A "good" APR depends heavily on your credit score, time in business, and the type of loan. For a well-qualified borrower with strong credit, an APR under 12% for a term loan or SBA loan is considered excellent in 2026. For borrowers with fair credit, an APR between 20% and 40% from an online lender may be competitive. The key is to compare the APR to benchmarks for your specific credit tier and the loan product you are seeking.

Most business loans use simple interest, calculated on the outstanding principal balance. Each payment you make is split between principal and interest. In the beginning, a larger portion of your payment goes toward interest. As you pay down the principal, the interest portion of each payment decreases. This is known as an amortization schedule.

APR is the annualized cost of a loan, including fees. It amortizes, meaning you pay interest on a declining balance. A factor rate is a simple multiplier used to calculate the total payback amount for products like MCAs. For example, a $10,000 advance with a 1.3 factor rate means you repay $13,000. Because the repayment term is very short, the equivalent APR of a factor rate is often extremely high, frequently exceeding 100%.

Generally, the most affordable financing options are conventional term loans from banks and credit unions, followed closely by SBA loans. These products offer the lowest APRs and longest repayment terms. However, they also have the most stringent qualification requirements, typically demanding excellent credit, at least two years in business, and strong profitability.

It depends on the loan type. Most working capital loans and lines of credit do not require a down payment. However, loans for specific asset purchases, like commercial real estate (SBA 504 loans) or equipment financing, often do. A typical down payment is 10-20% of the asset's purchase price. Providing a larger down payment can reduce your loan amount and potentially help you secure a better rate.

Origination fees vary by lender and loan type but typically range from 1% to 6% of the total loan amount. Bank and SBA loans often have lower origination fees (or none at all), while online lenders who provide faster funding for riskier borrowers may charge fees on the higher end of this range. This fee is always factored into the loan's APR.

Yes, it is possible to get a business loan with bad credit, but your options will be more limited and more expensive. Lenders will focus more heavily on your business's cash flow and recent performance. Products like Merchant Cash Advances, invoice financing, and some short-term loans are designed for business owners with lower credit scores. Crestmont Capital specializes in finding solutions for all credit profiles, including options for bad credit.

The funding time varies dramatically by loan type. MCAs and some online term loans can be funded in as little as 24-48 hours. A business line of credit or equipment loan may take one to two weeks. SBA loans and traditional bank loans are the slowest, often taking 30 to 90 days from application to funding due to their extensive underwriting and documentation requirements.

Almost all small business loans require a personal guarantee from any owner with 20-25% or more equity in the company. A personal guarantee is a legal promise to repay the loan personally if the business defaults. This reduces the lender's risk and is a standard requirement in the industry, especially for closely-held private companies.

SBA loan interest rates are tied to the national Prime Rate. Lenders can add a "spread" on top of the Prime Rate, up to a maximum set by the SBA. As of 2026, you can generally expect total interest rates for SBA 7(a) loans to be between the Prime Rate + 2.25% and Prime Rate + 4.75%, which translates to an overall rate of roughly 8% to 12% in the current economic climate.

A shorter loan term will result in higher monthly payments because you are repaying the principal more quickly. However, it will significantly reduce the total amount of interest you pay over the life of the loan. Conversely, a longer term lowers your monthly payment but increases your total interest cost. You must balance your monthly cash flow needs with your goal of minimizing the total cost of capital.

In most cases, yes. The interest paid on a business loan used for business purposes is considered a business expense and is tax-deductible. This can help to lower the effective cost of your loan. However, tax laws are complex, so it is always best to consult with a qualified tax advisor or CPA to understand the specific implications for your business.

Commonly required documents include several months of business bank statements, personal and business tax returns, a government-issued ID, and basic information about your business (name, address, EIN). For larger or more complex loans like SBA loans, you will also need to provide detailed financial statements (P&L, balance sheet), a business plan, and a debt schedule.

Securing a business loan with zero revenue is extremely difficult, as lenders need to see a proven ability to repay the debt. Pre-revenue startups may be able to qualify for certain SBA microloans, personal loans, or financing based on a strong business plan and personal financial strength. However, most business lenders require a minimum level of annual revenue (often $100,000+) to be considered.

A prepayment penalty is a fee charged by some lenders if you pay off all or part of your loan ahead of the scheduled term. This fee is designed to compensate the lender for the interest income they would have earned over the full term of the loan. It is crucial to ask if a loan has a prepayment penalty before accepting the offer, as it can limit your financial flexibility.