The Average Business Loan Rates in 2025: What To Expect

Traditional lending institutions have been making it increasingly more difficult for businesses to get loans, which has recently propelled other sources of financing, such as merchant cash advances and business lines of credit, into the spotlight.

However, this financing source diversity makes it hard to predict the average rates on the market today.

Understanding How Rates Work 

Although it might sometimes seem complicated, the way rates work is actually relatively simple. By definition, the interest rate is the percentage of the loan you’ll have to pay back on top of the principal.

For example, if you take out a $10,000 loan with a 10% interest rate, you’ll owe $11,000 in total.

With fixed business loan interest rates, you’ll know exactly how much your monthly payments will be because they stay the same throughout the loan life cycle.

Another important element determining the financial burden shouldered by the borrower is the loan term, which is the length of time you have to repay the loan.

A shorter-term loan will mean higher monthly payments, but you’ll pay less overall interest. A longer-term loan will mean lower monthly payments, but you’ll pay more interest overall.

Depending on the loan type, repayment terms can range from just a few months to a few years.

That’s why it’s important to compare rates from multiple lenders and check all loan options before taking out a loan. 

Average Business Loan Rates for 2025

The most common type of business lending disbursed in the U.S. are SBA loans, so named as they are guaranteed by the Small Business Administration (SBA).

Alternatively, you can go for a traditional bank loan, online loan, invoice factoring, merchant cash advance, and more.

Here’s the breakdown of the average business loan rates for 2025:

Factors Affecting Loan Rates

Here are a few of the most common factors here:

Business Loan Type

Short-term loans typically have higher interest rates than long-term loans. Also, the interest rates on secured business loans, backed by collateral, are usually lower than those on unsecured loans.

Creditworthiness

Borrowers with solid credit scores usually qualify for lower interest rates as they are seen as less of a risk to lenders.

Annual Turnover

The annual turnover of a business can also affect the interest rate. Businesses with higher turnovers are usually seen as less risky and may get lower rates.

Repayment History

If the business has a pattern of late or missed payments, it will likely be charged a higher interest rate.

This is due to the fact that there is a higher risk of defaulting on the loan if the borrower has a history of financial trouble.

Lender Relationship

A borrower’s relationship with the lender is also a factor to consider. Borrowers who have been with a lender for a long time may be offered lower rates than new customers. Also, some lenders provide loyalty discounts to customers who renew their loans.

How to Check Your Business Credit

Checking your business’s credit is crucial in managing your finances and ensuring your business is on solid footing. There are a few ways to check your business credit, but you have to be thorough with each.

One way to check your business credit is to review your credit report from the major credit reporting agencies. You can obtain a free copy of your report from each agency once per year.

Another way to check your business credit is to use reliable business-credit monitoring services.

These services will track your credit score and report any changes to you so that you can stay on top of your credit health.

It's also a good idea to periodically check in with your creditors to ensure they are reporting accurate information about your payments and account balances.

This will help you catch any errors early and avoid potential problems down the road.

Tips for Getting a Good Interest Rate

If you're in the market for a new loan, there are a few things you can do to ensure you get the best interest rate possible.

1. Start by checking with your local bank or credit union. They may be able to offer you a competitive rate, especially if you have a strong relationship.

2. Shop around online. Many lenders only do business online, and they often have better rates than banks with physical locations.

3. Consider a shorter loan term. The longer the term of your loan, the more interest you'll ultimately pay.

4. Don't be afraid to negotiate. If you're pre-approved for a loan at a certain interest rate, don't be scared to try to lower it. The worst that can happen is that the lender says no, but you might be surprised at how often it pays off to ask.

Common Fees To Watch

You should also be aware of any potential fees to avoid surprises down the road.

The first is the origination fee, which the lender charges for processing your loan application. These fees usually range from 1 to 6%. 

Another common fee is the prepayment penalty, which is charged if you pay off your loan early. This fee can vary depending on the lender, but it typically goes from 1% to 5% of the prepayment amount.

Missing your repayment date will incur a late payment fee. This fee is usually 3% to 5% of the outstanding portion of the loan.

Finally, there's a closing fee, which is charged when you close on your loan. This fee varies between lenders, so we suggest you check that information before making any decisions about closing your account.

If you're looking to take out a business loan, it's essential to compare offers from multiple online lenders and pay attention to all the fees associated with each.