11.5%
average SBA 7(a) loan APR: among the lowest rates available to small businesses
49%
of small businesses that applied for financing in 2023 were fully approved
$5M
maximum SBA 7(a) loan amount for qualifying businesses
150%+
effective APR on merchant cash advances: the most expensive option
Average APR Range by Small Business Loan Type
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| Loan Type | Typical APR | Max term | Collateral | Approval time | Best for |
|---|---|---|---|---|---|
| SBA 7(a) | 10.5%–13.5% | 10–25 years | Required | 30–90 days | Established businesses needing working capital |
| Bank term loan | 8%–13% | 5–7 years | Often required | 2–6 weeks | Businesses with 2+ years history and good credit |
| Online term loan | 15%–65% | 1–5 years | Usually not | 1–3 days | Faster access, newer businesses, fair credit |
| Business line of credit | 10%–35% | Revolving | Sometimes | 1–7 days | Managing cash flow gaps and seasonal needs |
| Merchant cash advance | 50%–200%+ | 3–18 months | None | Same day | Last resort: high-volume card sales only |
Warning: Factor rates on MCAs are not interest ratesA merchant cash advance with a 1.35 factor rate sounds modest: until you realize you are repaying $135,000 on a $100,000 advance, often in 6 months. That is an effective APR well above 100%. Most businesses that take an MCA end up in a debt cycle taking a second advance to cover the first.
Tip: Apply for an SBA loan before you need itSBA 7(a) loans require 30–90 days to close. Businesses that apply during a cash crunch rarely qualify: lenders want to see 2 years of profitable returns, not desperation. Establishing a banking relationship and getting pre-qualified during a strong period gives you options when timing matters.
Need flexible short-term financing between loan cycles?
