Understanding Small Business Loan Interest Rates: What You Need to Know Before You Borrow

Having a small business is an exciting endeavor, but it often comes with financial challenges. One of the most important challenges is understanding how to finance your business. One of the most common ways to finance a business is through a small business loan. However, it is important to understand small business loan interest rates before committing to a loan.


How Do Interest Rates Work?

When considering a small business loan, the first step is to understand the interest rate. The interest rate is the percentage of the loan amount that must be paid in addition to the loan principal. The interest rate is the cost of borrowing money, and the higher the interest rate, the more costly the loan. Small business loans typically have higher interest rates than other types of loans due to the higher risk associated with small businesses.


What Are Your Options?

When shopping for a small business loan, it is important to compare the interest rates of different lenders. Different lenders may have different interest rates, so it is important to find the best rate for your particular business. Additionally, the terms of the loan will also affect the interest rate. For example, a loan with a longer repayment period may have a lower interest rate than a loan with a shorter repayment period.

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MobyCap is what’s called a “direct lender.” And what this means is we are directly using our own funds for lending. Since there are no other middlemen involved in the process, like brokers, we are able to cut out those additional costs and pass on the savings to you! So you can be sure that you’re getting the lowest rates in the market.


What Are The Types of Rates?

In addition to shopping around for the best interest rate, it is also important to understand the different types of interest rates. Fixed interest rates are the most common and are the same throughout the loan term. Variable interest rates are less common and can fluctuate based on the market and other factors. MobyCap uses a fixed rate so you don’t have to worry about compounding interest like you would with other options out there.


Final Decision 

Before making a decision on a loan, it is also important to consider the other costs associated with the loan. These costs include origination fees, closing costs, and other fees that may be charged by the lender. These costs should be factored into the overall cost of the loan so that you can make an informed decision.

On the other-hand however, you must consider the opportunity cost of passing on a new project or investment into your business that might have yielded a large return for you.

Taking out a loan can be a great way to finance your business, but it is important to understand small business loan interest rates before making a decision. By shopping around for the best rate, understanding the different types of interest rates, and considering all costs associated with the loan, you can make an informed decision that will benefit your business in the long run.

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Who is MobyCap?

Moby Capital has been helping thousands of businesses just like yours to secure small business loans for over 10 years. We have sourced over $1 Billion in funding for small businesses and we have the expertise to make the loan process as fast and easy as possible. Contact us today to learn how we can help get money in your pocket.

Contact us today to learn how we can help put money in your pocket.

Your Business Must Be On Pace For At Least $500k In Annual Revenue For Us To Be The Right Fit For Your Business. Please Do Not Fill Out Our Contact Form Unless Your Business Is On Pace For At Least $500k In Annual Revenue. 


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*MobyCap specializes in both loans and alternative financing options. Please see our website for our full suite of services and offerings.

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