Business loan rates
The key points of business loan rates
Business loans often prove an invaluable part of any start up business plan because they provide a fixed, and
often substantial, amount of money. Whereas equity investments may be less stringent and you do not personally need
to make the repayments in the event that your business fails, the business loan gives you access to much needed
cash. You can run your business safe in the knowledge that if your business flourishes more than you had
anticipated you only ever need to repay the agreed business loan rates. Be careful, though, because business loan
rates can vary dramatically from lender to lender and loan to loan.
Interest rates
The main business loan rates that you will undoubtedly concentrate on will be the interest rates offered. These
should be easy to compare and your best options are unlikely to differ wildly from one another. Always try to get
the lowest business loan rates and also ensure that the payment dates suit the cash flow of your company. The
lender should be willing to accommodate a change in repayment dates in order to ensure they receive their
repayment.
Loan fees and upfront payments
When looking at any loan you should look for loan fees or up front payments. These will usually exist in
business loan rates but you should try to get the best deal you can and always make sure you take this figure into
account before completing your application. Ideally you should have details of any loan fees to hand when you are
comparing prices of different loans.
Expect the unexpected
Penalty payments come in many different shapes and sizes. While you should always aim to make all repayments on
time, sometimes the unforeseen does happen. Lenders know this too, and to take advantage and cover themselves for
any incurred costs, they levy small business rates that are only applicable if your payment is late, if you default
on the loan or if solicitors need to be involved. Check all these factors. Ensure that only reasonable fees are
covered in terms of solicitors' costs and late payment charges. Business loan rates include hidden charges as often
as personal loan rates do.
Avoiding prepayment charges
Prepayment charges are business loan rates that are charged in the event that you repay the loan value early. If
business is booming much quicker than expected it makes sense to use some of the profit in order to repay your
loan. You will be subject to fewer business loan rates so it is more cost effective in that respect. Many loans
offer the capability to repay the loan early without incurring any prepayment charges.
Comparing business loan rates
Comparing business loans should be done on a like for like basis. Unfortunately, this isn't always feasible but
you should be able to calculate the potential costs of any loan by considering your intended use and repayment of
the loan. Be realistic when considering this and bear in mind that the unexpected does happen so allow some
contingency in these areas.
|