Compare Small Business Loans - BUYERS GUIDE 2017
How Much Does a Small Business Loan Repayment Plan Cost and What to Look For:
The cost of business loans is dependent on the size of the loan that you take out, and the total cost in fees and interest paid over the life of the loan could range from as little as $1000 to as high as $100,000 or more, along with an interest rate averaging prime + 2.5%. The factors are simply too diverse to provide a hard price estimate of how much obtaining a business loan will cost. However, by understanding what to look for in a loan, you can find strategies to reduce the total amount the loan will eventually cost you.
Compare Small Business Loan Pricing
Getting a business loan provides the key that makes business growth and expansion possible. However, if the fees and interest rates are too high, the loan may bring about your company’s downfall rather than lead to it’s flourishing. This makes shopping critically for a loan provider so important. The most important factor is securing the lowest interest rate possible, but there are other considerations that should also go into selecting your loan product. In many situations, the best interest rates will be found by using loans that are backed by the Small Business Administration. These loans often require a very good credit history, a prolonged application process and a strong financial track record.
Examine the minimum loan amounts available when shopping for a loan provider. Because lenders are trying to make as much money from their clients as possible, some may have very high minimum lending amounts, even ranging as high as $500,000. This is often much more money than a small business needs to borrow, so shop around until you find a provider that offers loans in the range that you require.
Also ask about the fees, administration or closing costs that accompany your loans. Some providers may not charge any fees at all, and federal regulations will typically keep them low on SBA backed loans. However, there is some variance, and saving yourself money in fees up front can help you pay back your loan all the quicker.
What You Can Expect to Pay for Your Business Loans
The cost of a business loan is very difficult to predict. On a small loan, you may end up paying a few hundred dollars in fees and a few hundred more in interest. On the other hand, multi-million dollar loans could have fees that stretch well over $2000, and the interest will be thousands more over the lifetime of the loan. Ultimately, the interest rate you find will be the final arbiter of how much your business loan ends up costing you.
From start-up businesses in the earliest planning stages to established companies looking to expand, all types of companies take out loans. Commercial lending can be used for the upfront initial expenses, financing the ongoing business operations, or major investments in office equipment. After qualifying for a small business loan, businesses will monthly payments that include a portion of the principal, or the original amount borrowed in addition to interest to the financial institution.
If you're business is seeking for a loan, there are several steps to take before applying. Lenders will require you to prove your commitment to the business and demonstrate that you can repay money you borrow: they're in the commercial loan business to make money, not to provide a lending solution to struggling business owners.
It's also important to know that commercial loan applications you submit will be reported on your credit record - if you're turned down by any lender, the next one will know that you were declined a loan already, which can reduce your chances of securing funding. With that said, you should make sure to do everything you can the first time to illustrate your ability to pay the loan back.
Small Business Loans Sample Costs
Below are a few examples of prices for Small Business Loans which will give you an idea how much you will pay for your purchase.
- $150k to $5m average Loan Size
- Prime + 2%-2.75% average Interest Rate range
- Down Payment is generally between 10% to 20%
- 15x to 1.25x typical Debt Service Coverage Ratio
- Hold Back Rate is usually 10% to 20%
Save on Business Loans and Compare Up To Five Competitive Quotes