Commercial banks and credit unions offer small-business loans
Small business loans are offered by many lenders, including commercial banks, credit unions, finance companies, mortgage companies, real estate brokers, financial institutions, and non-traditional private lenders. Interest rates on these loans vary widely, depending on the lender and your business’s qualifications. The rate you receive depends largely on your business’s ability to repay and credit rating.
The average interest rate for a commercial small-business loan, however, is closer to 4% to 6%, with some lenders offering slightly lower rates. Lenders that specialize in commercial financing often have access to more competitive interest rates than other lenders, and may be able to provide special deals or financing options not available to individual borrowers. For instance, online lenders may not offer as many financing options but may be able to find you a better interest rate from another lender.
Non-bank lenders are generally considered to be highly competitive
Online lenders offer business loan interest rates that are often higher than what individual lenders would charge. However, many business owners find that it is more convenient and easier to apply for these loans online, due to lack of time and paperwork. Non-bank lenders are generally considered to be highly competitive, and may offer small business loan interest rates that are slightly lower than the national average small-business loan rates. In addition, many non-bank lenders offer other services, such as credit card financing and debt consolidation.
Non-traditional lenders tend to be larger financial institutions, such as credit unions, that do not have traditional loan products. Because non-traditional lenders generally have less borrowing power than banks, they are able to offer better interest rates and terms to borrowers. However, there are also some non-bank lenders who specialize in lending to businesses who need financing with very low or no cash up-front costs. One advantage of using a non-bank lender is that you do not have to provide a personal guarantee to secure the loan. You will, however, need to provide a business plan as evidence that you have the business to repay the loan.
If you have good credit, you may even qualify for zero down financing programs
Small business loans can be a great way to get the money you need in order to expand your business or to buy new equipment. These loans can help you finance projects such as equipment, supplies, or even advertising. As with all types of financing, you can find competitive loan rates by shopping around. You can search online for loan programs that are available to you. If you have good credit, you may even qualify for zero down financing programs, which allow you to pay as little as zero down for your first few years of payments on your new loan.
When you are working with a prime rate, you can get the best interest rates possible. For example, a 30-year old business owner with a good credit score should be able to find interest rates as low as 2.5 percent. If you are a business owner that has recently started up and needs to qualify for one of these low-interest loans, you should consider working with a local finance company. Your local bank or credit union may be able to offer you access to one of their prime rate loans, or they could refer you to an experienced lender that offers these loans.