When you think of getting working capital for your business, the loan amount may be the first factor that comes to your mind. But, the loan amount is only a little piece of small business loan riddle. There are many factors, and the principal factor among all is your loan repayment options.
While obtaining a business loan, you’re contracting with the lender to repay the funds acquired. The structure of repayment process and repayment options can drastically impact your business financial position and can mean the difference involving a rationalized agreement and an onerous debt obligation.
While selecting your repayment options, there are 3 major factors that you need to consider:
- Loan term period
- Payment amount
- Rate of interest
Loan Term Period
The loan term period is the duration over which the entire loan amount will be repaid. The shorter the loan term period, the bigger the each payment will be and vice-versa. The longer loan term also means more interest rate on the loan amount borrowed. So, while you may have lesser and more convenient monthly payments, you’ll be paying more money over a longer term period.
The monthly loan amount should also be considered that will be influenced by your loan term period. Larger monthly payments will cause shortage of capital and bring in a tax debt obligation. And the biggest pit is you may be unable to keep pace with the monthly payments, making you fail to pay and a potential business failure.
Rate of Interest
Rate of interest also plays an important role in loan repayment. The more the interest charged, the quicker you’ll want to repay the loan. Simply, more rate of interest means more cash spending, and even smaller loan amounts sometimes cost a fortune if the rate of interest is lofty.
Make A Right Selection
Before selecting a loan option, think of your specific financial needs. How much cash your business needs? What will happen if you can’t repay the loan? For which you need the loan for?
Evaluate your loan options as regards from whom to borrow. Is the potential business lender providing you all the money your business needs? Do they offer flexible repayment options? Is the paperwork minimal and uncomplicated? Always research well and plan in advance in spite of of your selection. If you are able to understand your money needs well, it will help you avoid many nuisances and put you in a much better position to get the most out of funding.
Choose The Right Lender
Keeping in mind all such factors, it’s wise to do your research before selecting a business loan lender. Select the lender who offers flexible loan repayment options that suits your business needs best. Traditional lenders and banks have stringent loan qualification rules and repayment options, but lenders like Merchant Advisors do exist to help businesses like you.
Merchant Advisors provides small business a variety of loan programs with variable repayment options and flexible loan terms at lower interest rate. Besides all these benefits, Merchant Advisors financing programs also come with quick loan decision of 1 hour, minimal paperwork and funding in just 24 to 48 hours.
There are also many other options like merchant cash advances that involve no pre-payment penalties and restrictions on loan usage. Meaning, you can get rid of your debt obligations quicker without paying the extra costs.