Small Business Loan Interest Rates (2026): What You'll Actually Pay by Product

Small business loan interest rates in 2026 typically run 6.8%–11% APR for bank term loans, 9.75%–14.75% for SBA 7(a) loans, 12%–22% APR for online term loans and lines of credit, and 1.10–1.50 factor rate (not APR) for a merchant cash advance. The product you qualify for usually matters more than the label "loan" — a business with strong credit and two-plus years in operation has access to the cheapest end of that range, while a newer or lower-credit business is typically priced, or routed, toward faster-funding products with a different cost structure entirely.

That's the honest range. What most searches on this topic actually need is the "why" behind it — why a bank loan and an online loan can differ by 80+ percentage points for what looks like the same product, why a merchant cash advance doesn't have an APR at all, and what actually determines which rate you get quoted. That's what the rest of this guide covers.

Small Business Financing Cost by Product Type

Not every small business financing product is priced the same way, and comparing them on APR alone doesn't work — a merchant cash advance and a revenue-based revolving product aren't loans, so they're not expressed as APR at all. The table below lines up the major product types on typical cost, how that cost is expressed, funding speed, and credit access, so you can compare apples to apples before you compare price.

Two things stand out in that table. First, the spread inside a single category — a business line of credit runs from roughly 8% at a bank to over 20% online — is often wider than the gap between two entirely different products. Second, three of these rows aren't measuring the same thing at all: APR, factor rate, and revenue-based revolving cost are three different pricing mechanics, and treating them as interchangeable numbers is where most rate comparisons go wrong.

How Business Loan Interest Rates Are Actually Calculated

For products priced as APR — bank term loans, SBA loans, online term loans, and lines of credit — the rate you're quoted is built from a base rate plus a risk-based spread. Here's what actually moves that number:

The base rate. Most bank and SBA products price off the prime rate (set by the Federal Reserve's monetary policy). When prime moves, every variable-rate product tied to it moves with it. Fixed-rate products lock in a rate at signing, so a business that fixed its rate during a high-prime period keeps paying that rate until it refinances, even after prime comes down.

The risk-based spread. On top of the base rate, a lender adds a spread that reflects how risky the file looks. That spread is where credit score, time in business, revenue, and collateral all do their work — and it's the reason two businesses can apply for the same SBA loan and get quoted rates several points apart.

The five factors underwriters actually weigh:

• Credit score — both personal and business credit, where applicable. This is the single biggest lever on a bank or SBA quote, and it's often a hard gate (not just a price adjustment) below certain thresholds.
• Time in business — lenders treat operating history as an independent risk signal. A business with ten-plus years on the books gets priced and approved differently than an 18-month-old business with an identical credit score, because survivorship itself is data.
• Revenue and cash flow — how much money moves through the business, and how consistently. This matters even more for products underwritten on bank-deposit data rather than a traditional credit pull.
• Collateral — secured products (equipment financing, some SBA loans) typically price lower than unsecured products, because the lender has an asset to fall back on if the business can't repay.
• Industry risk — some industries carry higher historical default rates than others, and underwriting models price that in at the category level before they ever look at your specific file.

A business that's strong on all five factors gets access to the cheapest products in the market. A business that's weak on one or two — say, strong revenue but only eight months in operation — usually doesn't get a worse rate on the same product so much as it gets routed to a different product entirely, because the cheapest lenders simply won't approve the file at any price.

Why MCA and ByzFlex Don't Have an "APR"

This is the part of the rate conversation that trips up the most searches, so it's worth being precise about it: a merchant cash advance is not a loan, and MCAs simply don't carry an APR to look up — asking for one is a bit like asking what a car's odometer reads in gallons, the wrong unit for what the product is.

MCA is a purchase of future receivables. A provider advances a lump sum in exchange for a fixed percentage of a business's future sales, at an agreed factor rate — typically 1.10 to 1.50. If a business receives a $50,000 advance at a 1.30 factor rate, the total amount owed is $65,000 ($50,000 × 1.30), fixed at signing regardless of how long repayment takes. Repayment is usually collected as a percentage of daily or weekly sales, so it flexes with revenue instead of following a fixed monthly schedule like a loan payment would.

ByzFlex is revenue-based revolving capital. It functions like a line of credit in the sense that a business gets ongoing access to funds as it repays, but it isn't structured, priced, or regulated as a line of credit — draws and cost are tied to the business's revenue, and the cost is disclosed as a revenue-based figure rather than an APR.

Why does this distinction matter beyond terminology? Because it changes what you should actually compare. Comparing a 1.30 factor rate against a 12% APR bank loan isn't a fair fight on the surface — the factor rate looks worse — but the products aren't solving the same problem. A bank loan assumes weeks of underwriting time and a strong, established file. MCA and ByzFlex assume neither. The honest comparison is: what's the total dollar cost of each option, and which one can actually fund your business in the timeframe you need?

Realistic Cost Scenarios by Business Profile

Rate ranges are easier to use when you can see how they actually land on a real business. Here are three profiles and what they'd typically be looking at:

Profile 1 — Established, strong credit, needs a growth loan. A business with 700+ credit, five years in operation, and consistent revenue is applying for a $150,000 expansion loan and can wait several weeks for funding. This business has access to the cheapest tier: a bank term loan or SBA 7(a) loan in the 6.8%–14.75% range. The tradeoff is time — a multi-week application and underwriting process — but the rate reflects that patience.

Profile 2 — Newer business, decent credit, needs working capital soon. An 18-month-old business with a 640 credit score doesn't clear most bank or SBA credit and time-in-business thresholds, but has steady monthly revenue. This business typically lands in online term loans or lines of credit territory, in the 14%–30% range depending on the specific lender and file strength, with funding in days rather than weeks.

Profile 3 — Bank-declined, needs cash fast. A business with a 540 credit score was declined by its bank and needs $40,000 within a few days to cover a payroll gap or restock inventory. Bank and SBA products aren't available at this credit tier. This is the profile MCA and revenue-based revolving capital are built for — pricing is expressed as a factor rate or revenue-based cost rather than APR, credit thresholds sit well below bank minimums (Byzfunder's floor is 525 for MCA and 550 for ByzFlex), and funding can move in as little as 24 hours for a qualifying file with clean deposit history.

None of these profiles is "the right way" to finance a business — they're different tradeoffs between cost, speed, and what a business can actually qualify for today.

What a Good Rate Looks Like — and the State Disclosure Rules You Should Know About

"Good rate" only means something relative to your product and profile. Inside each category, here's roughly where the better end of the range sits:

• SBA/bank loans: Under 10% APR is a strong outcome, typically reserved for 700+ credit and multi-year operating history.
• Online term loans and lines of credit: Under 20% APR is competitive for this category; rates climb from there as credit and file strength decline.
• MCA: A factor rate under 1.30 is on the better end of the typical 1.10–1.50 range; the total dollar cost (advance × factor rate) matters more than the rate number alone.
• ByzFlex: Cost is disclosed as a revenue-based figure before signing — compare the actual dollar cost against other revolving options rather than trying to convert it to an APR.

A few states also require standardized cost disclosures on commercial financing offers, regardless of product type. California's commercial financing disclosure law and New York's DFS Reg 100.4(a) both require lenders to provide an APR-equivalent disclosure alongside other key terms at the time of offer, and a handful of other states have similar rules moving through their legislatures. Whatever state you're financing in, ask for that disclosure in writing before you sign — it's designed specifically to make different pricing structures easier to compare side by side.

Frequently Asked Questions

What's a good interest rate for a small business loan?

It depends entirely on the product. Under 10% APR is a strong bank or SBA rate; under 20% APR is competitive for an online term loan or line of credit. For MCA, look at the factor rate (better offers sit under 1.30) and the total dollar repayment, not a converted APR — MCA isn't priced as a loan.

Why are online business loans more expensive than bank loans?

Online and fintech lenders typically approve faster and accept lower credit scores and shorter operating histories than banks. That accessibility and speed comes with a higher risk-based spread, because the lender is extending capital to files a bank would decline outright. The tradeoff is speed and access versus lowest possible cost.

Is a merchant cash advance more expensive than a loan?

It depends on what you're comparing and over what time period. An MCA's total repayment (advance × factor rate) is fixed at signing and often costs more in total dollars than a comparable bank loan — but MCA is typically available to businesses a bank would decline, and funds in days rather than weeks, so the two products usually aren't competing for the same applicant in the first place.

How is APR calculated on a business loan?

APR combines the base interest rate (often tied to the prime rate for variable products) with any additional fees, expressed as a yearly percentage. A lender arrives at the specific number for your file by layering a risk-based spread on top of that base rate, driven mainly by credit score, time in business, revenue, and collateral.

What credit score gets the best rate?

Generally, 700+ credit combined with two or more years in business and consistent revenue unlocks access to the cheapest bank and SBA products. Below roughly 680, bank and SBA access narrows significantly, and businesses are typically routed toward online lenders, MCA, or revenue-based products instead — where the credit floor is lower but the pricing mechanic is different.

Does time in business affect my rate, separate from credit score?

Yes. Lenders treat operating history as its own risk signal, independent of credit score. A strong personal credit score doesn't fully offset a short operating history at most banks and SBA lenders, which is part of why newer businesses increasingly turn to underwriting models built around current revenue and cash flow rather than years in operation.

Can I negotiate my business loan interest rate?

Sometimes, particularly with a bank or SBA lender where the quoted rate reflects a spread the underwriter has some discretion over. Strengthening your file before applying — paying down existing debt, improving cash flow documentation, or waiting until you clear a time-in-business threshold — tends to move the needle more than direct negotiation after a quote is issued.

What is ByzFlex, and how is its cost different from a line of credit?

ByzFlex is Byzfunder's revenue-based revolving capital product. It functions like a line of credit in that it gives a business ongoing access to funds as it repays, but it isn't structured, priced, or regulated as a traditional line of credit — draws and cost are tied to the business's revenue rather than a fixed credit limit and interest rate. Byzfunder discloses ByzFlex cost before signing so it can be compared directly against other options.

Whatever product fits your business, the rate you're quoted should be disclosed in writing before you sign, and it should be clear which pricing mechanic — APR, factor rate, or revenue-based cost — you're actually looking at. Byzfunder is a direct lender, not a broker, meaning applications go through one underwriting decision rather than being shopped to multiple third parties: MCA (factor rate, 525+ FICO) and ByzFlex (revenue-based revolving capital, 550+ FICO) are both priced and disclosed up front, with funding in as little as 24 hours for qualifying files. See if you qualify.

For California, term loans are arranged or made pursuant to the California Financing Law — License Number: 6031098.