It might be easy to get a short-term small business loan but there’s no doubt that it can turn out to be far more expensive than traditional loans.
The application for such a loan is usually done through a broker and the money is deposited into your account within a few days. You pay the loan back in a year either by daily or monthly payments.
Here are 3 things to remember before signing on the dotted line for this type of loan:
It’s vital that you know what additional fees you have to pay when you obtain the loan. In some cases, money lenders charge fees for a loan upfronts. Others will charge if you set up an automatic payments or miss a payment in the future. Check for these fees and how much it will cost too.
2: Know the APR
It must be pointed out that many money-lenders do not inform their clients about annual percentage rates for the loan products that they offer. For your benefit, if you do know the APR, this can help you to compare the cost of the loan to others. Also, if you want to know how much you can borrow based on the monthly payments that you can afford, there are a number of online calculators available online.
3: Check if they report to credit bureaus
It’s been known in the past that a number of money lenders do no report loan information to credit bureaus. This is despite the small business paying the loan off in full. Of course, without this option, a small business cannot build up credit in order to qualify for a traditional loan. Don’t get caught off-guard – check whether they report information before you do anything else.