Small Business Loan Rates 2026 – Current APRs and Factor Rates

✍️ MoneyVerge Editorial Team 📅 August 2026 ⏱️ 5 min read

📌 Key Takeaway: SBA loans offer the lowest rates (Prime+2.25–4.75% = approximately 10–12% in 2026). Online lenders charge 15–99%+ APR depending on credit and business profile. Always compare APR, not factor rates — a 1.25 factor rate sounds low but equals approximately 50% APR on a 6-month term.

Current Small Business Loan Rates 2026

Loan Type	Rate Range	Best Credit Profile	Term
SBA 7(a)	10–13% APR	650+ credit, 2+ years	Up to 25 years
Bank Term Loan	6–20% APR	680+ credit, 2+ years	1–10 years
Online Term Loan	15–99% APR	600+ credit, 6+ months	3–36 months
Business LOC	10–80% APR	600+ credit	Revolving
Invoice Financing	10–60% APR	Revenue-based	Per invoice
Merchant Cash Advance	40–150% APR	Revenue-based	Until repaid
Equipment Financing	4–20% APR	Any	2–7 years

Factor Rate vs APR — Critical Difference

Many short-term lenders quote factor rates instead of APR. A 1.2 factor rate means you repay $1.20 for every $1.00 borrowed — sounds like 20%, but if you repay in 6 months, the APR is approximately 40%. Always ask for the APR equivalent. The FTC requires lenders to disclose APR — if a lender refuses, walk away.

Frequently Asked Questions

What is a good interest rate for a small business loan?

Under 10% APR is excellent (typically SBA or bank loans for strong borrowers). 10–20% APR is good. 20–40% APR is fair for online lenders. Over 40% APR is expensive — only justified for short-term needs with no other option. Over 80% APR should be avoided except in genuine emergencies.

How can I get the lowest small business loan rate?

Build your personal credit to 700+, maintain 2+ years in business with consistent revenue, apply to SBA-preferred lenders first, provide collateral to reduce lender risk, and compare multiple offers before accepting. Each 50-point improvement in your credit score can reduce your rate by 2–5 percentage points.