Knowing exactly the costs of your business loan

A business loan is a way for a small company to obtain some initial capital and make some investments that are required in order to start its operation and grow from that point. But there are also some disadvantages about the business loan such as concealed information and costs.

A business owner has to know all the information about the loan, in order to construct a viable plan and carry it out. One of the largest costs associated with a business loan is its interest payments that can also variate across a specific period. In order for a business to be protected from the variations of the interest rate, it can choose a loan with a fixed interest rate. An adjustable interest rate or a variable interest rate can be a riskier alternative, especially if the company hasn’t got the individuals and the procedures to anticipate the evolution of the interest rates. There are also other costs that have to be considered before applying to obtain a business loan, such as fees and commissions.

The schedule of loan repayment

Borrowers have to choose a lending institution that offers an increased degree of transparency and discloses all the information that can be relevant. Borrowers have to identify the lenders that offer the most advantageous terms on their loans. The selected loan must have all the corresponding information available. The borrower must know exactly the repayment schedule in order to determine the necessary level of revenues that make it possible to realize the monthly payments.

In order for the borrower to know the repayment schedule, a business loan calculator is a useful instrument to do so. Camino Financial provides an excellent Small Business Loan Calculator. By introducing some simple parameters (specific to your own situation), you can easily calculate your monthly rate over the entire loan period, the principal loan amount and the interests associated.

Using the business loan calculator

Simply open the tool and introduce three figures. The loan amount is the first one: enter the dollar amount you intend to borrow. Then pick the payment term: for how long do you want to be paying back the loan? Choose between 24, 36, 48 and 60 months. Lastly, enter the monthly interest rate. The calculator allows you to choose from rates that range between 1% to 2.25%. That’s it! Click “Calculate” and let the business calculator do the rest.

Instantly your results will be shown. You’ll be able to see what you are paying for your loan. this includes the following:

Total interest paid (in dollar amount) during the whole term of the loan

● Closing Fee

● Funding Fee

● Documentation fee

Note that these last two are zero. Camino Financial doesn’t charge any funding or documentation fee. This means the only costs associated with your loan are the interest and the closing fee.

The last two results in the calculator (in bold) show you the total cost of the loan (the sum of all the interest and the closing fee) and your monthly payments. Study and consider all those figures carefully. Rest assure there are no other hidden fees or data. It’s all transparent and in front of you. You can compare these costs with others in the market and make an advised decision. Do those numbers make sense to you and fit your business? If they simply don’t, reset the calculator and start over: introduce other parameters that you think will suit you better. Having a business loan calculator is proof that the institution is transparent about its practices and wants to inform customers so that they can keep up with the repayment schedule as intended.

Marvin Floris

Marvis is a writer for Camino Financial, an online lender for small business loans. He is a freelance writer with a background in finance and economics. He likes to write about theoretical topics and ideas in these fields of research. He is an expert in cryptocurrency, consumer psychology and technological advancements in banking and financial instruments.

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Author: Chakraborty

Dr Chakrabarty is the Chief Innovation Officer of IntuiComp TeraScience. Earlier she was Assistant Professor of Delhi University, a QS ranked university in India. Before that she has held research positions in IIT Mumbai, IIT Chennai and IISc Bangalore. She holds 2 patents and over 20 research publications in her name which are highly cited. Her area of research is in smart technologies, integrated devices and communications. She also has a penchant for blogging and is an editor of Business Fundas.