When it comes to determining the cost of a small business loan, it depends on a number of different factors; the amount you’re looking to borrow, payment schedule and the type of small business loan you intend to apply for.

No matter what type of loan you are seeking, you are going to want to know exactly how much it will cost in the end. Knowing the true cost will allow you to make the right decision for you and your business.

Different Costs to Consider when Getting a Loan

Interest rates are standard costs associated with every type of loan. Interest rates vary based on the product, and the business qualifications. Time in business, annual revenue and credit score usually play a part in determining the final rate you will pay. The lower the interest rate, the lower the cost of the loan.

Not all interest rates are quoted the same way - a simple interest rate is an amount that a lender will charge on the principal only. An APR interest rate includes simple interest as well as fees that the lender will be charging you.

In addition to the interest you will pay on your loan, depending on your lender, you’re likely to encounter other fees tacked on to the final cost such as

  • Documentation fees
  • Origination fees
  • Loan processing fees
  • Account maintenance fees
  • Guarantee fees
  • Prepayment penalties
  • Late Payment Fees

Not all fees are associated with every loan, and the costs are dependent on the lender.

Fees can significantly affect the price of a loan. It’s important to investigate exactly what the fees are so you feel comfortable with what you are being charged with.

How Much is a Business Line of Credit

Rates on a business line of credit vary from 7% to 80%. Mainly because they function differently from a term loan. On a term loan, you are charged interest on your total loan amount. On a business line of credit, you are only charged interest on the amount you draw from your credit line.

Fees also may be different on the total cost of a line of credit. Some lenders draw a fee each time you pull from your line, some may charge a fee if you do not draw within a certain period of time, and others may charge a fee just to keep the account active.

How Much is Equipment Financing

When it comes time to purchasing equipment for your business, and you do not want to deplete your bank account to do so, equipment financing may be a better option.

With APR ranging 8%-30%, the actual rate you will pay depends on the cost of the equipment, and your qualifications (time in business, annual revenue and credit score). The cost structure of an equipment financing deal is straight forward, you finance the full piece of equipment and repay the interest and principal over the fixed terms. The equipment is used as collateral, and once the payback period is complete, you will own the equipment outright.

How Much is a Merchant Cash Advance

Merchant cash advances can provide the most flexibility for business owners due to their structure but can sometimes be costly.

Merchant cash advances isn’t technically a loan, but rather a cash advance that is paid back by withdrawing a percentage of your credit card sales (typically on a daily basis). Since your payback is based on your sales, the more credit sales a business does the faster they are able to repay. This comes in handy for some business owners as well during slower periods of time for the business since the payback is reflective of the incoming cash flow, however in those cases it can take a longer time to repay the loan.

How Much is an SBA Loan

A Small Business Administration (SBA) Loan is one of the more affordable loan products out there. Determining the rate of an SBA loan is determined by the current prime rate plus points added by the lender. The SBA provides guidelines on the maximum rate they are allowed to charge on top of the prime rate.

The ARP on an SBA loan is typically 7% to 8%. The SBA does charge a small fee for guaranteeing the loan. That fee depends on the loan amount. For loans up to $150,000 the fee is waived, for loans greater than $150,000 the fee will depend on the length of the loan.

SBA loans tend to be more affordable because they are a true bank products (which tend have better rates) and because they are guaranteed by the government, it lowers the risk for traditional intuitions. On the downside, SBA loans can take months to be approved and processed, leaving some business owners strapped for cash or missing opportunities due to the long processing time.

If you are looking for an SBA loan, ROK Financial has direct access to lenders that provide an expedited process to fast track your SBA Loan. We offer competitive rates to cover working capital and growth expenses.


The answer to "How much is a small business loan?" varies based on the type of financial product- among other things.

When you are looking for business financing, you want to make sure that you understand any costs that your business may incur throughout the borrowing process. ROK Financial's Business Financing Advisors will help you find the right product for you and your business. Not only the financing you need, but the business financing you can afford.

To learn more, complete our simple 1-minute application to speak with an advisor today!

About the Author, Madison Taylor

Madison Taylor is the Brand Ambassador at ROK Financial. She is responsible for raising brand awareness and business relationships with business owners across the country. Madison loves that she plays a small role in getting Business Back To Business Through Simple Business Financing and looks forward to hearing what you think about the blogs she creates! Madison has been working in the financial space for six years, and loves it! When she is not at work, you will find her at home learning a new recipe to test out on her family or going on new adventures with her friends.