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Are you ready to grow and expand your business? With careful consideration, these seven factors can ensure that you get the best deal and make the right decision for your business.
1. Total cost of the loan. The lender will approve you for an interest rate, which affects how much you’ll pay. The annual percentage rate (APR), which calculates the annual cost of a loan, including interest and fees, is a helpful way to compare costs for similar loans. To get the whole picture, look at the full repayment amount of the loan.
Check out the QuickBooks Capital calculator to see how APR and repayment term affects the total amount you’ll pay back. For example, a loan repayment term of less than a year will have a higher APR based on calculated annualized costs. But your total repayment amount on a short-term small business loan will likely be lower than a loan with similar interest and fees over a longer repayment term.
2. Fixed or variable rate. A fixed rate means you’ll have fixed payments, while a variable rate means your payment amount will vary as the rate changes. Make sure you know which type of rate your loan has and how it could affect what you pay.
3. Ease of application. Some business loans, especially long-term bank loans, require extensive paperwork and preparation, including bank statements, financial projections, and more. The process can be stressful and time-consuming. In contrast, QuickBooks Capital is one lender that offers seamless syncing with your QuickBooks data so you can apply quickly and easily, in a matter of minutes, when you’re ready.
4. Speed of funding. Once you accept a loan offer, the time to funding depends on the lender. Some lenders fund within a day or two, others may take weeks or even longer. With a QuickBooks Capital loan you could have funding within 1-2 business days of loan approval.
5. Repayment term. It’s important to understand the repayment schedule and payment due date. Make sure you know the terms of the loan and how frequently you need to repay (daily, weekly, monthly). Also, check the fine print for any clauses that allow the lender to demand the balance in full if you don’t meet certain conditions of the loan, including not paying as agreed or not keeping insurance or licenses up to date.
6. Personal guarantee. If you’re looking for an unsecured (no collateral) business loan, some offers require a personal guarantee. This means you agree to personally repay the loan if your business doesn’t. Before you apply, make sure you’re prepared to meet those terms. Loans with a personal guarantee can be helpful if you’re building a new business, but be sure you’re working with a reputable lender.
7. Reputation of the lender. It’s important that your lender be trustworthy and reputable. Do your research to ensure the lender has positive borrower reviews and is in good standing with federal regulators and consumer agencies.
Responsible business funding may be the key to taking the next big step forward in your business. Evaluating your options using these important factors can help you choose the best loan for your business.