Business Funding Rates & Cost Guide
Understand what business funding costs before you apply. Compare APRs, fees, and total costs across every major funding product.
How Much Does Business Funding Cost?
Typical ranges as of 2024:
| Funding Type | Typical APR / Rate | Term Length | Best For |
|---|---|---|---|
| SBA 7(a) Loan | 9.75%–13.25% variable, up to 14.75% fixed | 5–25 years | Long-term growth & real estate |
| Term Loan | Prime + 2% APR | 1–5 years | One-time investments & expansion |
| Line of Credit | Prime + 2% APR | Revolving | Working capital & cash flow |
| Revenue Based Funding | Based on monthly revenue | 2–7 years | Asset purchases & upgrades |
| Invoice Factoring | 1%–5% per invoice | 30–90 days | Cash flow gaps |
| PO Financing | 1.5%–6% per month | Per order | Large orders & contracts |
Source: SBA.gov Loan Programs; Federal Reserve Small Business Credit Survey, 2024.
Understanding the True Cost
Interest rate is only one component. These factors also affect your total cost:
APR vs. Factor Rate
Traditional loans quote APR. Short-term funding and MCAs use a factor rate (e.g., 1.2–1.5) that multiplies the advance amount. A $100K advance at 1.3 costs $130K — equivalent to 50%+ APR depending on term.
Origination Fees
Many lenders charge 1%–5% of the funded amount. SBA loans may include 2%–3.75% guarantee fees. These fees are often rolled into the loan.
Prepayment Penalties
SBA 7(a) loans have a prepayment penalty if paid within the first 3 years. Many alternative lenders do not discount for early payoff.
Collateral Requirements
Secured loans typically offer lower rates. Unsecured products carry higher rates to offset risk.
Frequently Asked Questions
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