This means if you default on your loan, the government pays the lender the guaranteed amount. Most SBA loans come from SBA-approved lenders that are backed by guarantees of up to 85% of the amount borrowed. The SBA guarantees loans, with terms and loan limits of up to 30 years and $5 million or more, to help business owners need financing to grow their businesses. Here are common types of financing your business can use. ![]() Common Types of Business Loans and Lending Optionsīusiness loans and lending options come in all shapes and sizes, and it’s crucial to understand each to determine which is best for your business. Online lenders, on the other hand, may have rates that range from 7% to more than 100%, depending on the specific loan product.ĪPRs vary depending on your credit score, the amount you’re borrowing, the total repayment term and factors specific to your business like years in operation and annual revenue. The APR for business loans from banks or credit unions typically start at 3% but can go as high as 11%. Business Loan APRsīusiness loan annual percentage rates (APRs) are the total cost you’ll pay for a business loan, including the interest rate and any fees. You can repay the loan sooner than required to save money on interest, but be aware of any fees or penalties you might owe for early repayment. For instance, if you apply for financing with a five-year loan term and pay the minimum payment each month, you’ll repay the loan in five years. The loan term is how long you have to repay your loan. For example, if you apply for a $100,000 business loan and your lender charges a 1% origination fee, you’d receive $99,000 even though $100,000 is your loan amount. To cover your costs, you may need to include those fees in your loan amount. Keep in mind, some lenders take fees out of your loan amount. Before you apply for a loan, it’s important to calculate how much money you’ll need so you can avoid overborrowing. The loan amount is the amount of money you’re borrowing. Understanding Business Loan Terminology Loan Amount Use the calculator to determine if you can afford the business loan you’re considering, or if you might need to find a less expensive option. Next, click submit to see your estimated monthly payment and total interest paid over the life of the loan. ![]() ![]() To use this business loan calculator, type in the amount you’ll need to borrow, the interest rate and the term (in months). Via American Express's Website How To Use This Business Loan Calculator
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