Low-Interest Business Loans: Find the Best One for You

Finding the right loan is an important part of managing your business’s finances. An important factor to analyze when reviewing your options is the annual percentage rate. The APR reflects the true cost of borrowing; it includes all the fees and interest you’ll pay over the life of the loan.

If your company has a strong foothold and your personal credit is good, you’ll have an easier time qualifying for low-interest business loans. To help get you started, we’ve rounded up several financing options ranked by the lowest APR.

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No. 1: SBA loans

No. 2: Lending Club

No. 3: Funding Circle

No. 4: StreetShares

No. 1: SBA loans

If you’re looking for the lowest rates, SBA loans are your best bet. By guaranteeing between 75% and 85% of the financing, the Small Business Administration helps business owners qualify for bank loans with low rates. SBA loan rates are based on the prime rate and typically range between 5% and 8%. The downside? The SBA guidelines are stringent and complicated. That makes the application process a major time commitment — we’re talking months — that small business owners may not have time for.

Enter SmartBiz and Live Oak, two lenders that offer an online option to help streamline the SBA loan process, giving business owners access to financing at similar low interest rates with less hassle.

SmartBiz: Loans range from $30,000 to $350,000 and have a 10-year term with no prepayment penalty. SmartBiz loans have APRs between 7% and 8%. SmartBiz’s application process is shorter than at a traditional bank, often just several weeks compared with several months.

Loan amount: $30,000 to $350,000. APR: 7% to 8%. Loan term: 10 years. Funding time: As quickly as seven days but typically several weeks. Read our SmartBiz review.

Get started at SmartBiz Before you apply for a SmartBiz loan, find out whether you meet the lender’s minimum qualifications. 600+ personal credit score. 2+ years in business. $50,000+ in annual revenue. Personal guarantee required. No outstanding tax liens. No bankruptcies or foreclosures in last three years. No recent charge-offs or settlements. Must be current on government-related loans. Do I qualify? ▾

Live Oak: Though Live Oak offers large SBA loans up to $5 million with rates between 5.5% and 7%, the bank specializes in certain sectors. It serves 13 niche industries including the wine and craft brewery industry, funeral industry and insurance industry (see our review for full list). If your business falls into one of these categories, the North Carolina-based online bank can help get you an SBA loan in just 45 days.

Loan amount: $75,000 to $5 million. APR: 5.5% to 7%. Loan term: 10 to 25 years. Approval time: Average of 45 days to process an SBA loan application. Read our Live Oak Bank review.

Get started at Live Oak Bank Before you apply for a Live Oak Bank loan, find out whether you meet the minimum qualifications. 650+ personal credit score. 2+ years in business. Cash flow must be able to support the debt. Personal guarantee required. No bankruptcies or foreclosures. No outstanding tax liens Must be current on government-related loans Do I qualify? ▾

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No. 2: Lending Club

If you don’t have time to sort through the SBA loan process, Lending Club offers comparable rates. If you have a good credit score and a healthy business, you can qualify for an APR starting at 8%, according to the company. It’s a good option if you want funding quickly: If you qualify, you can expect your loan in a week or two.

Loan amount: $5,000 to $300,000. APR: 8% to 32%. Loan term: One to five years. Funding time: As fast as two days but typically a week or two. Read our Lending Club review.

Get started at Lending Club Before you apply for a Lending Club loan, find out whether you meet the minimum qualifications. 600+ personal credit score. 2+ years in business. $75,000+ in annual revenue. Own at least 20% of the business. No recent bankruptcies or tax liens. Provide collateral for loans of more than $100,000. Lending Club is currently unavailable to borrowers in Iowa and Idaho. Do I qualify? ▾

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No. 3: Funding Circle

Similar to Lending Club, Funding Circle is a peer-to-peer alternative lender that connects small-business owners with loans from $25,000 to $500,000 in about 10 days. Both have comparable APRs, starting at 8%. However, Funding Circle has a higher annual revenue minimum at $150,000 compared with Lending Club’s $75,000.

Loan amount: $25,000 to $500,000. APR: 8% to 33%. Loan term: One to five years. Funding time: Average of 10 days. Read our Funding Circle review.

Get started at Funding Circle Before you apply for a Funding Circle loan, find out whether you meet the lender’s minimum qualifications. 620+ personal credit score. 2+ years in business. $150,000+ in annual revenue. Profitable at least one of the last two years. No bankruptcy in the last seven years. Personal guarantee required. Do I qualify? ▾

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No. 4: StreetShares

By connecting borrowers with investors that have similar characteristics or interests, StreetShares can offer APRs that range from 9% to 40%. Though it has the highest minimum APR on our list, the company offers two products: a line of credit and a term loan, so small-business owners can choose the financing option right for them. StreetShares is also a good option for newer businesses: You need only one year in business to qualify. The lender also has the lowest annual revenue threshold, at $25,000.

Loan amount: $2,000 to $100,000. APR: 9% to 40%. Loan term: Three to 36 months. Funding time: One to five days. Read our StreetShares review.

Get started at StreetShares Before you apply for a StreetShares loan, find out whether you meet the lender’s minimum qualifications. 600+ personal credit score. 1+ year in business. $25,000+ in annual revenue.* No bankruptcies in the past three years. No current tax liens or collections (unless you have proper documentation). You only need 6 months in business if you have $100,000+ in revenue. StreetShares is currently unavailable to borrowers in North Dakota or South Dakota. Do I qualify? ▾

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Find and compare small-business loans

If none of these options seems like a good fit, NerdWallet has created a comparison tool for the best small-business loans to meet your needs and goals. We gauged lender trustworthiness, market scope and user experience, among other factors, and filtered them by categories that include your revenue and how long you’ve been in business.

Compare business loans

Jackie Zimmermann is a staff writer at NerdWallet, a personal finance website. Email: jzimmermann@nerdwallet.com. Twitter: @jackie_zm.

To get more information about funding options and compare them for your small business, visit NerdWallet’s small-business loans page. For free, personalized answers to questions about financing your business, visit the Small Business section of NerdWallet’s Ask an Advisor page.