PrimeRates provides access to personalized business loan offers through our simple and quick pre-qualification application. Once you’re pre-qualified, you can select the best offer for you and finalize the business loan application with the lender.
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Our simple application takes less than 5-7 minutes to complete.
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Choose the offer that best fits your needs by comparing loan amounts and terms.
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Finalize your loan offer with the lender you selected to receive your funds.
The average interest rate on a small business loan from a traditional, or bank lender is between 4% to 13%. However, online lenders can be more expensive, with rates hovering between 13% and 71%.
Depending on the size of the loan and the borrower’s financial qualifications, a lender may require a UCC-1 lien, or collateral agreement which says that the lender can take a portion of the borrower’s assets if they default on the loan. Most small business lenders won’t require a down payment, but will offer you an interest rate based on your annual revenue, personal credit score and a host of other factors.
Small business loans can be anywhere from $1,000 to $5 million. The amount that you borrow depends on your financial needs, the lender’s maximum loan amount and your financial qualifications. Even if you need a large amount of cash, if you’re a brand new business or have poor credit, you might not be able to access that entire amount through just one lender.
By the same token, before signing an agreement to borrow a large amount of cash, make sure that you have evaluated your expenses and are not borrowing more than what you need. It’s important to remember that each loan comes with interest, so you’ll have to repay everything that you borrow, along with additional fees.
Small businesses can be some of the most high-risk borrowers for a lender to deal with. Because small businesses often have shaky revenue streams and are still growing, lenders see them with some uncertainty, so tend to charge higher interest rates to make up for that. Additionally, many online lenders don’t require any collateral, which means that if the borrower defaults on the loan, there aren’t a lot of immediate options that the lender can take.
Although APR encompasses most of the anticipated fees associated with a loan, there are still additional fees and charges that the number might not include. These fees might be late payment fees if payments aren’t made on time, insufficient funds fees, and even fees for paying by check. Additionally, in the case of a loan being sent to collections, borrowers may also face hefty collection fees – which are not included in the initial APR of a loan.
If you have immediate financial needs or urgent repairs to pay for, it might cost you more in the long run to choose a loan with a lower rate but a slower time to fund. On the other hand, if you can afford to wait a few weeks or even a few months, some lenders may offer you significantly lower rates than if you borrowed through a lender that gives immediate access to funds.
Before signing any loan agreement, make sure to carefully read the fine print. In addition to a wide variety of fees that can potentially be imposed, you should also consider your ability to make timely payments. Even if a lender offers you a much lower rate in exchange for a shorter repayment period, it might not be feasible for you to make larger payments on time. If too many late payments pile up, you might find yourself facing fees that amount to more money than you would have spent by simply agreeing to a higher-rate loan with a longer repayment period. Before taking out a loan, remember to evaluate if the terms are manageable and realistic for your budget.
Average Rates: Credibility Capital offers loans with APRs ranging between 10% and 25%.
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» MORE: Credibility Capital Business Loans Review
Average Rates: OnDeck’s annual percentage rates range between 9% and 99% for term loans, and between 11% and 63% for their lines of credit.
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» MORE: OnDeck Business Loans Review
Average Rates: Kabbage offers loans with APRs ranging between 24% and 99%.
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» MORE: Kabbage Business Loans Review
Average Rates: LendingClub’s loans come with APRs ranging between 9.77% and 35.98%.
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» MORE: LendingClub Business Loans Review
Average Rates: SmartBiz offers SBA loans with rates ranging between 9.7% and 11.04%.
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» MORE: SmartBiz Business Loans Review
Whether you’re looking for a loan to manage some last-minute, small expenses or you need some extra cash for the down payment on a new piece of equipment, the annual percentage rate is going to be the biggest factor that determines how expensive your loan will be. However, APR isn’t the only factor that plays into the overall cost of a loan, so make sure to look into the finer details of each agreement before accepting any offer.
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