High Interest Rate: You may apply for a secured or unsecured Small Business loan. Unsecured loans do pose a greater risk to banks, and so the interest rate associated with unsecured debt will be higher. However, generally even an unsecured business loan should have a lower interest rate than your typical credit card interest rate or instant payday loans online. If you are concerned about the high interest rate on a loan you are applying for today, it may be worth your time to shop around for a more competitive rate.
High Monthly Payment: The monthly payment on your loan will be component of the loan term, the loan amount, and the interest rate. Most small business loans are obtained to help a business grow and expand, or otherwise to provide cash to make ends meet during a slow period of time. However, a high monthly payment on a loan can hamper these efforts. Further, it generally is reflective of the fact that you may be borrowing too much money, paying too high of an interest rate, or are not getting the loan term you need. Avoid taking on debt that you will not be able to realistically pay back.
Strict Prepayment Penalties: While you do want to find a loan that you can easily pay back with affordable monthly payments, you also may want to retain the right to pay the loan off early, too. Some loans have a stringent prepayment clause that requires you to pay a fee if the principal is paid back too early. Consider reading the fine print on your loan terms today to ensure you will have the ability to pay your loan off early if you choose to do so.
High Fees: All loans today will have some fees associated with them. Common fees include a credit report fee, a lender fee, and an underwriting fee. The fees may vary based on the size of the loan amount you are requesting. However, if you feel you are being overcharged, you can either try to negotiate lower fees or shop around to find a loan with lower loan fees.
Fails to Meet Your Needs: You certainly have some specific goals in mind that you want to attain by applying for a small business loan. Consider all aspects of the loan including the monthly payments, fees, and loan amount you have been approved for. Is this the loan that will help you achieve your goals? If not, you should consider shopping around to find a loan that is better suited to your needs.