Guidelines: Borrowing doesn't have to be intimidating...

SBA LOANS SBA loan interest rates are capped but vary by program, loan size, term, and lender, offering both fixed and variable options. For the common 7(a) loan, maximum variable rates range from Prime + 3.0% to Prime + 6.5%, while fixed rates range from Prime + 5.0% to Prime + 8.0% (based on a 7.5% prime rate as of April 2025). Other programs like 504 and Microloans have their own rate ranges, typically tied to benchmarks like the Treasury note or a general percentage. Your specific rate depends on your business's creditworthiness and lender assessment, but cannot exceed SBA limits. Negotiating a lower rate with the lender might be possible. The prime rate, a key factor, fluctuates with Federal Reserve policy.

BANK TERM LOANS Bank term loans generally feature competitive fixed interest rates. However, the specific rate you receive will depend on your business's credit profile, financial standing, the loan amount, and the lending bank. Average APRs for these loans can range from roughly 6.5% to 12%, with possibilities of being higher or lower based on individual circumstances and the lender. Banks often provide lower interest rates compared to online alternatives due to their more stringent borrower requirements. It is essential to consider that various fees can be associated with bank term loans, impacting the overall cost. These fees can include origination fees, application fees, and closing costs. Additionally, borrowers might encounter late payment fees or, less commonly, prepayment penalties. Banks may also charge for credit reports and other services like appraisals or application assistance. To fully understand the borrowing expenses, discussing all potential fees and the APR with the bank is crucial.

Business lines of credit typically have variable interest rates that fluctuate with benchmark rates like Prime or SOFR. Average APRs can vary widely, ranging from about 8% to potentially over 60%, influenced by factors such as creditworthiness and security. While most rates are variable, some fixed-rate options exist, with recent averages around 7.44% to 8.40%. Interest rates can be presented as APR, simple interest (weekly or monthly), or factor rates, with the latter being less transparent. Although lines of credit might have slightly higher rates than term loans, interest is only paid on the drawn amount. Understanding how the rate is calculated is crucial for comparing offers. Ultimately, the specific interest rate will depend on your business's unique financial profile and the lender's terms.