What type of loans typically have lower interest rates due to government backing?

SBA loans, or Small Business Administration loans, are designed to support small businesses and are backed by the government. This government backing reduces the risk to lenders, which allows them to offer lower interest rates compared to conventional loans or other types of financing.

The support from the SBA means that lenders have a higher level of security and may be more willing to provide loans to borrowers with less established credit histories or weaker financials, which can be common among small businesses. This corresponds to more favorable terms for borrowers, including reduced interest rates.

In contrast, conventional loans are typically issued by private lenders and do not have government backing, which often results in higher interest rates. Private loans usually come from non-bank financial institutions or individuals and may carry higher rates due to the risk assessment of the lender. Home equity loans, while potentially offering attractive rates, are dependent on the equity in an individual’s home rather than being specifically structured to support small businesses like SBA loans are.