What factors to consider when shopping for a business loan?
When you’re making your final decision, there are some factors worth considering that may go beyond what you’ll find on our small business loan calculator. Look for and pay close attention to:
The loan’s terms
Pay close attention to the terms of the loan. They determine your repayment expenses. Longer terms can offer you more flexibility, but they often mean a higher total cost of borrowing.
Pay close attention to the loan agreement and ask questions until you are certain you fully understand all fees that your loan comes with. For example, you can ask if the loan comes with an “origination fee” or an “administrative fee”. Will the lender charge an extra fee for NSFs. There may also be a fee applied if you decide to repay your loan too early. Consider these costs when determining the full cost of a business loan.
Different financing products are repaid differently. For example, a typical term loan has the same fixed monthly repayment amount. However a Merchant Cash Advance works differently, where the loan is repaid daily, based on the percentage of sales for that day, which means you’ll repay more when you sell more, and less when you sell less. It is important to utilize a product that fits your business model and industry.