Typical Business Term Loan Rates in 2026 by Lender Type

“Business term loan” covers a huge range of products and prices — from a 7% bank loan with a 10-year amortization to a 60% APR-equivalent 6-month online loan dressed up with a factor rate. This guide breaks down current rates by lender type and the factors that determine where your deal will land. For the broader product overview see business term loans.

Bank Term Loan Rates (Cheapest)

Conventional bank term loans are the cheapest source of capital, and the hardest to qualify for. Typical pricing in 2026:

• Strong borrowers (3+ years, $1M+ revenue, 720+ FICO): 7–10% APR, fixed or floating. Often priced as prime + 0–3% on floating, or 7-year Treasury + 2–3.5% on fixed.
• Typical small business (2+ years, $500K+ revenue, 680+ FICO): 9–13% APR. Most community banks will quote in this range.
• Marginal-but-acceptable (2 years, $250K+ revenue, 660+ FICO): 11–15% APR, often requiring collateral or personal guarantee.
• Term length impact: Shorter terms (1–3 years) typically price 50–150 bps lower than longer terms (5–7 years) at the same bank.
• Collateral impact: Real estate or equipment-secured term loans price 100–300 bps below unsecured. Bank UCC blanket lien usually saves 25–75 bps.

Bank rates are the cheapest but slow (2–6 weeks to fund) and require strong financials. If you qualify, always shop bank first. See how fast you can get a bank term loan.

SBA Term Loan Rates

SBA 7(a) loans are capped at prime + 2.25–4.75% depending on loan size and term. With prime at ~7.50% in May 2026:

• Loans > $350K, 7+ year term: ~9.75% APR
• Loans $50K–$350K: 10.75–11.75% APR
• Loans < $50K: 11.25–12.25% APR

Most banks price right at the SBA cap. Best for borrowers who don’t quite qualify for bank conventional pricing but want a long amortization (up to 25 years for real estate, 10 years for working capital/equipment). See SBA loan rates 2026.

Online Term Loan Rates

Online lenders fill the gap between “bank conventional” and “short-term alternative.” Typical 2026 pricing:

• Funding Circle: 12–30% APR, 3–7 year terms, $25K–$500K. Requires 2+ years, 660+ FICO, $150K+ revenue. Sweet spot $100K–$300K.
• OnDeck term loans: ~30–50% APR equivalent, 3–24 month terms, $5K–$250K. Daily/weekly repayments. Faster than Funding Circle, more expensive.
• Credibly: 1.09–1.36 factor rate over 3–24 months, equivalent to ~20–100% APR. $5K–$400K. Looser credit (550+).
• BlueVine term: ~15–30% APR, 6–12 month terms, $5K–$250K. 625+ FICO, $40K+ monthly revenue.
• Lendio (marketplace): Submits to 75+ lenders. Rate depends on which lender takes the deal — expect 8–60%+ APR depending on profile.

Online term loans are 2–5x more expensive than bank but fund in 1–5 business days. Worth the premium only when speed matters or bank decline forces the issue.

Alternative / Short-Term Term Loan Rates

Anything under 12 months, often marketed as a “short-term loan” or “working capital loan,” tends to be expensive on an APR basis:

• Short-term loans (3–12 months): Typically priced as factor rates (1.15–1.50x) which equate to 30–80% APR. Daily or weekly debits.
• Merchant cash advance (MCA): Technically not a loan but often pitched as one. Factor rates 1.20–1.50x with holdback against deposits. Effective APR 40–120%+. See MCA.
• Revenue-based financing: 1.20–1.50x payback over 6–18 months. APR-equivalent 20–60%. See RBF.

These are expensive but accessible — often the only option for businesses under 2 years with limited revenue or distressed credit. Use them as bridge capital, not permanent capital. See term loan mistakes that cost thousands.

What Determines Your Final Rate

Six factors move your rate within a lender’s range:

• Personal credit score (FICO): The biggest single factor. Each 50-point band typically moves rate 100–300 bps. 720+ is the “best rate” threshold at most lenders.
• Business credit profile: Paydex 80+, established trade lines, no derogatories. Affects bank pricing more than online.
• Revenue and time in business: Lenders price based on cash-flow risk. $1M+ revenue with 3+ years of consistent deposits prices materially below $300K revenue with 18 months of history.
• Debt service coverage ratio (DSCR): Banks typically want 1.25x+ DSCR after the new loan. Borrowers at 1.5x+ get better pricing; 1.10–1.25x gets quoted at the high end of the range.
• Term length: Shorter terms price lower at the same lender (less duration risk). 3-year terms vs 7-year terms can differ by 50–200 bps.
• Collateral: Secured by real estate or specific equipment runs 100–300 bps cheaper than unsecured.

Fixed vs Variable Rate Term Loans

• Fixed rate: Same payment for the full term. Predictable, but you don’t benefit if rates fall. Typically 25–100 bps higher than the equivalent variable.
• Variable rate (floating): Tied to prime + a spread. Payments move with prime. Common on SBA 7(a) and many bank term loans.
• When to pick fixed: Long terms (5+ years), tight cash flow sensitivity to rate moves, or you expect rates to rise.
• When to pick variable: Short terms (1–3 years) where the duration is too short to be hurt by rate moves; you have cash flow buffer; you expect rates to fall.

Origination Fees and Total Cost of Capital

Rate isn’t the only cost. Typical fees by lender type:

• Bank term loans: Origination fee 0–1% + closing costs ($500–$5,000 depending on size and collateral).
• SBA 7(a): Guaranty fee 0–3.75% of guaranteed portion (rolled into loan), plus packaging/closing $2,500–$5,000.
• Online term loans: Origination fee 2–5% deducted from funded amount. Funding Circle: ~3.5%. OnDeck: 2.5%.
• Short-term/alternative: Usually no separate origination fee but the factor rate already embeds the lender’s margin.

Always compare offers on total cost of capital (rate + fees + early payoff terms), not just rate. A 12% APR with 5% origination is roughly equivalent to a 15% APR with no fee on a 3-year loan. See how to compare business loan offers.

How to Qualify for the Lowest Rate

• Apply at your existing business bank first. Deposit relationship pricing is real — often 50–200 bps below what a non-customer would get.
• Have 24 months of clean bank statements. Consistent deposits, no NSF, no other lender debits.
• Document use of funds clearly. Equipment purchases or expansion get better rates than “working capital” which signals cash-flow stress.
• Offer collateral if you have it. Even a UCC blanket lien on AR + inventory often saves 25–100 bps.
• Compare 3–5 offers in parallel. Rate spread on the same deal across lenders is typically 200–500 bps.
• Don’t over-shop. 3–5 applications in a 14-day window count as one credit inquiry. 15+ applications signals distress and hurts pricing.

Get Matched with Term Loan Providers

The fastest way to find the lowest rate for your profile is to apply through a marketplace that submits to bank, SBA, and online lenders in one application. Get matched for a business term loan — one app, multiple offers, no credit hit on initial review. Also see term loan credit requirements, how much you can qualify for, and our loan calculator.