Learning the Facts About Small Business Loan Rates


Securing financial assistance for a small business enterprise can be difference between continued or suspended operations. In addition, emerging companies often lack the collateral, solid business history, and stellar credit rating needed to secure the lowest possible small business loan rates.

Although most business owners are aware of their exact funding needs, few are able to devote the countless hours and extensive labor costs needed to facilitate the best small business loan rates, and furthermore, getting the best rate is not always the highest priority.

However, by understanding the factors that determine small business loan rates, and by considering the entire costs involved with a loan, business owners can select the best financing option, and choose the one attainable for their specific business.

How Small Business Loan Rates Work

Generally speaking, even with SBA backed loan programs, lenders rely on a combination of factors to determine the interest rate for a small business loan.

Personal Credit Rating: Most traditional lenders do not differentiate between business credit history and the owner’s personal credit rating, making it difficult to qualify for a loan. However, if approved, the rating will play a significant role in determining small business loan rates.

Traditional funding institutions will require a strong credit rating and solid business history for approval, whereas other lending companies can work with business owners with less that perfect credit, offering financing solutions, regardless of previous credit history.

Time Period: The repayment period of the loan will contribute to small business loan rates, therefore business owners should consider short-term loans that offer access to funds quickly, without requiring hours of preparation, and lengthy approval times, generating considerable labor expenses.

Loan Amount: The loan amount will affect rates as well, but for most emerging entrepreneurs, simply qualifying for any amount of financing can prove so elusive, that finding a lender willing to issue a loan far outweighs subsequent higher small business loan rates.

Funds Application: A business loan that is apportioned for property or equipment purchases, or some other designated use, often qualifies for lower interest rates, calculating that the real property will act as security for the loan. Although, often the extensive paperwork and compliance forms required generate high labor costs, which cancel out any lower interest rates achieved by funds appropriation.

Financing Considerations

Before contacting a lender, business owners should consider the total cost of the loan, not just how to negotiate the lowest small business loan rates. In other words, there are intangible costs that can influence the financing decision.

The preparation time involved in traditional financing will generate labor and service costs that add a significant burden to the cash flow of the business, which expound if the time, materials, and energies consumed are found to be wasted, with an application rejection.

Another aspect to consider is the additional monthly drain to business resources with a fixed repayment amount. Whether or not the business has a record sales month or a slow one, the loan payment never varies.

There is also the chance for lost revenue while waiting for a small business loan to be processed. Bank loans, and ones secured by the SBA require an extensive waiting period, and entrepreneurs in need of operating funds just aren’t in a position to keep the doors open while waiting on approval or the check.

Choosing a funding source that offers a streamlined application and qualification process, along with an effortless repayment plan, one that utilizes innovative technology, tailored to the business, can often provide immediate funding solutions that save labor, and therefore off-set the cost of the business loan rates.

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Discover Superior Funding Sources Through a Business Cash Advance


To operate efficiently and ensure continued growth, small businesses today need the financial resources to weather fluctuations in the economy. However, it can be difficult for emerging entrepreneurs to arrange financing through traditional funding institutions, which require a lengthy application process.

Fortunately, there is a variety of lending alternatives available for business owners, and oftentimes, a business cash advance can provide a superior source of working capital for operational expenses.

Opposed to traditional loans, a business cash advance includes simplified approval requirements, flexible allocation of funds, and percentage based repayment terms, making this type of merchant funding a desirable option for many seasonal or service based businesses.

Faster, Easier Approval

The daily operational expenses to maintain a facility, workforce, and inventory require working capital, no matter the size, and these fixed costs don’t disappear during a slow sales month.

However, unlike traditional loans, the application for a merchant cash advance doesn’t rely on ownership credit scores, current net worth, or business credit history for approval.

Utilizing the company’s credit and debit card receipt record, a cash advance lender can review past sales and determine an amount according to the previous records.

The entire application process is streamlined with simplified procedures to create a speedy approval time of days, rather than the weeks or months required by banks or other loan institutions. Even companies with a less than stellar payment history can qualify based on actual sales.

Flexible Funds Allocation

Most traditional loans specify where and how the funds can be utilized in the business. A loan for an equipment upgrade provides the exact amount for the purchase, which then becomes listed as collateral for the loan.

Yet, a business cash advance allows small business owners the flexibility to allocate the funds at their own discretion. This option enables the proprietor to place additional capital where it is needed most.

Innovative Repayment Plan

Even simple interest loans establish a fixed monthly payment amount, but businesses that function under certain conditions, such as catering to a specific demographic, or operate based on seasonal tourism or products, know that fluctuating sales can affect their ability to make monthly payments.

business cash advance is different. By implementing a new card terminal system or using your current system, the lender is able receive a percentage of each transaction, and apply the amount to the repayment. Essentially, the business repays the cash advance through a designated portion of each transaction.

Extremely helpful during slow weeks or months, this type of innovative plan allows businesses the freedom to operate without an additional monthly bill.

A business cash advance provides superior financing solutions for private practices, service-based companies, or any small business because it is able to offer approval, allocation, and payment flexibility that are absent through traditional lending avenues.


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