Business Loan Rates

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There are all different types of small business loan rates out there.  When applying for a loan, your small business loan rate is really going to depend on several things:

- What your business credit score looks like.
- What your personal credit score looks like.
- How long you have been in business.
- How profitable your business is. (Business Financial Statements)
- What type of collateral you are going to sign off on for the business loan.

With the credit markets so tight right now, it’s important to make sure you have a good business credit score with all three business credit reporting agencies, a good personal credit score with all three personal credit reporting agencies, a well written business plan, and a loan application with proper personal and business financials.

The business loan rate you will be approved for will depend on your personal credit score, business credit score and business and personal financials

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You can find out what the daily average small business loan rates are here at the Federal Reserve website. 

Small business loans rates are adjusted almost every day.  Depending the kind of loan or line of credit you are looking for, rates may adjust.  For example, if the lending institution is taking on more of the risk by offering you a business loan, then the rates may be a bit higher.  Yahoo has a cool business loan calculator where you can find out what your monthly payments are going to be.

How do I know if the bank is taking on more risk then usual?

There are certain loan types where the lending institution is taking on more of the risk then usual.  Some of these loan types are:

Merchant Cash Advance Loan – Lending to a business based on their future credit card receivables.

Purchase Order Financing Loan – Lending money to an organization that has a purchase order but does not have the capital to fulfill that order.

Accounts Receivable Financing Loan – Lending money to a business that has receivables coming into the business in the near future and needs cash to operate the business today.

Unsecured Business Loan – Lending money to an organization that has no assets to use as collateral.

Be sure to ask as many questions as you can before applying for a business loan.  Your rates will depend on it!!

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