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Knowing the costs your business will face can help you find an affordable loan that fits your particular needs. Costs can vary widely between lenders and also depend on factors like your credit score, time in business, revenue and more. New businesses in particular might be in for a long comparison process before the application.
There are two factors that impact how much a business loan costs: the interest you’re charged to borrow a loan and the fees that you need to pay before, during and after the loan process. The combine to create the annual percentage rate (APR), which is the cost of your loan for every year you have a balance.
Interest rate is almost always the main cost of your loan and will depend on a variety of factors. The major influence will be whether your loan has a fixed or variable interest rate. A fixed interest rate remains the same over the life of your loan, while a variable interest rate changes with the market, though lenders usually have a minimum base interest rate you’ll be charged.
The collateral you provide with your loan will also play a role. Unsecured loans, or loans that don’t require any collateral, will generally have higher interest rates than secured loans. This is because lenders face a higher risk when giving out unsecured loans. If you fail to repay, it won’t be able to take the collateral and sell it to recoup its losses.
Your business’s credit score — and your own, if your business is new — will also impact your loan. So will your business plan, revenue, industry and the type of loan you’re seeking. Compare business loan rates to be sure you know the general range lenders charge for interest.
Term loan |
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Line of credit |
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SBA loan |
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Equipment and vehicle financing |
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Business credit card |
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Short-term business loan |
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Cash-flow lending |
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Invoice financing |
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Merchant cash advance |
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Trade financing |
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The type of loan your business needs will influence how the interest rate is charged. There are plenty of things to know about interest before you get started, so read up on them before you start the borrowing process.
You may be able to deduct the cost of interest from your income
Business loans are often amortized, meaning that you pay the same amount each month. Many have a monthly amortization, meaning that you make a repayment on interest and fees each month.
But some come with weekly, bi-weekly or even daily amortization. Ask your lender for an amortization schedule to plan for repayments before signing the business loan agreement.
Taking out a business loan is a big step. By calculating the cost of your loan options, you’ll be in a good position to make a smart borrowing decision that will benefit your business for years to come. However, there are a number of other factors that you need to consider when borrowing a business loan. Read up on how business loans work so you know exactly what to expect when you apply.
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How much fee will it cost me to get a business loan of $50,000 to $100,000?
Hi Crossfaith,
Thanks for contacting finder, a comparison website and general information service.
The fees associated with a business loan depends on on the lender and the product for which you are approved.
On the page you’re viewing, we have a table in which you may go to each lender’s page by clicking the “Go to site” and “More” so you can compare the lenders and so you can make a sound decision on which option that would best suit your needs.
I hope this helps.
Best regards,
Judith