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Startup business loan payments are determined by 3 main factors: loan amount, interest rate, and term.
Startup loans typically range from $9,000 to $20,000. You can be funded for as little as $500 or for as much as $750,000 (though you’ll need a large personal income for a loan that size).
Startup loan decisions are made differently from other forms of business financing. Instead of basing funding on revenue, time in business, and your business’s credit history, lenders will look at factors like the type of business you’re starting, the related experience you have, and your personal credit score, among other factors.
Interest rates for true startup loans typically range from 10% to 28%. For qualified borrowers, that rate can drop to 7%.
These rates may be slightly higher than other forms of business financing, but startup loans make financing more accessible to companies that may not yet qualify for a business loan. You know what they say—10% in the hand is worth 30% in the bush.
Since there are several startup business loan options available, term lengths differ. For example, you can expect to pay off a term loan over 1–5 years or opt for a credit card that will provide revolving access to cash.
Fees. We’re talking about fees.
Applying for and reviewing your loan options through Lendio is always free—however, many lenders will charge application fees. It’s a good rule of thumb to ask about potential application fees before starting the process with a lender.
Lenders sometimes charge up-front origination fees when a loan is funded to cover the cost of putting a loan in place. Ask if your lender charges an origination fee and how it’s paid to determine the full cost of your startup loan (and when payments are due).
Take a few steps to avoid surprises in the loan repayment process.