Bank Business Loan Rates: Are They Really That Low?

When you think about small business loan rates, your mind probably goes to one place: banks. However, recent trends in the business financing industry are changing the game for business owners, opening up new opportunities (without the hassle of dealing with the lengthy bank process).

It’s true: if you compare flat business loan rates, banks will almost always win. But the gap has closed; now, fintech lenders offer highly competitive business loan rates, lengths and terms. 

This change has come as fintech lenders have developed a name for themselves and grown their market share. The primary difference that has helped fintech lenders become a valued resource for small business owners is the qualification requirements.

The Truth About Bank Business Loan Rates

Bank loan rates have dropped slightly since 2020, but the lowest rates are usually reserved for perfect businesses with excellent credit and spotless financial records. You should also take into account that banks are very strict to begin with. Receiving funding at all can be next to impossible. 

However, the central problem still remains: business owners can’t wait around for banks to approve and issue payment. This lengthy process has pushed many business owners to fintech lenders, with more flexible requirements and faster funding processes.

Time vs. Money: Is the Lowest Rate Really the Best Deal?

As a business owner, you need to make cost-effective decisions in all areas – and especially when it comes to financing. The right business financing product could pave the way for a brighter future and a better bottom line.

 When you’re choosing between a bank and a fintech lender, it all comes down to the numbers. 

Qualifying for a low bank loan rate requires a lot of preparation and paperwork. Banks will request piles of paperwork as proof that you’re up to their standards, including:

• A detailed business plan
• An explanation of how you plan to use the loan (and how it will increase profits)
• Legal documents, including licenses, permits and proof of registration
• Business insurance information
• Business and personal credit rating, bank statements and tax returns
• Financial statements, including cash flow, balance sheet, debt schedule and profit and loss
• Details on aging accounts payable and accounts receivable
• Proof of collateral 

In some cases, it can take the better part of a year to compile all these documents. 

After submitting your application and documentation, it takes several months for approval. 

The bank may also request even more information, which delays the process even more.

Instead, Choose the Faster, Readily Available Funding Option

Applying for a loan from a fintech financing company requires only a few documents and some basic information. This may include:

• Proof of identity
• Contact details
• Bank statements

National has a one-page digital application. You can also easily connect your bank account to eliminate the need for paper statements.

Lenders may also perform a credit check if the loan you’re applying for has a minimum FICO score requirement, but only after you’re already pre-approved.

Depending on the type of loan and the technology used in the underwriting process, you could be approved in less than 24 hours. Funding typically arrives in your business bank account within a few days of approval.

However, 24-hour funding is also available from some fintech companies. Certain loan types may take as long as a few weeks to be approved and funded.

While bank loans require numerous documents, online loans have a much simpler qualification process. Beyond bank statements and tax returns, fintech lenders will only request additional documents under unique circumstances.

You can put the hours (or days) you save during the application process toward growing your business—instead of doing clerical work.

Through National’s simplified application and approval process, you can get funding in days, not weeks or months. And, you can put the funds to use right away! Get started by applying now!

About National Business Capital & Services

National Business Capital & Services is the #1 FinTech marketplace offering small business financing and services. Harnessing the power of smart technology and even smarter people, we’ve streamlined the approval process to secure over $1 billion in financing for small business owners to date.

Our expert Business Financing Advisors work within our 75+ Lender Marketplace in real-time to give you easy access to the best low-interest SBA loans, short and long-term loans and business lines of credit, as well as a full suite of revenue-driving business services.

We strengthen local communities one small business loan at a time.

For every deal we fund, we donate 10 meals to Feeding America!

Disclaimer: The information and insights in this article are provided for informational purposes only, and do not constitute financial, legal, tax, business or personal advice from National Business Capital & Services and the author. Do not rely on this information as advice and please consult with your financial advisor, accountant and/or attorney before making any decisions. If you rely solely on this information it is at your own risk. The information is true and accurate to the best of our knowledge, but there may be errors, omissions or mistakes.