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SBA 7(a) loans are partially guaranteed by the Small Business Administration, which reduces lender risk and typically results in lower interest rates (typically 1-2% below conventional term loans). However, they require more paperwork and take longer to process. Term loans are conventional bank loans with faster approval but higher rates.

A business line of credit gives you access to funds up to a credit limit, and you only pay interest on what you draw. It works like a credit card for your business — ideal for managing cash flow gaps or unexpected expenses. Interest rates are typically higher than term loans (usually 2-4% above prime).

As of 2026, SBA 7(a) loans typically range from 7-10% APR, conventional term loans from 9-15%, and lines of credit from 10-20%. Rates depend on your credit score, time in business, revenue, industry, and collateral. Startups and businesses with less than 2 years of history typically pay higher rates.