Understanding Business Loans
Business loans provide financing for various business needs including startup costs, expansion, working capital, and equipment purchases.
Types of Business Loans
- SBA Loans: Government-guaranteed loans with favorable terms
- Conventional Loans: Traditional bank loans
- Equipment Financing: Loans secured by equipment
- Line of Credit: Revolving credit for ongoing needs
- Invoice Financing: Borrow against accounts receivable
Common Business Loan Fees
- Origination Fee: 1-6% of loan amount for processing
- Documentation Fee: Covers paperwork costs
- Application Fee: Upfront cost to review application
- Annual Fee: Ongoing administrative costs
- Prepayment Penalty: Fee for early repayment
Real APR vs. Stated Rate
The real APR includes interest plus fees, giving a more accurate picture of total borrowing cost. Always compare loans using APR rather than just the interest rate.