 TITLE: What Is the Average Interest Rate on a Business Loan? CONTENT: Business loans can take different forms, including installment loans, lines of credit, equipment loans and commercial real estate loans. They can work like personal loans that are used for business expenses such as office leases and employee pay. But there are also types of business loans that work a bit differently, such as accounts receivable financing, which is when a business uses the money it's owed as collateral to get a loan.\nSince business loans are borrowed by businesses and not people, the business's finances and credit are what's scrutinized by a lender. These factors help determine if the business qualifies for a loan, how much it can borrow and the rates and terms it's offered.\nA business loan's interest rate can be impacted by:\n*   **The type of financing**: Different types of loans may offer different interest rates. For example, long-term installment loans tend to have lower rates than business credit cards.\n*   **The type of business**: Some businesses are riskier than others, and lenders may take this into account when setting interest rates.\n*   **Time in business**: Lenders may also consider how long the business has been around. Some lenders won't offer financing to new businesses at all, and others may charge new businesses a higher interest rate.\n*   **The business's finances**: You may need to share copies of your business's financial statements—the balance sheet, cash flow statement, and income statement—as part of the application process. A strong financial position could help you qualify for lower interest rates.\n*   **Market interest rates**: Lenders may base their loans' rates, in part, on a benchmark interest rate. As general interest rates rise or fall, new borrowers may receive higher or lower rates on their loans.\n*   **The business's credit**: Businesses can establish and build credit that's separate from the business owner's personal credit. Credit history and scores can impact the ability to get a loan and the rates the business receives.\n*   **The owner's finances and credit**: For many small and new businesses, the owner's personal finances and credit will be a factor when getting a loan. The owner may also need to personally guarantee that the loan will be repaid if the business isn't able to fulfill its obligation. END