What Will Financing Actually Cost You?
There's no single business loan rate — the number a lender leads with is rarely the number that matters. Here's how pricing actually works, and how to compare two offers correctly instead of chasing one headline figure.
There's no single business loan rate.
Cost depends on the financing product, your business profile, how much you're borrowing, the term, the repayment structure, and the individual lender — not one universal number. Two businesses can reasonably be quoted very different figures.
Rate ≠ Total Cost.
The number a lender leads with is rarely the number that matters. Two offers with the same headline rate can cost very differently once fees and term are counted — and two offers that look nothing alike on the surface can end up costing about the same. The rest of this page is about learning to see total cost, not just the headline.
Rates and fees vary by lender and by business, and any figures shown on this page are illustrative examples — not offers, quotes, or current market pricing. Your actual terms are determined during underwriting and disclosed in full before you accept.
Interest rate, APR, and factor rate aren't the same thing
These three terms get used loosely, but they measure different things — and mixing them up is the single easiest way to misread an offer.
Interest Rate
The rate charged on the amount you currently owe. On its own, it doesn't account for fees — so it can understate what borrowing actually costs.
APR
Annual Percentage Rate. Annualizes the cost of borrowing and, in many structures, folds in certain fees — which is why it's a better comparison tool than the interest rate alone. It doesn't necessarily capture literally every possible cost in every financing structure.
Factor Rate
A flat number like 1.20, multiplied once against what you borrow to get total repayment. It is not an annual rate, and reading it as one is the most common pricing mistake on short-term financing.
The origination fee doesn't lower your payment — it lowers what actually lands in your account. The same payment stream on a smaller amount received works out to a higher annualized cost than the stated rate alone suggests. That gap is the entire reason APR exists as a comparison tool.
Illustrative example only — not a Fundur quote, lender quote, or current market pricing. Actual rates, fees, and APR depend on the lender and your business.
How a factor rate actually works
Factor rates show up on working capital and other short-term products. The math is simple — but reading the result as an interest rate is where it goes wrong. The factor rate calculator converts one into a true APR.
| Repaid over | Financing cost as a share of principal | Simplified annualized estimate |
|---|---|---|
| 6 months | 20% | ≈ 40% |
| 12 months | 20% | ≈ 20% |
The estimate above is (financing cost ÷ amount borrowed) ÷ (term in years) — a simplified way to see why timing changes the annualized cost of the same $10,000 charge, not a precise APR calculation. Daily or weekly automatic repayment can push the real figure higher still. It isn't a substitute for asking a lender directly what the APR-equivalent works out to.
Illustrative example only — not a Fundur quote or current market pricing.
A longer term lowers your payment — and raises your total cost
Lower payment doesn't necessarily mean cheaper financing. Higher payment isn't automatically worse. The trade-off is real — here's what it looks like in numbers.
Illustrative example: $100,000 at a fixed 8% APR, fully amortized. The 60-month term costs $8,847 more in total interest to save $1,106 a month. Neither is universally "better" — it depends on whether your business needs the lower payment more than it needs the lower total cost. Real rates, fees, and available terms vary by product and lender — see each product page for what's actually offered.
Daily
Common on some short-term and factor-rate structures. Fits businesses with a steady daily cash rhythm; can feel intrusive against uneven daily deposits.
Weekly
A middle ground between daily and monthly. Tends to suit businesses whose revenue collects in a weekly or biweekly rhythm rather than daily or monthly.
Monthly
The standard for traditional term loans. Fits businesses whose revenue collects mostly around once a month — many B2B invoicing and contract-based cycles.
No frequency is universally better — the question is whether the withdrawal rhythm matches how your revenue actually arrives. A company collecting mostly monthly can experience frequent withdrawals very differently from one generating steady daily deposits.
Fees you may encounter — and what to ask
Not every lender or product charges every fee below. This is what to check for when you review an offer, not a universal fee schedule.
| Fee | Where you may see it | What to ask |
|---|---|---|
| Origination fee | Term loans, working capital loans, some lines of credit | "Is this deducted from what I receive, or billed separately?" |
| Draw fee | Lines of credit, charged when you draw funds | "Is there a fee every time I draw, or only on the first one?" |
| Maintenance / unused-line fee | Lines of credit, on undrawn capacity | "Is there a cost to keeping the line open if I don't use it?" |
| Closing / packaging costs | SBA loans, larger term loans | "What closing costs are rolled into the loan versus paid upfront?" |
| Late fee | Most products | "What happens if a payment is late or missed?" |
| Prepayment fee or discount | Term loans, SBA loans | "Is there a penalty for paying early — or a discount for it?" |
| Factoring fee (discount rate) | Invoice factoring, charged for each period the invoice is outstanding | "Is the fee flat, or does it increase the longer the invoice ages?" |
| Government guaranty fee | SBA loans only, set by the federal program | "How does the current SBA guaranty fee apply to my loan size?" |
| Underwriting fee | Some term loans and larger requests; sometimes bundled into closing costs | “Is underwriting charged separately, and is it refundable if the loan does not close?” |
| Documentation / administration fee | Some term loans, equipment financing and lines, charged for preparing the agreement | “What does this cover, and is it a flat amount or a percentage?” |
| ACH / payment-processing fee | Some daily- or weekly-repaid products, added to each automatic debit | “Is there a charge on every payment, and is it included in the APR you quoted?” |
| Application fee | Uncommon on online products; more usual at banks and on SBA loans as part of packaging | “Is anything payable before a decision, and is it credited back at closing?” |
| Annual or renewal fee | Lines of credit, at each anniversary or renewal review | “What does it cost to keep the line for a second year, and can the limit change at renewal?” |
| Broker or success fee | Where an intermediary arranges the financing | “Who pays you — me or the lender — and how much, in writing?” |
Origination fee
Draw fee
Maintenance / unused-line fee
Closing / packaging costs
Late fee
Prepayment fee or discount
Factoring fee (discount rate)
Government guaranty fee
Underwriting fee
Documentation / administration fee
ACH / payment-processing fee
Application fee
Annual or renewal fee
Broker or success fee
Two ways to read this table. Fees in the top half are structural — they follow from how a product works — and the ones below the guaranty fee are the smaller charges that most often go unmentioned until the agreement arrives. None of them is universal, and a lender that charges several small ones is not necessarily dearer than one that charges a single large one: add every fee to the interest or factor cost and compare the total, which is what the checklist further down is for. Where a fee is deducted from the amount advanced rather than billed, it raises the effective APR exactly as the origination example above shows.
"Which product has the lowest rate?" is often the wrong first question
The six products are priced and repaid differently by design — comparing headline rates across them isn't apples to apples. Comparing how each is priced and repaid is more useful.
Working Capital Loan
Business Line of Credit
Business Term Loan
Equipment Financing
Invoice Factoring
SBA Loan
The rate ranges you will actually see published, by product
Six products, six different kinds of number. Every figure in this table is either a Federal Reserve survey median for bank lending or a range already published on the matching Fundur product page, so you can see the shape of each market before you read an offer against it. None of it is a quote.
| Product | How it is priced | Ranges you will see published | What moves your number |
|---|---|---|---|
| Business term loan | Fixed interest rate on an amortising balance | Bank-originated, Q3 2025 medians: 7.10–7.76% across fixed and variable, urban and rural. Non-bank lenders price above bank rates and the spread between them is wide; the illustrative example on the term loan page uses 8.9% APR. | Term length, credit profile, whether it is secured, and which kind of lender is quoting. |
| Business line of credit | Variable: a published index plus a margin, on the drawn balance | Bank-originated, Q3 2025 medians: 6.99–7.91%. The index-plus-margin example above runs 8.75–12.75% on the same index with a 2% and a 6% margin. | The margin the lender sets for you, moves in the index, how long a draw stays out, and any unused-line fee. |
| Working capital loan | Interest rate or a factor rate, repaid weekly or monthly | Factor-priced offers are quoted as a multiplier, not a rate. The worked example on the working capital page — a 1.30 factor on $50,000 — is roughly 35% APR over 18 months and roughly 97% over 6, for the same $15,000 cost. | Term and payment frequency dominate; on a factor-rate product the dollars are fixed and the APR moves with the term. |
| Equipment financing | Fixed rate, secured by the equipment itself | Published tiers on the equipment financing page, 2026: about 7–12% for strong credit and an established business, about 12–20% for an average profile, about 20–30% for weaker credit or older, specialised assets. | Age and type of equipment, down payment, term, and whether the asset holds resale value. |
| Invoice factoring | A factoring fee per period the invoice is outstanding, not an interest rate | Commonly about 1–4% of the invoice value per 30 days it stays unpaid, as published on the invoice factoring page. | Your customers' credit, invoice volume, and how long your customers actually take to pay. |
| SBA 7(a) loan | A base rate (usually Prime) plus a spread the lender sets within SBA's cap | The caps step down with loan size: currently from 13.50% on loans of $50,000 or less to 10.00% on loans over $350,000, with the lender free to price below the cap. | Loan size sets the cap, the lender sets the spread, and the federal guaranty fee is charged separately. |
Business term loan
Business line of credit
Working capital loan
Equipment financing
Invoice factoring
SBA 7(a) loan
Sources: bank medians are from the Federal Reserve Bank of Kansas City, Small Business Lending Survey, third quarter 2025 (released 18 December 2025), reporting median interest rates on new small business term loans and lines of credit at urban and rural banks; they describe bank lending, not the non-bank products most fast financing comes from. Product ranges are as published on Fundur’s own equipment financing, invoice factoring, working capital loan and SBA rates and fees pages, and are illustrative — not a Fundur quote, a lender quote, or current market pricing. Your rate is set in underwriting and disclosed in full before you accept.
A line of credit is the one product on this page whose rate normally moves. It is usually quoted as a published index plus a margin the lender sets for your business — so two businesses on the same index can be paying very different rates, and both of their rates change when the index does.
| On $25,000 drawn for 5 months | Rate | Interest cost |
|---|---|---|
| Index 6.75% + a 2.00% margin | 8.75% | $911 |
| Index 6.75% + a 6.00% margin | 12.75% | $1,328 |
Same lender, same index, same draw — $417 apart because of the margin alone. And because the index floats, a one-point move in it changes the cost of that same draw by about $104. Interest here is calculated on the drawn balance for the time it is drawn (balance × annual rate × time), which is how a line actually accrues.
Three things follow, and they are the reason a line's headline rate compares badly with a term loan's. Interest generally accrues only on the drawn, outstanding balance — so how much you draw and for how long moves your total cost more than the rate does. Other fees vary by lender and agreement, and may include fees associated with unused or undrawn capacity; the fee table above lists the ones worth asking about. And a variable rate means the number you are quoted at signing is the number today, not for the life of the facility.
Questions worth asking in writing: which index the rate is tied to, what the margin is, how often the rate can reset, whether there is a floor or a cap, and what it costs to keep the line open in a month when you do not draw on it. See how a business line of credit works, or put a line against a lump sum to see what the same money costs under each structure.
Illustrative example only — not a Fundur quote, a lender quote, or current market pricing. Index values move; margins are set case by case.
If you qualify, what can affect the economics?
Business Loan Requirements answers whether you qualify. This is about what happens to your price once you do — the factors lenders weigh when setting your specific rate or fee, not whether you clear the door.
How heavily each factor counts varies by product — see Business Loan Requirements for how lenders weigh them.
How credit quality moves the price — without a rate for every score
There is no honest table of “620 = this rate, 700 = that rate” for business financing, because the score is not what a lender prices. What credit quality mostly decides is which kind of lender will look at the file, and the gap between lender categories — a bank median against a non-bank factor rate in the ranges above — is far wider than the gap between two scores at the same lender. Within a category, credit then nudges the offer along that lender’s range, and it is usually one dimension that moves first.
| Credit profile | What usually changes first | What can offset or worsen it |
|---|---|---|
| Stronger credit | Access first, then price: the lowest-cost categories — banks, credit unions, government-guaranteed lending — come into reach, and within any lender the offer sits toward the bottom of its range. Fees are more often negotiable. | A short operating history, thin or lumpy deposits, a large request relative to revenue, or a specialised asset can still push the offer toward non-bank pricing. Strong credit does not substitute for cash flow. |
| Mid-range credit | The lender category more than the rate. Most bank pricing is harder to reach, so the realistic market is non-bank and marketplace lenders, where the same profile is priced on the banking rather than on the score. Expect a higher rate or factor, a larger origination fee, or a shorter term — usually one of them first, not all at once. | Steady deposits, a clean recent stretch with no negative days, collateral or an asset being financed, and a modest request all pull the price down; existing daily or weekly drafts and a declining trend push it up. |
| Weaker credit | The amount and the term change before the rate does: a smaller advance, a shorter term, more frequent payments, and more often a factor rate than an interest rate. The product itself may change — toward invoice- or asset-backed structures where the score carries less weight. | An invoice from a creditworthy customer or a financeable asset moves the price more than a few points of score; disclosed and well-serviced existing obligations count for more than the mark that caused the score. Stacking a second short-term position on a first is what makes weak credit expensive. |
Stronger credit
Mid-range credit
Weaker credit
“Stronger”, “mid-range” and “weaker” are deliberately not tied to score numbers: the bureaus and the scoring models draw their bands differently, lenders use different models, and the same score reads differently beside different bank statements. The one figure that is published by tier on this site — equipment financing’s three credit bands in the ranges table above — is published there precisely because the asset, not the score, anchors that product. For what an imperfect score does to an offer in more detail, and which structures weigh it least, see business loans for bad credit.
Compare the economics, not just the headline rate
Before accepting an offer, put these side by side. If a lender can't answer one of them clearly, that's worth noting on its own.
- Amount actually received
- Total repayment amount
- APR, where applicable
- All fees, itemized
- Term length
- Payment amount
- Payment frequency
- Prepayment treatment
- Collateral or guarantee required
Illustrative example, both offers at $100,000 and a fixed 8% APR — only the term differs. Real offers usually differ on rate and fees too, which is exactly why comparing every dimension above matters more than comparing any single number.
Ask about prepayment before you need the answer
The right answer differs by structure — the only mistake is assuming one without asking.
- Is there a prepayment penalty?
- Does paying early actually reduce the interest I owe?
- On a factor-rate product, is the full financing charge still owed even if I pay early?
- Is there an early-payoff discount?
- Exactly how is my payoff amount calculated on the day I pay?
On most interest-based loans, paying early can reduce what you owe in interest. On a factor-rate product, total repayment is often fixed once the factor is applied, so paying early doesn't automatically save money unless the lender explicitly offers a discount. Don't assume either way — ask. If the reason you are asking is that you want to replace the loan, refinancing a business loan shows how a prepayment charge and an origination fee decide whether the new loan actually saves money.
See what a specific amount and term would actually cost
Run your own numbers instead of eyeballing an offer.
A few more things people ask.
What is a good interest rate for a business loan?+
There's no single number that qualifies as "good" across every product, lender, and borrower profile — the honest comparison is total cost, not a headline rate in isolation. Instead of chasing one number, use the framework on this page: total repayment, APR where applicable, fees, and term together tell you what an offer actually costs.
Is APR the same as interest rate?+
No. The interest rate is the cost charged on what you still owe. APR annualizes borrowing cost and, in many cases, folds in certain fees — which is why a stated interest rate and the APR on the same offer can differ.
Is a factor rate the same as APR?+
No, and they aren't directly comparable at face value. A factor rate is a flat multiplier applied once to the amount borrowed, not an annualized rate. The same factor rate can represent very different annualized costs depending on how long you have to repay it.
Are business loan fees negotiable?+
Sometimes — it depends on the fee, the lender, and your profile. Origination fees in particular can vary between offers for the same amount. The reliable approach is to ask directly rather than assume any fee is fixed.
Does paying off a business loan early save money?+
It depends on the structure. On most interest-based loans, paying early can reduce the interest you ultimately owe. On a factor-rate product, the total repayment is often fixed once the factor is applied, so paying early doesn't automatically save money unless the lender explicitly offers an early-payoff discount. Always ask before you assume either way.
Are business loan rates fixed or variable?+
Both exist. A fixed rate stays the same for the life of the loan, which is what makes the payment predictable. A variable rate is tied to a benchmark and can move over time, which changes the payment or the total cost as the benchmark moves. Which one applies depends on the product and the specific offer.
Does checking my financing options affect my credit score?+
Checking your options with Fundur won’t affect your credit score. A lender may run its own credit check before funding, which may affect your score.
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