Small Business Loan Rate

the loan rate is critical for any entrepreneur and can mean the difference between the success and failure of a venture. The key to working this out isn’t in simply hunting for whoever has posted the best interest rate, as there isn’t much difference between one commercial lender or another in that regard.This is because this type of loan is reviewed heavily before approval in order to keep the interest rate as close to prime as possible. The real difference will be in the options that an individual lender makes available.

A good first stop might be the Small Business Administration. They make a number of small business loans available that vary in features depending on your needs. An SBA Microloan is a loan in an amount under $35,000 with a business loan rate of around 8%. This is connected to the Treasury lending rate, adding either 7.5% or 8.5%, depending on the amount of the loan itself. The main type of loan the SBA uses is the SBA 7(a) loan. This is a guaranteed loan with a maximum amount of $1.5 million. A bank actually handles the loan itself, and the guarantee is offered by the SBA. Anything over $50,000 has a rated maximum of prime plus 2.75%.

Apart from the SBA, there are a number of community development organizations that could offer a good business loan rate to the right small business owner. These organizations were founded to create and grow small businesses as a way to enhance the community since this has a trickle-down effect of bringing revenue into the community at large and creating jobs.

These organizations often have looser credit standards and aren’t as rigid as formal banking institutions. You’re usually looking at a business loan rate of 4.25% to 8.75%, which will vary depending on the amount of the loan, the term, and the individual’s credit rating. Their maximum amounts are generally fairly low, ranging from $50,000 to $100,000 depending on the organization. For larger loans, they’ll usually make an arrangement to work in cooperation with a bank.

One good example of a community organization low rate agreement would be Accion in Albuquerque, New Mexico. They offer a business loan rate that varies from 2% to 7%, depending on how much risk they’re taking on. Their maximum loan amount is $150,000.

Tulsa, Oklahoma is home to the Tulsa Economic Development Corporation (TEDC). TEDC tends to offer the SBA 504, where they can offer a fixed 4.7% over a ten-year term in amounts of up to $4 million. This is generally used for mortgage financing or capital asset acquisition and renovation.

Another example is in Harrisburg, Pennsylvania where the Harrisburg Regional Chamber has created the Capital Region Economic Development Corporation (CREDC). They have a bad credit small business loan rate of 4.25%, which they make available in amounts of under $200,000.

These are a few examples of how you can get a good business loan rate with options that suit your needs. It’s worth getting in touch with your local business organizations to find out if they’ve made something available that could work for your business.