Commercial Financing Rates and Costs

When shopping for commercial financing, avoid focusing too closely on costs. On a loan of tens or hundreds of thousands of dollars, a difference of $50 or $100 per month will have little impact on your business, so you should choose the commercial financing that best matches your needs and seems the most trustworthy, instead of the lowest cost provider.

Business owners who aren't familiar with commercial financing tend to have unrealistic expectations when comparing interest rates, usually because they try to equate extremely low home mortgage rates to business loans. Banks are willing to offer 6% rates on home mortgages because the home itself will always be there and is almost guaranteed to go up in value, so their investment is fairly well guaranteed.

That's just not the case with businesses. Businesses can fall in value or even go bankrupt. To compensate for those additional risks, lenders have to charge more for commercial financing. Typical rates right now range from 8% to 14% - but you will always find higher and lower rates. In some cases, you won't even be quoted an exact interest rate. Instead, the lending company will simply tell you what your total monthly payments will be, including all fees and interest.