Finding affordable business financing can be difficult, which makes zero-interest business loans (also called interest-free business loans or 0% business financing) especially attractive. Globally, small and medium-sized enterprises make up about 90% of all businesses but face an estimated $5.7 trillion financing gap. So any chance to access capital at zero cost is beneficial.

True zero-interest loans are rare. You’ll most often find them through nonprofits, local governments, or community lenders that want to make capital more accessible. These programs can help small businesses manage cash flow, fund new equipment, or recover after a setback.

This guide discusses what zero-interest business loans are, how they work, where to find them, and the best alternatives if one isn’t available.

What’s in this article?

• What is a zero-interest business loan?
  
• How do zero-interest business loans work?
  
• What types of zero-interest business loans are available?
  
• How can I qualify for a zero-interest business loan?
  
• What are the best alternatives to zero-interest business loans?
  
• What are the pros and cons of zero-interest business loans?
  
• How Stripe Capital can help
  

What is a zero-interest business loan?

A zero-interest business loan lets you borrow money without paying anything extra. Borrow $10,000, then repay $10,000.

Traditional lenders make money from interest so true 0% loans usually come from mission-driven groups or as short-term promotions. Some lenders might charge a small administrative fee or limit the loan amount, but a genuine zero-interest loan won’t add hidden costs or surprise you with “deferred interest” later.

Because they’re often part of targeted programs, these loans tend to go to businesses that meet specific criteria, such as those in certain communities or industries.

How do zero-interest business loans work?

Zero-interest loans are possible because someone else is covering the cost. Maybe it’s a nonprofit that’s using grant funding, a city that’s using economic development money, or a private company that’s offering 0% financing as a way to support or attract small businesses.

Because the lender isn’t earning interest, these loans are often short-term and small (e.g., up to $15,000). Usually, these loans are meant to cover a gap or kick-start growth. The lender might charge a one-time administrative fee or ask you to take part in mentorship or training programs, and that’s how they keep the model sustainable.

In these scenarios, read the fine print. Some “zero-interest” loans are really deferred-interest deals or promotional credit cards. Those agreements are interest-free for a few months, then the interest rate gets sharply higher after that. True zero-interest loans never accrue interest.

What types of zero-interest business loans are available?

True zero-interest business loans don’t usually come from banks. Instead, businesses need to look for opportunities from the following types of lenders:

• Government and economic development programs: Government-backed zero-interest loans tend to be for moments of need, such as after disasters or downturns. The Florida Small Business Emergency Bridge Loan Program, for example, provides 0% loans after hurricanes so companies can stay afloat while they wait for insurance or longer-term financing. These loans are typically small, short-term, and meant to stabilize operations, not replace long-term credit.

• Nonprofits and community-based lenders: Mission-driven lenders are often the most consistent source of real 0% financing. Applicants need decent credit and a guarantor, but not collateral.

• Crowdfunded and peer-based options: Platforms like Kiva have reimagined interest-free lending through crowdfunding. Entrepreneurs can borrow at 0% interest, funded by hundreds of small individual lenders. Repayment terms usually range from about 12–36 months, and every dollar you pay back goes directly to those community lenders.

• Corporate and private initiatives: Sometimes, private companies offer 0% financing as part of their social impact work or customer programs. During the pandemic, for instance, Owl Rock Capital launched a $5 million initiative to provide interest-free loans to minority-owned small businesses. Other companies use 0% financing to help customers buy equipment or inventory.

How can I qualify for a zero-interest business loan?

Because many zero-interest loan programs exist to serve specific communities or goals, the requirements vary.

Here are some aspects to keep in mind:

• Location: Many of these programs are local. To qualify, your business usually needs to operate within a particular city, county, or region. Always check whether your business fits the geographic boundaries.

• Credit and documentation: Even without interest, lenders want assurance that you can repay. Some require a minimum personal credit score. Others skip credit checks entirely but review your business activity and repayment potential.

• Community ties: Mission-driven lenders often look for social credibility as much as financial data. Kiva, for instance, asks borrowers to show early support from their networks before they launch campaigns. Others might mandate references, mentoring participation, or a basic business plan that explains how you’ll use the funds.

Qualifying for a 0% loan is about showing local engagement and the ability to fulfill your promise to repay.

What are the best alternatives to zero-interest business loans?

Because true 0% business loans are rare and might require specific traits, the next best option is to find financing that keeps your costs as low and predictable as possible.

Here are a few solid options:

• Government-backed loans: Many governments offer loans with favorable terms for small businesses, either with lower rates or longer repayment periods.

• Business grants and competitions: Grants are basically free funding since you don’t repay them. They’re usually offered by governments, corporations, or foundations for specific purposes such as improvement and support for underrepresented entrepreneurs. They can take time and paperwork to apply for. But if you qualify, you keep every dollar. Pitch competitions work similarly, with cash prizes for standout business ideas and no repayment requirement.

• Business credit cards with 0% introductory APR: Many business credit cards offer 0% annual percentage rate (APR) on purchases or balance transfers for the first 6–18 months. When it’s used strategically, that period can function like a short-term, interest-free loan. Pay the balance in full before the promotional period ends, or you’ll face a higher standard interest rate afterward. It’s an efficient way to spread out large purchases, if your cash flow is steady.

• Revenue-based financing: Stripe Capital, for example, gives eligible businesses up-front funding with no interest or compounding charges. They pay a single, flat fee agreed to at the start. Repayments come automatically as a fixed percentage of your daily sales, and they adjust with your revenue so you never overextend. For businesses that want flexible financing without the difficulty or cost of interest-bearing loans, this model can be a practical, transparent alternative.

What are the pros and cons of zero-interest business loans?

Zero-interest business loans come with trade-offs. Weigh the following factors in advance to determine whether these loans are the right opportunity.

Pros

• No interest costs: You repay only what you borrow.

• Lower debt burden: You can reduce overall repayment stress and avoid debt accumulation over time.

• More inclusive qualifications: Many 0% financing programs focus on community impact, not credit scores alone.

• Purpose-driven support: Some programs target specific needs such as disaster recovery, local job creation, and minority entrepreneurship.

Cons

• Limited availability: Genuine 0% loans are rare and often limited to specific locations or groups.

• Smaller loan amounts: Many cap at $10,000–$50,000, which might not cover larger expenses or expansion plans.

• Short repayment terms: These loans often require repayment within months or a couple of years. That means businesses need a steady cash flow.

• Extra conditions: Some programs mandate guarantors, mentoring sessions, or training participation as part of the deal. That might be valuable, but it’s also time-consuming.

How Stripe Capital can help

Stripe Capital offers revenue-based financing solutions to help your business access the funds it needs to grow.

Capital can help you:

• Access growth capital faster: Get approved for a loan or merchant cash advance in minutes—without the lengthy application process and collateral requirements of traditional bank loans.

• Align financing with your revenue: Capital’s revenue-based structure means you pay a fixed percentage of your daily sales, so payments scale with your business performance. If the amount that you pay through sales doesn’t meet the minimum due each payment period, Capital will automatically debit the remaining amount from your bank account at the end of the period.

• Expand with confidence: Fund growth initiatives such as marketing campaigns, new hires, inventory expansion, and more—without diluting your equity or personal assets.

• Use Stripe’s expertise: Capital provides custom financing solutions informed by Stripe’s deep expertise and payment data.

Learn more about how Stripe Capital can fuel your business growth, or get started today.