Business Loan Interest Rates Today: Comprehensive Guide to 2025 Trends and Insights

Jordan Brooks

Jordan Brooks

— 5 min read
Close-up of a hand using a ballpen and calculator to analyze interest rates on a chart.

Estimated Reading Time

9 minutes

Key Takeaways

  • Understanding business loan rates is crucial for small-business owners.
  • Loan rates vary by type, lender, and borrower qualifications.
  • SBA loans often offer better rates due to federal backing.

Table of Contents

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Business Loan Interest Rates Today: Navigating the 2025 Landscape

In today’s ever-evolving financial landscape, understanding business loan interest rates is crucial for any entrepreneur or small business owner. These rates fluctuate widely by lender type, product, and borrower qualifications as of May 2025. Now, let's dive into the up-to-date landscape of business loans and learn about the loans that are available to businesses wanting to obtain the funds they need:

Exploring the Current Scene: Bank Small-Business Loans

In the universe of bank small-business loans, traditional banks with relatively lower interest rates than other lending sources have been the go-to option for many business owners. As of May 2025, the rates range from 6.54% to 11.7%. These are typical terms for an installment loan and are just examples for demonstration purposes. For more, visit NerdWallet for more.

The Pros and The Cons of Online Term Loans

If your business has less-than-stellar credit or if there simply aren’t enough assets to provide adequate collateral, a bank loan might not be an option, but online term loans can be in spite of their high interest rates. These loans can have an interest rate between 14% and astronomical 99% per year APR. Although online lenders present a quicker, easier way to get to cash for companies that don’t qualify with traditional banks, the cost can be onerous. You can read more about this here at NerdWallet.

SBA Loans: The Engine Behind Small-Business Assistance

The United States Small Business Administration (SBA) administers a selection of loan programs that address various small-business financing requirements. The SBA 7(a) loans, for example, offer several tiers for both fixed and variable rates. Fixed rates can range based on your loan size, and have the following caps:

  • Up to $25,000: Up to 15.5%
  • Up to $50,000: Up to 14.5%
  • Up to $250,000: Up to 13.5%
  • More than $250,000: Up to 12.5%

For variable rate SBA 7(a) loans:

  • Up to $50,000: Up to 14%
  • $50,001 - $250,000: Up to 13.5%
  • $250,000 - $350,000: Up to 12%
  • Over $350,000: Up to 10.5%

SBA 504 loans have fixed rates with eligibility criteria between 6.243% and 6.642% based on term length (10, 20, or 25 years). SBA loans tend to offer lower rates, thanks to their federal guarantee. These rates correspond to the present prime rate, which is at 7.5%, and the current cost of borrowing according to one company’s rate: NerdWallet; NEDC Loans as of May 2025.

Business lines of credit can provide flexibility for businesses that tend to have revolving access to funds. But their interest rates vary greatly, from 10% to 99% ARP. The expense is going to vary from lender to lender, and it will also be based on the perceived risk of the borrower, which makes it less anticipated as a funding option. An alternative source for more information on business line of credit can be seen at NerdWallet.

Equipment Financing: A Tailored Option for Your Business Needs

When you need key equipment for your business, equipment financing could be the solution. The interest rates for these loans vary from 4% to 45% APR, greatly dependent on the type of equipment being financed, the business’s credit profile, and the length of the loan. If you’re thinking about a business equipment loan, also browse NerdWallet.

Invoice Factoring: Financing using Outstanding Invoices

Invoice factoring, or financing, is when businesses can fund themselves based on their outstanding invoices. This is a short-term solution with rates that span from 10%-79% APR, very much depending on the calculated risk as well as the age of the invoices. If you’re considering options such as business invoices financing, read more at NerdWallet.

Expensive Merchant Cash Advance

Vendor financing products are among the costliest funding products, charging rates and fees that go up from 40% to an astronomical 350% Annual Percentage Rate (APR). These innovations are usually employed by companies that are unable to get the traditional loans they desire and are willing to pay to have access to capital quickly. Get more information about business cash advances at NerdWallet.

Federal Reserve Information and Specialized Loan Programs

The Federal Reserve offers an indicator of how much you should expect to pay for business term loan rates, and its figures show an average of 7.98% (LendingTree). Furthermore, product-specific loan programs such as USDA loans, available to farmers, offer some of the lowest rates in the industry (around 3.875% to 4.000%) for three to five-year terms due to government backing (USDA).

Summary of Business Loan Rates as of May 2025

To help paint the picture, below are the typical interest rates for several types of loans:

  • Bank Small-Business Loan: 6.54% – 11.7% here
  • Online Term Loan: 14% – 99% APR
  • SBA 7(a) Loan (Fixed): 12.5% – 15.5%
  • SBA 7(a) Loan (Variable): 10.5% – 14%
  • SBA 504 Loan (Fixed): 6.24% – 6.64% (10–25 years)
  • Business Line of Credit: 10% – 99% APR
  • Equipment Financing: 4% – 45% APR
  • Invoice Factoring: 10% – 79% APR
  • Merchant Cash Advance: 40% – 350% APR
  • USDA Agricultural Loans: 3.875% – 4.000% (3–5 year terms)

Key Influencers of Loan Rates

There are several factors that influence the interest rates charged to businesses seeking funds:

  • Credit history: Borrowers with higher credit scores, and businesses with longer track records, are likely to get better rates. Find out more about credit affects business loans.
  • Collateral: Interest rates are typically higher for unsecured loans vs. secured loans.
  • Type of loan and lender: Federally covered loans (including SBA and USDA) typically offer lower interest rates than online or alternative lenders.
  • Loan Length: Rates may be higher on longer-term loans as there is more risk to a lender.

As suggested by NerdWallet, interest rates on loan types are largely based on the prime rate, and its recent increase in May 2025 to the current standing of 7.5% can be attributed to changes in monetary policy. It has most profoundly affected the maximums on SBA lending, although online lending remains an option for quick cash, albeit an expensive one. This expanding area of lending is especially geared toward lending to businesses that may not be able to receive a traditional loan as shown in our how-to guide on lenders for business loans. Find additional information at NerdWallet; LendingTree.

To sum up, May 2025 business loan rates cover a wide range from far below 4% for some government-backed agricultural loans to triple-digit APRs for high-risk short-term online borrowing. Options abound for entrepreneurs and business owners. Conventional and SBA loans are among the most affordable in today’s crowded financial environment, and they provide hope and opportunity for businesses that meet certain criteria.

Frequently Asked Questions

  • Q: As of May 2025, what is the typical interest rate on a bank small-business loan?A: The rates of interest vary and can be between 6.54% and 11.7% on the basis of the borrower's qualifications. Read more at NerdWallet.
  • Q: Why are online term loans so expensive?A: Online term loans tend to have higher costs because of lower borrower qualifications and quicker access to the funds.
  • Q: Are there agricultural loans with low interest?A: USDA agricultural loans have some of the lowest rates with a 3- to 5-year term, ranging from 3.875% to 4.000%. More details at USDA.

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