Do Small Business Loans Have Interest?
Yes, small business loans carry interest, because that's how lenders earn a return on the capital they extend. What varies enormously is how much. With the prime rate around 6.75% in mid-2026, SBA loans run roughly 9-11.5% APR, term loans range from 8% to 30%+, and lines of credit fall around 8-25%. Some products, like merchant cash advances, use a factor rate instead of interest, which converts to a much higher effective cost. The point isn't to avoid interest; it's to minimize it. Quordx Capital matches you to the lowest-cost financing you qualify for across a 50+ network.
This guide is part of our full library on Business Loans. Start there for the complete lineup, then come back for the deep dive on your situation.
Last updated · Reviewed by Cody Dreis
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How Interest Is Charged
Most loans use an APR, an annual percentage rate applied to your balance. Term loans and lines of credit work this way. Your rate reflects your credit, revenue, and the product type, so the same business sees different numbers across different products.
Merchant cash advances are different. Instead of interest, they use a factor rate, say 1.30, applied to the full advance. A $50,000 advance at 1.40 means repaying $70,000, regardless of how fast you pay it off. It's a cost worth understanding clearly before choosing it, since the effective annualized rate can be far higher than an APR-based loan.
Which Options Cost The Least?
SBA 7(a) Loan: Lowest rates, ~9-11.5% APR with long terms. Best for established businesses that can wait for the process.
Equipment Financing: Collateral-backed, ~7-20%. Best for asset purchases wanting lower interest, since the equipment secures the loan.
Business Line of Credit: Interest only on what you draw, ~8-25%. Best for minimizing total cost through precise borrowing rather than carrying a lump sum.
How Quordx Capital Works
Apply online in about 10 minutes. Upload 3-6 months of bank statements, your most recent business tax return, and your ID. Quordx Capital matches your profile to the best-fit lenders in our 50+ network and submits for you. Most decisions return within 24-48 hours.
What to Expect
You'll pay interest, but Quordx Capital surfaces the cheapest option you qualify for and shows the real cost of each, including factor rates where they apply, so you can compare apples to apples. Decisions in 24-48 hours, funding in 3-7 business days.
Borrowers pay nothing to Quordx Capital. No application or broker fees. The lender pays commission at close.
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Written by
Cody Dreis
Founder, Quordx Capital
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Quordx Capital is a business funding broker, not a lender. We facilitate introductions between U.S. small and medium-sized businesses and lenders or capital providers in our network. All credit decisions, funding amounts, rates, fees, repayment terms, and timelines are determined solely by individual lenders based on their own underwriting criteria.
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