Business loan interest rates at banks ran at a median of 6.7% to 7% on new small business term loans in the second quarter of 2026, according to the Kansas City Fed's Small Business Lending Survey, and the prime rate that many loans are priced from was 7% on November 4, 2026, in the Federal Reserve's H.15 release. SBA 7(a) loans, as general information, carried maximum rates of 10% to 15% in November 2026, depending on the loan size and whether the rate is variable or fixed. Merchant cash advances, lines of credit and consolidation are priced in factor rate and dollars, so those are the figures this guide gives for them.
The rate you are offered depends on your credit, time in business, revenue, collateral, term and debt service coverage. A rate also leaves out fees and the length of the term, so the example further down puts $100,000 into three products and compares the total paid, the payment and the speed.
Business loan interest rates by type of loan
The table gives a figure only where a public source publishes one, with its date beside it. We found no public survey that reports a rate for equipment financing, so that row uses a labelled example.
| Type of financing | How it is priced | Figure and date |
|---|---|---|
| Bank term loan | Annual rate, fixed or variable | Median of 6.7% to 7% on new term loans, second quarter of 2026 |
| SBA 7(a) loan, as general information | Annual rate, negotiated up to an SBA maximum | Maximum of 10% to 13.5% variable and 12% to 15% fixed by loan size, November 2026 |
| SBA 504 loan, as general information | Fixed rate, pegged above 10-year Treasury issues | 10-year Treasury at 4.90% on November 4, 2026 |
| Equipment financing | Annual rate with fixed payments | Example of 10% in the comparison below, not a market figure |
| Revenue-based financing (merchant cash advance) | Factor rate and dollars | Example of 1.30 on $100,000, a total payback of $130,000 |
| Line of credit | Factor rate or a fee on each draw, in dollars | Example of 1.10 on a $20,000 draw, a total payback of $22,000 |
| Consolidation of existing advances | Factor rate, total payback and payment | Set offer by offer, compared in dollars |
The average business loan interest rate at banks
No agency publishes one official average business loan interest rate. The closest public figure comes from the Small Business Lending Survey, which the Kansas City Fed runs for the Federal Reserve Board and which covers loans to firms with $5 million or less in annual revenue. It reports medians, so half of the banks' figures sit above the number and half below.
For the second quarter of 2026, the highest median on new term loans was 7%, on variable rates at urban banks, and the lowest was 6.7%, on variable rates at rural banks, with fixed rates between them. Prime was 6.75% through that quarter, according to the SBA's rate tables. The rate figures come from 88 banks that answered the survey for each of the last five quarters.
These are rates on loans banks made, so they say nothing about the applications banks declined. About 69% of respondents named borrower financials as the most common reason for denying a loan, and a business with thinner financials may be quoted more than the median or may need a different product.
How the prime rate, fixed rates and variable rates work
Most bank pricing starts with a base rate and adds a spread, the extra a lender charges for the risk it sees in your file. H.15 describes prime as the rate posted by a majority of the 25 largest insured U.S.-chartered commercial banks and as one of several base rates banks use to price short-term business loans. With prime at 7%, a spread of 3% gives a rate of 10%.
A variable rate keeps the spread and moves with the base. The SBA's rate tables show prime at 6.75% on September 1, 2026 and 7% on October 1, 2026, so a loan at prime plus 3% that adjusts monthly went from 9.75% to 10%, which is about $250 more interest a year on a $100,000 balance. The SBA's 7(a) page says the lender may require a different payment when a variable rate changes. A variable loan can also carry a floor and a ceiling, so ask for both in writing.
A fixed rate stays the same for the whole term, and the payment stays the same with it. Which of the two costs less over a full term depends on where the base rate goes after you sign, so check the payment you could carry if it went up.
SBA 7(a) maximum rates by loan size
As general information, a lender and borrower negotiate the rate on an SBA 7(a) loan, and it cannot go above the SBA's maximum. The federal rule sets the variable maximums as a spread over the base rate, and the SBA's rate tables list the fixed maximums each month. This table shows both for November 2026, with prime at 7%.
| Loan size | Maximum variable rate | Variable maximum at 7% prime | Maximum fixed rate |
|---|---|---|---|
| $25,000 or less | Prime plus 6.5% | 13.5% | 15% |
| $25,001 to $50,000 | Prime plus 6.5% | 13.5% | 14% |
| $50,001 to $250,000 | Prime plus 6% | 13% | 13% |
| $250,001 to $350,000 | Prime plus 4.5% | 11.5% | 12% |
| More than $350,000 | Prime plus 3% | 10% | 12% |
These are ceilings, and a lender can quote less. Our guide to SBA loan requirements covers the guaranty fee and who qualifies.
The SBA's 504 program offers fixed-rate financing for major fixed assets, with a rate pegged to an increment above the market rate for 10-year Treasury issues. Our guide to how an SBA 504 loan works explains how that rate is set and how the bank's share is priced.
For long-term money, we arrange SBA and bank loans through our partners. The partner sets the rate, term and collateral, and these loans take weeks.
Why a rate alone does not show what a loan costs
A rate prices the balance you owe each year, and it leaves out fees and how long you keep the money. An origination fee is the most common addition. With a 2% fee taken at closing on $100,000, $98,000 reaches your account and you still repay the full $100,000, so the 8% example in the comparison below goes from a cost of $21,658 to $23,658 with the rate unchanged. Other offers add an appraisal fee, a guaranty fee on SBA loans or a charge for paying off early.
The term matters too, because a longer term lowers the payment and adds interest. Our guide to business term loans shows one $100,000 loan at three terms. To line up offers that are priced differently, use the five figures in our guide to comparing business loan offers, which works for a rate and a factor rate alike.
How advances, lines of credit and consolidation are priced
Merchant cash advances, lines of credit and consolidation are priced in factor rate and dollars, so those are the figures we use for them. A factor rate is a multiplier on the amount you receive, and multiplying it out gives the total you pay back.
Revenue-based financing is a merchant cash advance. You receive payment in advance for part of your future sales, the funder sizes the amount on your usual revenue, and a set daily or weekly payment runs until the agreed total is paid. Advances run from $5,000 to $2,000,000. A factor rate of 1.30 on $100,000 means a total payback of $130,000 and a cost of $30,000, and our guide to how factor rates work covers fees, terms and early payoff.
A line of credit of up to $2,000,000 is priced on what you draw, with offers in one to two business days. As an example, a $20,000 draw at a 1.10 factor rate means $22,000 repaid weekly or monthly. With consolidation, your existing funders are paid off directly by the new funder and you make one weekly or monthly payment on a longer term. The total may not go down, so set the offer's total payback beside what you still owe today.
What $100,000 costs as a bank loan, an equipment loan and an advance
All the figures below are examples, not quotes or any lender's or funder's terms, and fees are left out so the three line up.
| Example figure | Bank term loan | Equipment loan | Revenue-based advance |
|---|---|---|---|
| Example price | 8% fixed | 10% fixed | 1.30 factor rate |
| Repayment | 60 monthly payments over 5 years | 60 monthly payments over 5 years | 40 weekly payments over about 9 months |
| Payment | $2,027.64 a month | $2,124.70 a month | $3,250 a week, about $14,083 a month |
| Total paid | $121,658 | $127,482 | $130,000 |
| Cost in dollars | $21,658 | $27,482 | $30,000 |
| Speed | Weeks | Offers typically in one to two business days | Typically funded within one to two business days of choosing an offer |
| What the decision rests on | Tax returns, financial statements, credit and collateral | The equipment, which secures the deal, and your revenue | Mainly four months of business bank statements, usually with no collateral |
The bank loan costs the least in dollars in this example, and it asks for the most paperwork and the longest wait. The equipment loan costs $27,482 and fits when the $100,000 buys a machine or vehicle, and we arrange equipment financing of up to $500,000.
The advance costs $8,342 more than the bank loan and $2,518 more than the equipment loan. That difference is the price of speed and of approval based on revenue. Its payment is larger because the whole amount is repaid in about nine months, so it finishes about 51 months before the two loans. When a job or a stock purchase would be gone before a bank file closes, the fair comparison is the cost of the advance against what waiting would lose, and our guide to quick business loans shows how to put a dollar figure on that.
Interest builds on a balance over time, so paying off a loan early usually cuts the interest unless a prepayment charge applies. A factor rate cost is set when you sign, and some contracts offer an early payoff discount, so ask to see that term.
What moves business loan rates
Every lender and funder sets its own requirements and they vary widely, but the same six things come up when a file is priced.
Credit
A strong credit history gives a lender less risk to price in, and credit history is among the common reasons for denial in the Kansas City Fed's survey. In the Federal Reserve Banks' 2026 Report on Employer Firms, 74% to 90% of low-risk applicants were at least partly approved, depending on the kind of lender, compared with 54% to 70% of medium- or high-risk applicants. A lower score narrows your options without ending them, because funders weigh credit differently.
Time in business
A longer record gives a lender more to read, and a bank file usually asks for several years of tax returns. The funders we work with generally look for about a year in business and about $20,000 a month in deposits. If you're not there yet, apply anyway. Some funders work with newer or smaller businesses, and we'll tell you what's realistic.
Revenue
Steady revenue shows a lender where the next payment will come from. A bank reads it in your tax returns and financial statements, and a revenue-based funder reads it in your deposits and sizes the advance to match.
Collateral
A lien gives a lender something to recover if payments stop, which is one reason a secured loan can carry a lower rate. An equipment loan is secured by the machine itself, and a bank loan may ask for a lien on business assets or property. An advance usually takes no collateral, which is part of why it is priced differently.
Term and loan size
A longer term leaves the lender waiting longer for its money, and it adds interest even when the rate stays the same. Size matters too, and the SBA's maximums show the pattern, with a variable maximum of 13.5% on loans of $50,000 or less and 10% on loans above $350,000.
Debt service coverage
Long-term lenders divide your operating cash flow by the year's payments on all business debt, including the new loan. The SBA's lending rulebook sets a minimum of 1.15 on a standard 7(a) loan and 1.10 on a 7(a) loan of $350,000 or less that is not for a change of ownership. As an example, a business with $90,000 of operating cash flow and $30,000 a year in existing payments would add $24,332 a year with the bank loan above, for coverage of about 1.66. A wider margin gives you more room to negotiate.
How to see the rates and offers for your business
The figures above are benchmarks, and your own offer will show your own price, total and payment. Start with the short application and four months of business bank statements, uploaded as PDFs or emailed to us. One application goes to the funders in our network, the offers come back side by side, and we go through them with you before anything is signed. Getting matched does not need a hard credit pull, since most funders prequalify from bank statements and a soft pull. A funder may run a hard pull in final underwriting, and you will know first. There is nothing to pay to apply or to see offers. To talk it through first, call (818) 351-0225.
Frequently asked questions
What is the average business loan interest rate?
No agency publishes one official average, and the closest public figure is the Kansas City Fed's Small Business Lending Survey, where median rates on new bank term loans to small businesses ran from 6.7% to 7% in the second quarter of 2026.
What was the prime rate for business loans in November 2026?
The bank prime loan rate was 7% on November 4, 2026, in the Federal Reserve's H.15 release, and a variable business loan priced at prime plus 3% would have carried a rate of 10% on that date.
What is the maximum interest rate on an SBA 7(a) loan?
As general information, for November 2026 the SBA's maximums ran from 10% to 13.5% on variable rates with prime at 7% and from 12% to 15% on fixed rates, with the highest maximums on the smallest loans.
Why does a merchant cash advance use a factor rate instead of an interest rate?
A merchant cash advance is a purchase of future sales, priced once as a multiplier on the amount advanced, so its cost is stated as a factor rate and a dollar total, and a 1.30 factor rate on $100,000 means a total payback of $130,000.
What moves business loan rates the most?
Business loan rates move with your credit, time in business, revenue, collateral, term, loan size and debt service coverage, and each lender weighs those differently.
Does checking business loan rates hurt my credit?
Getting matched through Today Capital Group does not need a hard credit pull, since most funders prequalify from bank statements and a soft pull, and if a funder runs a hard pull in final underwriting, you will know first.
