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.