBA levels, roughly 6% to 13.5% in 2026, is very good. For a fast online loan, a rate near the low end of the 14% to 99% range is good. Always compare the APR, which includes fees, rather than the headline rate.
Why are online business loan rates so much higher?
Online lenders approve more businesses, including newer ones and those with lower credit, and they fund in days rather than weeks. They charge more to cover that risk and speed. Short terms and daily or weekly payments also raise the effective APR.
How do I convert a factor rate to an APR?
The APR depends on the factor rate, how long repayment takes and how often you pay. For example, a 1.3 factor rate repaid with daily payments over six months is about 109% APR, and about 55% over twelve months. Our business loan calculator does the conversion for any factor rate and term.
Does my credit score affect my business loan rate?
Yes, especially with banks and SBA lenders, where strong credit is close to required. Online lenders and cash advance providers weigh revenue more heavily, but a higher score still usually means a lower rate and better terms.
Are business loan rates fixed or variable?
Both exist. Most SBA 7(a) loans and many lines of credit are variable and move with the Prime Rate. Many online term loans and equipment loans are fixed. A variable rate can start lower but rise later.
Sources
- NerdWallet: Business loan rates and fees (bank rates for Q1 2026; online, equipment, invoice and cash advance ranges as of April 2026)
- U.S. Small Business Administration: 7(a) terms, conditions and eligibility
- Bankrate: Wall Street Journal Prime Rate (7.00% in October 2026)
- SomerCor: October 2026 SBA 504 interest rates
- Federal Reserve Bank of Kansas City: Small Business Lending Survey, Q1 2026
- Payment and APR examples calculated with our business loan calculator