3 Tips on Choosing a Small Business Loan Lender
Do you want to engage in a small business project but do not have cash? If so, you can apply for a loan. There are different lenders that offer small business loans. These lenders do not have stringent requirements like banks and traditional credit institutions. For instance, you will not be required to provide collateral for the loan you are applying for.
There are many lenders you can approach to finance your venture. However, before applying for a loan, you should know the options you have. Evaluate different lenders for Capital For Merchants to know what they offer. Below are some factors to consider when choosing a small business loan lender.
i) How much interest rate is charged?
Find out the amount of interest charged for the loan you want. Lenders charge different rates depending on their financial policies. It is important to shop around to find a lender that charges fair rates. The easiest way to do this is to search online. There are various websites that list the rates charged by different lenders. Compare the rates to find lenders that are affordable.
ii) How long is the term of the loan?
Find out after how long you will be required to pay back the loan. The term of the loan will depend with the lender you choose. Generally, lenders determine the term based on how much loan you are applying for. The term can also affect the interest rate you will be charged. Generally, the longer the term of your loan, the lower the interest rate you will be charged.
When you take a loan for a longer term, your monthly payments will be lower. However, the amount you will end up paying at the end of the loan will be more than you would have paid if you opted for a shorter term loan.
iii) What fees will you pay?
Apart from interest, there are other fees you may have to pay. These fees may be charged when your loan is approved or when it is being disbursed to your account. Some lenders also have penalties, for example when you pay your installments late.
Find out about all the fees you are likely to be charged when you apply for a loan. The fees are usually disclosed in the lender's contract. Make sure you read the contract to know what is expected of you.
The above are three things you should consider when choosing a small business lender. Click here to read on.