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What Does Small Business Lending Cost?

No, really, what do you need to know?

If you've been shopping for a small business loan online, you may have noticed ads that look like these:




That's a big part of the reason you probably don't trust business loan companies.

Here's what the ads would look like if someone were forced at gunpoint to tell you the truth:

Here's what different types of loans really cost.

Bank & SBA Loans

Bank loans tend to be the lowest-cost money available. Rates for unsecured loans can run from 7 to 10 percent, plus some (reasonable) origination and closing fees.

SBA loans run from 5-8% as of late 2015, depending on the product.

Working Capital Loans

Loan rates for small business owners can sometimes be under 10%.

They can also be over 100%.

Most of the people we work with don't qualify for the very best rates (the very most qualified can just go to their bank) but most don't pay the highest rates either. Because we like telling people the truth.


Cash Advance - Smarter Finance USA

If you're an established business with reasonable credit and profits, your rates are likely to range from 7%-20% depending on how risky you look on paper.

If you have rough credit, are losing money, have bounced checks recently, or otherwise look like a bad credit risk your rates will be higher than that. How much higher depends on the situation - but we'll always be transparent with you about what you would likely qualify for.

Merchant Cash Advance

There's a way to spin these loans so that they sound reasonable if you're willing to dance with the devil himself. These loans are a last resort and should be used sparingly. Rates will always be high, and the short-term nature of these products can really put your business in a sweatbox.

We occasionally help customers get a merchant cash advance, but it's our last choice


These can be good options if you have the type of equipment (machinery, vehicles, etc.) that lenders like to lend against.

Rates vary ( they can range from 10% to 50%).

However, with the payments being (usually) fully tax deductable, these loans are often the cheapest you can get after the tax breaks.

The payments can also be much more manageable than some of the other options since sale/leasebacks are often available for up to 5 years.

More small business loans 101:

  1. What kind of loans are out there for small business?
  2. What can I use the money for?
  3. What does small business financing cost?
  4. Do I qualify for a loan?
  5. Can a new business qualify for a small business loan?
Loans and taxes - Smarter Finance USA