Best Low Interest Small Business Loans

What Is A Low Interest Business Loan?

Business owners may need to finance expenses that can’t be paid for out of pocket. That’s where a business loan comes in. If you’re the owner of an established business with high annual revenue, multiple years in operation, and a good personal credit score, you might be eligible for a loan with a low interest rate.

While Small Business Administration (SBA) loans are some of the lowest interest loans in the industry, many online and traditional lenders can also offer extremely low rates.

What Is Considered A Low Interest Rate For Business Loans?

While many online lenders offer loans with annual percentage rates upwards of 30%, a low interest rate on a business loan is usually below 11%.

Who Qualifies For Low Interest Loans?

Borrowers who own businesses with at least one year of operation and annual revenues above $50,000 are the most likely individuals to qualify for low interest loans. Additionally, having a credit score above 650 also increases your chances of approval for a loan with a low rate.

How To Qualify For Low Interest Business Loans

Credit Score: Some lenders offer loans with low interest rates to borrowers with credit scores as low as 600. However, having a credit score above 650 will greatly increase your chances of being approved for a low interest loan.

Time in Business: It’s very difficult for businesses with less than one year in operation to be approved for loans with low interest rates because lenders typically see them as high-risk borrowers. A minimum of two years in business is ideal for securing a low rate. However, some lenders may offer low rates to businesses with just one year.

Term Length: Lenders are more inclined to offer lower interest rates to borrowers who are willing to repay the amount in full within a short period of time. A short repayment period for a medium-sized business loan is usually one year or less.

Best Options For Small Business Loans With The Lowest Interest Rates

SmartBiz

» MORE: SmartBiz SBA Loan Review

Pros:

• High amounts, with loans of up to $350,000
• Low APR, with rates between 9.07% and 11.04%
• Lower minimum credit score than some of its competitors, with a minimum of 600 for loans below $150,000
• Low minimum annual revenue
• Expedited application process, funding times as short as 30 days

Cons:

• Difficult for new businesses to qualify, with a minimum time in business of two years
• Difficult to qualify if businesses have had foreclosures or bankruptcies within the last three years
• Higher APR than a traditional SBA loan

Why SmartBiz For Low Interest Business Loans?

If you want to borrow an SBA loan but don’t have two to three months to wait for the funds, SmartBiz can help expedite that process by giving you a decision and access to funds within 30 days of application. Additionally, if you’re applying for a loan that’s less than $150,000, SmartBiz will consider your application with a credit score of just 600.

Lendio

Pros:

• High maximum amount, with loans of up to $5 million
• Flexible loan terms, with terms of up to 25 years
• Low minimum credit score of 560
• Quick to fund
• 12 types of financing offered
• One application provides access to several lenders

Cons:

• Potentially high interest rates
• No maximum origination or fees given

Why Lendio For Low Interest Business Loans?

If you’re a new business and have low credit or low annual revenue, using a loan-matching service like Lendio could be the right option for you. Through Lendio, applicants can gain access to a wide variety of lenders offering several different products.

Best Low Interest Small Business Start-Up Loans (Been In Business 1 to 2 Years)

Credibility Capital

» MORE: Credibility Capital Business Loan Review

Pros:

• Large loans, with a maximum amount of $350,000
• Flexible repayment, with terms of up to three years
• One application gives access to several different lenders

Cons:

• Higher interest than with traditional SBA loans, with rates ranging between 10% and 25%
• Difficult for borrowers with low credit to qualify, with a minimum credit score requirement of 650
• UCC-1 filing and personal guarantee required

Why Credibility Capital For Start-Ups & Requirements

Credibility Capital can help small businesses who are having trouble getting approved with traditional SBA lenders and have at least 18 months in operation, take out large loan amounts to expand their company. To qualify, you should have a personal credit score above 650 and a minimum annual revenue of $150,000.

Best Low Interest Business Loans For Established Businesses

Funding Circle

» MORE: Funding Circle Business Loan Review

Pros:

• No prepayment penalty
• Interest rates as low as 4.99%
• Repayment terms of up to five years

Cons:

• Long application
• Difficult for borrowers with low credit or less than two years in business to qualify
• High origination fees, with fees ranging between .99% and 6.99%

Why Funding Circle For Established Businesses & Requirements

Although Funding Circle has no minimum annual revenue requirement, they do require at least two years in business to qualify.

Good For:

Funding Circle loans are best for businesses that are looking to expand their properties, purchase new equipment, or pay large, one-time expenses.

LendingClub

» MORE: LendingClub Business Loan Review

Pros:

• Quick to fund, with loans becoming available within two days to two weeks
• Flexible loan terms, with terms of up to five years
• Easier to qualify for borrowers with average credit scores

Cons:

• Potentially high APR, with rates ranging between 9% and 35.7%
• UCC-1 lien requirement for loans above $100,000
• Low maximum loan amount of $300,000

Why LendinClub For Established Businesses & Requirements

Lending Club requires businesses applying for its products to have annual revenue above $50,000 and at least one year in business. Applicants should also have personal credit scores above 600.

Good For

Lending Club’s loans are best for businesses that need to finance urgent, one-time expenses such as emergency repairs, or who are looking to make small equipment purchases.

Conclusion

Even if you own a new business or have a low credit score, it still might be possible to find a loan with a low interest rate. Loan-matching services like Lendio and SmartBiz could be a good place to start in order to compare multiple offers from multiple lenders. Make sure to consider a variety of loans and offers before making a final decision on the product that’s right for your business.