Here are features you should seriously think about before signing up for the small or startup business loan offer you have just received:
1. The repayment term. You may opt either for a short or a long repayment period, depending on the amount of cash you wish to borrow. For long-term borrowers, you can choose a 10- or 20-year repayment period. Meanwhile, for short-term borrowers, you may decide to repay your business loan within three, six, nine or 12 months.
Just remember that the longer the repayment period is; the greater will be the payments you will have to make on interest. Hence, as early as now, you should resolve to choose the right repayment period that will perfectly suit the needs and financial capability of your enterprise.
2. The interest rate. The laws and regulations, which govern lending practices in the market, tend to vary from one state to another. So, it would be wise to research on these rules and provisions first for you to easily determine which lenders abide by them, most especially in terms of the acceptable range of interest rates.
Keep in mind that there are two basic kinds of interest imposed on business loans. The first is a fixed interest rate. With this feature, you can lock-in a low rate of interest on your credit account, for the whole term of your business loan. The second type is the variable interest rate. With this feature, you can expect to start paying a low rate of interest. However, such rate may soon spike up, depending on the changes that will happen in the market.
3. Additional fees and charges. Apart from the interest charges, you may also be required to submit payments on any of the following fees: application or administrative charges, late payment penalties, fines for violations of your credit agreement, etc. Hence, we advise you to examine your contract very carefully for you to know the schedule of payments you must submit to your business lender.
4. Special terms and conditions. There may also be special provisions and restrictions that will apply to your business loan. For instance, you may ask your chosen lender the following questions: What will happen if you default or skip on your monthly payments? What's the actual definition of your lender for payment delinquency? What can you do to turn the situation around and thus avoid getting penalized? Keep in mind that the answers to these questions will help you realize if the business loan you wish to take out would work to the advantage of your enterprise
5. The stipulations of the co-signer agreement. If your small or startup business loan comes with a co-signer requirement, we encourage you to think about the following queries: Do I know someone who has high personal credit rating and who's willing to co-sign my application for a business loan? How will my payment activities affect his or her credit standing? Am I confident that my business can afford to keep up with its future dues? What are the duties of obligations of my co-signer?
6. The grace period. Your business loan should come with a suitable grace period provision which you can invoke when business is slow. That way, you can avoid making substantial payment on penalties and additional charges especially if you have limited cash on-hand.
7. The security or collateral requirement. Think of the personal or business asset you can offer to guarantee the repayment of your small or startup business loan. Always remember that by offering collateral, you can easily convince lenders to grant your request for funds. And that's not all. The firm may even provide your business a credit program that carries a competitive rate of interest and flexible payment terms, especially if you can pledge a valuable asset against your business loan.
1. The repayment term. You may opt either for a short or a long repayment period, depending on the amount of cash you wish to borrow. For long-term borrowers, you can choose a 10- or 20-year repayment period. Meanwhile, for short-term borrowers, you may decide to repay your business loan within three, six, nine or 12 months.
Just remember that the longer the repayment period is; the greater will be the payments you will have to make on interest. Hence, as early as now, you should resolve to choose the right repayment period that will perfectly suit the needs and financial capability of your enterprise.
2. The interest rate. The laws and regulations, which govern lending practices in the market, tend to vary from one state to another. So, it would be wise to research on these rules and provisions first for you to easily determine which lenders abide by them, most especially in terms of the acceptable range of interest rates.
Keep in mind that there are two basic kinds of interest imposed on business loans. The first is a fixed interest rate. With this feature, you can lock-in a low rate of interest on your credit account, for the whole term of your business loan. The second type is the variable interest rate. With this feature, you can expect to start paying a low rate of interest. However, such rate may soon spike up, depending on the changes that will happen in the market.
3. Additional fees and charges. Apart from the interest charges, you may also be required to submit payments on any of the following fees: application or administrative charges, late payment penalties, fines for violations of your credit agreement, etc. Hence, we advise you to examine your contract very carefully for you to know the schedule of payments you must submit to your business lender.
4. Special terms and conditions. There may also be special provisions and restrictions that will apply to your business loan. For instance, you may ask your chosen lender the following questions: What will happen if you default or skip on your monthly payments? What's the actual definition of your lender for payment delinquency? What can you do to turn the situation around and thus avoid getting penalized? Keep in mind that the answers to these questions will help you realize if the business loan you wish to take out would work to the advantage of your enterprise
5. The stipulations of the co-signer agreement. If your small or startup business loan comes with a co-signer requirement, we encourage you to think about the following queries: Do I know someone who has high personal credit rating and who's willing to co-sign my application for a business loan? How will my payment activities affect his or her credit standing? Am I confident that my business can afford to keep up with its future dues? What are the duties of obligations of my co-signer?
6. The grace period. Your business loan should come with a suitable grace period provision which you can invoke when business is slow. That way, you can avoid making substantial payment on penalties and additional charges especially if you have limited cash on-hand.
7. The security or collateral requirement. Think of the personal or business asset you can offer to guarantee the repayment of your small or startup business loan. Always remember that by offering collateral, you can easily convince lenders to grant your request for funds. And that's not all. The firm may even provide your business a credit program that carries a competitive rate of interest and flexible payment terms, especially if you can pledge a valuable asset against your business loan.
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