Business loan interest rates in 2026 range from about 7% on traditional bank term loans to over 35% on some online lenders. SBA 7(a) loans price at Prime plus 2% to 4.75%, which puts them in the 11% to 14% range depending on Prime. Merchant cash advances and revenue-based financing are quoted as factor rates, which translate to effective APRs of 40% to over 100%.
Business loan rates depend on three things: the lender category, the borrower's credit profile, and the broader rate environment. Before comparing offers, it helps to understand how APR differs from the headline interest rate and how credit scores shift the range.
| Loan Type | Interest Rate Range | Typical APR | Funding Speed |
|---|---|---|---|
| SBA 7(a) | Prime + 2% to 4.75% | 11% to 15% | 30 to 90 days |
| SBA 504 | 5% to 7% (CDC portion, fixed) | 6% to 8% | 45 to 90 days |
| SBA Microloan | 8% to 13% | 8% to 13% | 30 to 60 days |
| Traditional bank term loan | 7% to 13% | 8% to 15% | 14 to 45 days |
| Online term loan | 9% to 35% | 14% to 50% | 1 to 7 days |
| Business line of credit | Prime + 3% to 12% | 11% to 25% | 3 to 14 days |
| Equipment financing | 6% to 25% | 7% to 28% | 1 to 14 days |
| Invoice factoring | 1% to 5% per 30 days | 20% to 70% | 1 to 7 days |
| Merchant cash advance | Factor 1.1 to 1.5 | 40% to 350% | 1 to 3 days |
Sources: SBA 7(a) and 504 Program Performance Reports, Federal Reserve Banks' 2024 Small Business Credit Survey, Biz2Credit Small Business Lending Index, Equipment Leasing and Finance Association Monthly Index, and published lender rate sheets, June 2026.
Most business loan rates are tied to Prime, which moves with the Federal Reserve's federal funds rate. When the Fed raises rates, business loan rates follow within one to three months. When the Fed cuts, they fall on the same lag.
The Federal Reserve Bank of St. Louis publishes the Prime Rate historical series through FRED, which lets borrowers track exactly where rates have moved. SBA loans, business lines of credit, and most variable-rate bank loans reprice when Prime moves.
In a rising rate environment, fixed rates protect borrowers. In a falling rate environment, variable rates benefit borrowers. Most established business owners pick the structure that matches the time horizon of the underlying use of funds.
Two borrowers can walk into the same lender and walk out with very different rates. The variables that move the price within a lender's range:
Merchant cash advances do not quote interest rates. They quote factor rates, which look small but translate to very high effective APRs. A factor rate of 1.3 on a $50,000 advance means you repay $65,000. If the payback period is six months, the effective APR exceeds 100%.
Brett Theodos, senior fellow at the Urban Institute and author of multiple reports on small business credit access, has flagged the factor rate disclosure gap as one of the most persistent sources of borrower confusion. Always ask any revenue-based lender for the APR equivalent before signing.
Usually yes, but not always. SBA 7(a) rates are capped at Prime + 4.75% for loans over $50,000. That is hard to beat for established businesses. Bank loans sometimes price lower for very strong borrowers with existing banking relationships.
SBA-tied and bank rates move with Prime, which the Fed adjusts roughly eight times a year. Online lender rates move more frequently, sometimes monthly, based on the lender's cost of capital and risk appetite.
Yes, if your credit improves or rates fall. Refinancing usually requires paying off the original loan in full. Watch for prepayment penalties on the original loan and origination fees on the new one.
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