What are business loan rates and which bank is cheapest?
Secured business loans run 10–15% a year, unsecured 14–22%, and state subsidised loans about 5%. The cheapest bank is the one where your business turnover sits, since it prices the risk lower. A credit line (interest only on the amount used) suits working-capital needs; an investment loan suits equipment. Current bank offers are compared below.
Unlike consumer loans, business loan rates are set individually: the bank assesses turnover, sector, collateral and term and then quotes, so the advertised figure is only a starting point. The same entrepreneur can get offers 3–5 points apart from three banks. This page covers the factors that set the rate, the differences between product types and the arguments for negotiation.
What you need
- 1 Turnover visible at the bank (6–12 months); the factor that affects the rate most
- 2 Collateral type: real estate gets the lowest rate, equipment and inventory higher
- 3 Purpose: investment (long term, lower rate) or working capital (short term, credit line)
- 4 For comparison: effective rate, fee, collateral valuation and insurance costs
Bank offers that fit this case
| Bank | Loan | Rate | Term | |
|---|---|---|---|---|
Yelo Bank
|
Yelo Bank Biznes Kredit | 8.9% | 59 mo. | Details |
Unibank
|
UniBank Biznes Kredit | 9% | 60 mo. | Details |
Rabitəbank
|
Rabitəbank Biznes Kredit | 10.5% | 48 mo. | Details |
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Kapital Bank
|
Kapital Bank Biznes Kredit | 12% | 60 mo. | Details |
ABB Bank
|
ABB Biznes Kredit | 15% | 48 mo. | Details |
Access bank
|
AccessBank Biznes Kredit | 18% | 48 mo. | Details |
Expressbank
|
Expressbank Biznes Kredit | 15% | 48 mo. | Details |
Sample calculation
Estimated figures for 30 000 AZN over 36 months at ~8.9% effective rate. The exact number depends on the bank.
How to apply?
What to watch for?
- ✓ Show a competitor bank's written offer to your main bank; business loan rates are negotiable.
- ✓ Take a credit line for working capital, not a lump-sum loan: do not pay interest on money you are not using.
- ✓ Offering real estate as collateral can cut the rate by 3–5 points, but it also raises your risk.
- ✓ Watch the fee: a 1–2% arrangement fee significantly raises the effective rate on a short-term loan.
Frequently asked questions
How does a credit line differ from an overdraft?
An overdraft allows a negative balance on the current account, is short (30–90 days) and repays automatically; a credit line runs longer and is drawn in tranches. In both, interest is charged only on the amount used.
Is the business loan rate fixed?
In most contracts yes; some large, long-term loans may carry a variable rate tied to the Central Bank's refinancing rate; check the contract.
Can a business loan be repaid early?
Yes, but unlike consumer loans, business loans may carry an early repayment fee (usually 1–2%); check the contract.
Related questions
Useful links
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