Small Business Loan Rates

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What Are the Business Loan Interest Rates for Small Business Loans for February 2022?

  • Current SBA loan rates for SBA 7(a) loans: Lenders typically charge Interest rate ranges 5.50% –9.75% principal & interest rate.

  • Current SBA loan rates for SBA CDC 504 loans: Lenders typically charge Interest rate ranges 2.40% – 3.90% principal & interest rate. 

What Are the Current Business Loan Interest Rates for All Other Business Funding Products for 2022?

  • Current rates for Traditional Business Loan interest rates: 5.50% – 7.75% interest rate.

  • Current rates for Traditional Bank Business Line of Credit: 5.50% – 9.75% interest rate.

  • Current rates for Short Term Small Business Loans: 9.5%-28.99% interest rate

  • Current rates for Business Cash Advance factor rate: 1.09%-1.45% (not an interest rate)

  • Current rates for Merchant Cash Advance factor rate: 1.09%-1.45% (not an interest rate)

  • Current rates for Equipment Financing or Leasing: 5.50%-28.99%  interest rate

  • Current rates for Invoice Financing factor rate: .5%-2% flat fee, no interest rate

  • Current rates for Purchase Order factor rate: 2%-7% flat fee, no interest rate

  • Current rates for Business Credit Cards Introductory rates starting at 0% up to 28.99% annual interest rate. Typically a variable interest rate applies. Prime rate or Treasury rate plus applied depending on what lenders charge.

 

What’s the Average Business Loan Rates ?

There are many types of small business lending products that charge different interest rates and business loan terms. If you have excellent credit, strong financials, and meet the qualifications of a traditional bank loan or SBA loan, then you can expect annual percentage interest rates in the 3%-6.5% range. But if you have some credit issues, your financial statements and other qualifications are deficient, you will not get approved for traditional bank loans and then you may be looking at less favorable business loan terms with higher interest rates and fees to qualify. The type of business loan options will dictate what business loan interest rate, total cost and terms you will get and whether you will need to work with alternative lenders as to what lenders charge.

 

Are Small Business Loans a Good Idea?

Small business loans may be an excellent idea if you are in need of capital for the following reason(s)

  • Working Capital Loans

  • Cash Flow Shortages

  • Business Expansion Loans

  • Business Emergencies Loans

  • Advertising and/or Marketing

  • Debt Refinancing Loans

  • Equipment Needs

  • Recruitment of Employees

  • Operational Needs

  • Inventory

Small business owners should always consider the total cost and annual percentage rate versus the benefit of funding when deciding whether to get a business loan for your business from small business lenders. Always compare business loan options and interest rates when making any decision. It may be in your best interest not to get a loan if the terms don’t make sense for what you are using the money for.

 

The 9 Best Small Business Financing Options an Loan Programs for Small Businesses for 2022

 

Small Business Administration (SBA) Loans

The U.S. Small Business Administration (SBA) is a federal government agency that provides programs, guidelines, and loan guarantees to approved lenders for businesses and are loans arranged pursuant to department guidelines. The Small Business Administration’s mission is to help Americans start, build, and grow their businesses successfully. The SBA is not a lender and does not provide loans to businesses directly. The SBA provides a guarantee that gives the approved lender (who loans small business) the ability to take on the risk of business lending under SBA loan terms that lenders would not ordinarily do so on their own. SBA does regulate the maximum rate that can be charged. SBA loans are fixed rates(usually the lowest interest rates) and no penalty to pay of loan early for any loan type. Business plan may be required.

The SBA loan guarantees are up to $4,500,000 of each loan amount made by participant lenders with rights reserved. The loan amount can typically range from $25,000 to $5 million and are repaid in monthly installments. SBA is popular because these loans have lower interest rates and better terms than some other traditional business financing. Approved lenders may add additional layers of qualifications due to risk.

 

SBA Loans Product Overview

Loan Amount: Up to 5 million

Business Loan Interest Rate: Business Loan interest rates starting at 5.50%, treasury index plus 1% to 2.5% or the prime rate. Typically most lenders do not charge a variable interest rates. The SBA has maximum business loan rates cap.

Loan Term: 3 to 25 years

Closing Costs: Origination fees 0% to 3%

Payment: Fixed monthly

Credit Scores: Good to excellent preferred, but all personal credit considered. Business credit score also considered.

Requirements: Application and business bank account and financials.

 

Small Business Administration (SBA) Loans/Loan Type

SBA 7(a) Loans . SBA 7(a) loans are SBA’s primary program designed to provide financial assistance to small businesses. The terms and conditions of SBA 7(a) loans, like the guaranty percentage and loan amount, may vary by the type of loans and businesses. Uses for SBA 7(a) loans include working capital, equipment, buying a business, start-up costs, and refinancing debt. There is a guaranty fee.

How the Guaranty Fee Works: SBA 7 (a) loans charges a one-time guarantee fee, also known as a guaranty fee, in addition to an annual service fee. The guarantee fee is based on the loan amount and repayment term, but are only charged on the guaranteed amount of the loan. Lenders will initially pay the guaranty fee, but have the option of passing this fee onto the borrower. Guaranty Fee Loan Amount Fee $150,000 or less 2% of guaranteed portion $150,001 to $700,000 3% of guaranteed portion $701,001 to $5 million 3.5% of guaranteed portion up to $1 million, plus 3.75% of the guaranteed portion over $1 million Short-term SBA loans with repayment terms less than one year are subject to a guaranty fee of 0.25% of the guaranteed amount.

SBA Express Loans. SBA Express Loans resemble the standard 7(a) SBA loan qualifications, business loan rates and purpose. It gives the same great opportunity such as short-term working capital loan — but even faster. For businesses looking for a loan in days instead of months — the SBA Express Loans are a great alternative.

SBA Loan Program 504. The SBA 504 loan is a powerful economic development program that will provide businesses another avenue for business funding if commercial real estate is involved in the transaction. Down payment will be required. The use of proceeds from SBA 504 loans must be used for fixed assets such as construction, commercial real estate, land or land improvements (and certain soft costs), or can also be used to refinance existing debt/loans. SBA 504 C involves commercial real estate.

SBA Disaster Loans- SBA disaster loans for businesses that are in declared disaster areas.

SBA Loan Additional Resources

U.S. Small Business Administration Business Guide

U.S. Small Business Administration Coronavirus (COVID-19): Small Business Guidance & Loan Resources and Coronavirus Financing Options 

 

 Long Term Business Loans

Long-term small business loans have a duration of greater than two years. Businesses are offered a fixed amount upfront and charged principal & interest. Unlike a business line, a business owner cannot draw money as you go with a long-term loan. Typically, long term business lending is for business expansion and growth or to finance large, long-term projects. This business financing option may be used for long-term projects and has lower interest rate than other loans.

 

Product Overview

Loan Amount: Up to 5 million

Business Loan Interest Rate: Loan interest rates starting at 5.50% or treasury index plus 1% to 2.5% or the prime rate. Typically not a variable interest rate and are fixed rate loans.

Loan Term: 2 to 10 years

Fee:  0% to 3%

Payment: Monthly or bi-weekly

Credit Score Requirements: Good to excellent preferred. All types considered. Business credit score also considered.

Annual Revenue: above $250,000

Learn More

 

Business Line of Credit

A Business line of credit is an open revolving line of credit. This type of financing allows business owners to draw funds when needed on-demand or make purchases—a business line of credit charges a principal & interest. Business lines of credit do have a credit limit that cannot be exceeded without approval. They are not open-ended forever and require renewal either semi-annually or annually to be extended. Lines of credit may be used for small purchases and expenses. Interest rates vary due to risk and higher interest rates may apply to qualify. Loans and lines are different products with different features.

 

Product Overview

Interest Rate: Average 1% per month simple interest

Terms: Open revolving line

Fee: 0% to 3%

Payment: Monthly, bi-Weekly or weekly

Credit: Good to excellent preferred. All types considered. Business credit score also considered.

No Prepayment Fees

Learn More

 

Small Business Credit Cards

Business credit cards are open revolving credit lines that charge a annual interest rate with a cap.. A card is issued that can be used for making payments or purchases. Business owners utilize cards in conjunction with other small business financing options. The primary use of this financial product is for the purchase of small items or pay expenses. This type of loan is popular because of its flexibility and offers small loans for business purposes.

 

Product Overview

Average Interest Rate: Introductory rates starting at 0% up to 28.99% annual interest rate. Typically a variable interest rate applies. Prime rate or Treasury rate plus applied.

Terms: Open revolving line with a limit

Fee: $0 to $500 Annual fees

Payment: Flexible monthly payments

Credit: Must have good to excellent personal credit score and deep history. business credit scores not required.

Learn More

 

Short Term Business Loans

Short term business loans are typically repaid with 6 to 18 months. Short term loans feature a lump sum offered upfront with a fixed payback amount calculated using a factor rate over a short period of time. Business loan rates are not principal & interest but a “factor rate” that costs more than traditional loans. Most businesses choose short-term loans when they do not qualify for traditional business financing. Short-term loans charge more for costs, and the payments are more frequent to compensate for the greater risks lenders take in offering this product. Short-term business loans are popular with businesses because of the reduced documentation requirements and credit tolerances that are laxer than a traditional business term loan

 

Product Overview

Loan Amount: $10,000-$500,000

Business Loan Interest Rate: Factor rates range from 1.09% up to 1.45%

Terms: 6 to 18 months in duration (typically 12 months or less)

Fee: 0% to 5% fees

Payments: Weekly, bi-weekly and in some cases daily

Credit: All types considered. Business credit score also considered.

Annual Revenue: above $250,000

Learn More

 

Business Cash Advances

Business Cash Advances (BCA) are also known as the Purchase of Future Sales Agreement that advances future sales at a discount. The business is responsible for paying back a fixed amount known as a specified amount, which is greater than the amount that was advanced. This difference between the advance amount and the payback amount is called the “factor rate or cost.” This is not principal & interest costs. The advance is repaid by taking a fixed percentage of future overall deposits called the specified percentage. The payments are collected by an ACH fixed daily or weekly based on the specified percentage of future sales.

At the end of every month, reconciliation can occur. If the fixed payments taken are more than the set future percentage of sales, a business owner can request a refund back to the business for overpayment so that the set specified percentage of sales collected for the business matches the revenue volumes. Repayment continues until the payback amount is paid back in full. There is no term limit with advances as the fixed payback percentage changes due to fluctuating revenue. Business cash advances are not loans but advances off of future sales.

 

Product Overview

Rates: Factor rates range from 1.09% up to 1.45%

Terms: No term limits. Payments continue until paid in full based on specified percentage collection method and are dependent on future revenues

Fees: Origination fees that range 0% to 5%

Payment: Weekly or daily

Credit: All types considered.

Annual Revenue: above $250,000

Learn More

 

Merchant Cash Advances

A Merchant Cash Advance (MCA) is also known as a Purchase of Future Sales Agreement that operates very similarly to BCA’s. The biggest difference is the repayment process, which is connected to future credit card revenues instead of overall sales. MCA’s take a set percentage of future credit card sales at the time of batch until the advance is paid back in full.

Business owners find this valuable when they have fluctuating revenues and don’t want to be locked into a fixed payment that could negatively impact capital or margins of profit if revenues decline or fluctuate. This business funding is used primarily for cash flow needs. Merchant cash advances are not loans but advances off of future revenues.

 

Product Overview

Rates: Factor rates that range from 1.09% up to 1.45%

Terms: No term limits

Fees: Origination fees range from 0% to 3%

Payment: Fixed percentage of future revenues

Personal Credit Score: All types considered.

Learn More

 

Equipment Financing

Businesses that use equipment to operate often turn to equipment loans for the purchase of equipment that uses the equipment as collateral. Business owners must have very good to excellent credit, but limited paperwork is necessary to get approved.

 

Product Overview

Interest Rate: Factor rate ranging from 1.09% up to 1.45%. Typically not a variable interest rate.

Terms: 2 to 7 years

Fees: Origination fees range from 0% to 3%

Payment: Weekly or daily

Personal Credit Scores: All types considered.

Learn More

 

Invoice Factoring

Invoice financing advances the outstanding balance to a business owner to increase the speed of revenue to the business. Invoice factoring provides cash quickly, and there is no need to wait for outstanding invoices to be collected and received by the client. Invoice financing has affordable costs ranging from 1% to 2.5% fee off of the face value of the invoice advanced.

 

Product Overview

Loan Rate: None

Terms: No term limits

Fees: 1% to 3% fee based on the invoice. Monthly service fees may apply depending on the volume of invoices factored

Credit Score: Credit history of the clients need to be favorable, NOT the owner advancing off invoices.

Learn More

Different Types of Small Business Loan Originators That Offer Loans to Businesses

  • Traditional banks (Bank of America, Wells Fargo, Chase, etc.) loans business directly without 3rd party

  • Credit Unions

  • Business Lenders (Fintech) or Online Lenders

  • Business Originating Marketplace’s

  • Small Business Loan Broker’s

  • Long-Term Business Lenders

  • Equipment Financing Companies

  • Invoice Factoring Companies

  • Alternative Lenders

  • Private Business Lenders

  • Hard Money Business Lenders

  • Commercial Real Estate Lenders

  • Certified Development Company

  • Financial Institutions

Every originator differs in terms of what products and services they offer, so it’s important to ask what type of business finance products they offer upfront to see if they can provide you the best options available in the business finance marketplace. Online lenders offer unique business financing options. When evaluating offers, please review the lenders or financial institution for terms and conditions of products and services.

 The Bottom Line: Advice and Tips About Applying for a Business Loan

Whether it’s a Business Loan Broker, Direct Lender, or a Business Finance Marketplace Platform, it’s important to ask questions and do your research about the loan originator you are choosing.

As a business owner, always ask yourself the key questions when getting a loan for your business. What types of financing products are offered? Does the Loan Originator have the experience and knowledge to assist me in finding the best product for my needs? Does the loan originator not only have great customer service on the origination of my loan but also on the processing, financing, and servicing of my loan on the back end?

Always start by asking, Why do I need the money? How am I going to put it to good use for the business? Is it going to improve how the business operates? Have I been given all financing options in the marketplace? Am I getting competitive rates, costs, and terms for my situation and profile? Have I done my cost verse benefit analysis for borrowing money for the business?

Always check your proposals and agreements for terms and conditions, which most lenders will include the cost of money (maximum interest rate or factor rate), all closing or financing fees, term duration, payment frequency, personal or business guarantees, and any collateral requirements. If you ask the tough questions of yourself, you will be better armed to make great decisions.

 

How to Apply for a Small Business Loan Using Advancepoint Capital’s Marketplace

Applying for a loan with AdvancePoint Capital is as simple as 1, 2, 3. Let AdvancePoint Capital help you get the finance option that fits your needs. We have a small business lenders network of online lenders that can provide all available solutions in market. Start with this online form, then fill out the short application page, wait a few hours for your approval, and then get your money!

 *advancepoint does not provide California finance lender loans and works with federally chartered banks in California if providing business loans.

The fast, convenient, and straightforward way to get approved and get the money you need for your small business – now! Get your quote today by filling out our simple form.

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