Choosing a business loan is a big decision, and it can be challenging to know where to start. Whether you’re a start-up looking to get off the ground, or an established company ready to scale, a business loan can be a smart decision to fund your growth. With so many options available, it’s essential to understand the different types of loans on offer and how they can benefit your business.

Fixed or Variable Rate Loans?

One of the first decisions you’ll need to make is whether you want a fixed or variable-rate loan. A fixed-rate loan means you will always pay the same amount each month regardless of any changes in interest rates, and this is great for financial forecasting as it provides certainty that your repayments won’t change over time. This could be the smarter option for beginning businesses that are carefully budgeting.

On the other hand, a variable-rate loan will fluctuate depending on interest rate changes, which may mean a lower monthly repayment. However, should rates rise, and continue to rise as they have been, you may find yourself paying more each month than initially planned. This option is better suited to established businesses with a stable cash flow and can comfortably afford higher repayments.

Secured vs Unsecured Loans?

The next factor for consideration concerns whether you want to take out a secured or unsecured loan. A secured loan requires some form of collateral, such as property or equipment, to be used as security against defaulting on payments. This makes secured loans easier to get approved for but also puts your assets at risk if you cannot meet your repayments. An unsecured loan does not require any form of collateral and can be easier to qualify for but typically comes with higher interest rates than secured loans as there is more risk involved for lenders. This is an important decision and is best discussed with an expert advisor.

Interest Rates and Loan Fees

Don’t forget to consider the interest rates and fees associated with different business loans. Interest rates are typically expressed as an annual percentage rate (APR) which includes all costs associated with a loan, including any upfront fees such as establishment fees or ongoing fees such as monthly account-keeping fees. It’s important to compare different lenders’ APRs to get an accurate picture of what a loan will cost overall before making any commitments.

When choosing a business loan, it’s important to consider your options carefully before deciding. Look at all of the terms associated with each option, including interest rate, repayment period, fees, collateral requirements, etc., and make sure they fit your business’s budget and goals. It’s also important to consider whether or not you want a fixed interest rate or one that can fluctuate over time. Because we’ve built relationships with a broad range of providers, we’re bound to be able to provide you with the right lender for your needs. Contact us today for an obligation-free quote and to find out more.