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3 Small Business Loan Rates You Should Be Aware of as a Business Owner

   Tuesday, 31 October 2017 10:44 PBC Blog

3 Small Business Loan Rates You Should Be Aware of as a Business Owner

When it comes to looking for the best small business loans, few of the important queries people ask about include the small business loan rates, the term of repayment and amount of money provided. However what many businesses fail to question is about the additional fees, costs, and penalties. These can take a big chunk out of your funds, so you have to ask about the rates on the loans you avail without fail. Here is a closer look at three main business loan rates:

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Rate of interest

This is the rate you pay to a lender in addition to the amount borrowed, which is the principal. The interest is charged to enable the lender to profit from the transaction. If you pose a high risk, the small business loan rates demanded will be higher. The interest is calculated as simple or compound interest.

Simple interest:
This is a direct estimate that uses three factors namely the borrowed amount, annual interest rate and repayment term.

Compound interest:
This is a complex calculation that arrives at the rate based on the payments done monthly. The interest is based on initial principal and accumulated interest during previous loan periods or deposits, or in other words, you pay interest on interest.

Whichever type of calculation is done, the interest rate is a percentage of the amount borrowed which you are paying to the lender.

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APR (Annual Percentage Rate)

This is a comprehensive estimate of the amount you have to pay over the loan amount you have borrowed. In other words, this includes the rate of interest, costs and other fees associated with the loan.  It is mandatory for lenders to reveal their APRs along with the interest rates, so business owners and consumers can compare the small business loan rates between lenders and choose the best one.

Although the APR value is very helpful when you look for a loan, you have to consider the interest rate also. Even if APRs include interest rates, it will be more helpful, if you can divide the loan cost into a single time fee paid upfront and your recurring payments. Seeing these two entities will help you arrive at a better and informed decision regarding your business funding.

Factor Rate

These are small business loan rates, which use a different type of calculation. These apply specifically for merchant cash advances and for a few loans of short term.


We provide two highly accessible financing programs that can get your business the working capital it needs in days instead of months.

For a small business, obtaining a traditional loan today is a complex and difficult process. That’s where Premier Business Capital comes in. 

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