Key takeaways
- Bank and SBA loans are the cheapest but hardest to get; online and alternative products cost more and decide faster.
- SBA 7(a) rates are capped at the Prime rate plus a maximum spread that depends on loan size.
- Your rate depends mostly on revenue, time in business, credit, existing debt and the product you choose.
Typical cost ranges by product
The ranges below are approximate and reflect the broad market for U.S. small business funding. Rates move with the Prime rate, and every lender prices each business individually.
| Product | Banks & SBA lenders | Online & alternative providers |
|---|---|---|
| Term loan | Roughly single digits to mid-teens APR | Low teens to 40%+ APR |
| Business line of credit | Roughly single digits to mid-teens APR | Low teens to 50%+ APR, plus possible draw fees |
| SBA 7(a) loan | Prime + a capped spread (see below) | — |
| Equipment financing | Single digits to low teens APR | Low teens to 30%+ APR, depending on credit and asset |
| Working capital / revenue-based | — | Factor rate about 1.10–1.45 |
| Merchant cash advance | — | Factor rate about 1.15–1.50 |
| Invoice factoring | — | About 1%–5% of the invoice per month outstanding |
SBA 7(a) maximum interest rates
The SBA caps what lenders may charge on 7(a) loans. For variable-rate loans, the maximum is a base rate (commonly the Prime rate) plus a spread that shrinks as the loan gets larger:
| Loan amount | Maximum variable rate |
|---|---|
| $50,000 or less | Base rate + 6.5% |
| $50,001 – $250,000 | Base rate + 6.0% |
| $250,001 – $350,000 | Base rate + 4.5% |
| More than $350,000 | Base rate + 3.0% |
What determines your rate
- Monthly revenue and how consistent your deposits are
- Time in business
- Personal credit score of the owners
- Existing debt and open advances
- Collateral (equipment, receivables, real estate)
- Term length and payment frequency
How to compare rates fairly
Rates are quoted in different ways — APR, interest rate, factor rate or a monthly factoring fee. Convert offers to the same terms: total amount repaid, payment amount and frequency, and fees taken out of the funding. Our factor rate calculator converts a factor rate into an estimated APR.
Sources
BFG Funds is not a lender. We connect businesses with independent lenders and funding providers. Amounts, rates, terms and timing are set by each provider after its own review of your business (bank statements, revenue, time in business, credit profile and more) and are not guaranteed.