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Updated: March 27th, 2020
You would think that acquiring and repaying a business loan would be a fairly straightforward affair — you agree to the amount, the term, the interest rate and fees, and then you repay your debt over an agreed schedule. Unfortunately, it’s not always that straightforward — especially when it comes to figuring out just how much you owe. Some lenders sneak in additional hidden fees, concealing them in fine print or confusing legalese, which can secretly and significantly inflate the cost of your loan.
At Funding Circle, we believe business owners deserve to know the real cost of their loan. We only charge a one-off, up-front origination fee (3.49% – 6.99%) if you choose to accept our loan offer. That’s it! No back-alley charges, no surprise fees.
If you are going to be asked by other lenders to cough up additional application fees, due diligence or underwriting charges, administrative fees, annual charges, or costs that seem totally made-up, you deserve to know about it. Here are some of the hidden fees to look out for when dealing with other lenders.
It sounds absurd, but it’s true: there are lenders out there who charge just to review a loan application and and some even charge to pull your credit report! We see things a bit differently: your application experience should be simple, cost-free, and obligation-free. With Funding Circle, you can apply for a loan in 10 minutes, get a decision in as little as 24 hours, and decide independently whether it’s the best choice for your business. No pressure, no costs — period.
Be on the lookout for lenders who want you to pay an additional monthly fee for upkeep of your loan — all on top of your interest rate! This fee can range anywhere from $50 to hundreds of dollars per month, depending on your loan size.
If business is going swell and you want to pay off your loan early, you might be surprised to learn it will sometimes cost you. Some lenders charge extra if you want to pay your loan off early, and others will make you pay back the interest for the full term, making it impossible for your to save money by paying early. At Funding Circle, you only pay for the time you borrow, and with no prepayment penalties to be found.
When shopping around, ask each lender to help you calculate the annual percentage rate (APR) of their loan offer. The APR tells you the true cost per year of borrowing money; it takes into account your annual interest rate plus any additional fees and charges that may be hidden in the fine print. This will help you make an apples-to-apples comparison of different loan offers.
If a lender won’t share the APR, learn how to calculate it yourself — and find a better lender.
Are you ready for a more transparent business term loan experience? Apply today for a Funding Circle loan — after submitting documents, we can get you a decision in as little as 24 hours!
Louis DeNicola is the president of LD Money Media LLC and an experienced finance writer who specializes in credit, personal finance, and small business finance. Within the small business sphere, he helps business owners understand their financing options, cash flow management, business credit, and taxes. In addition to Funding Circle, you can find his work on BlueVine, Credit Karma, Experian, Wirecutter, and Lending Tree.