The Lost City of Atlantis, Stonehenge, and the dark exploits of Jack the Ripper rank as some of the greatest unsolved mysteries of all time. Details of the events are muddled and shadowy.
Getting a business loan may feel just as baffling because you don’t have answers to your growing list of questions. How much does it cost to get a business loan so you can grow and expand your business to make more profit? How much will you pay in interest for the life of the loan and what are other costs you’ll pay in addition to interest charges? Will the monthly payment be affordable and fit within your budget? Any business owner knows they need to spend money to make more. You can get answers to these types of questions before you even apply for a loan. Here’s an example of two people who did just that.A business loan calculator could answer all your questions and solve all the mysteries surrounding small business loans.
James and Helen Knew Their Costs before Applying for a Business Loan
James and Helen had owned a mechanic’s shop for over 20 years and after expenses realized monthly profits of $2,000. They needed business loan proceeds to pay off credit cards and buy newer equipment. In fact, the equipment they used regularly would no longer pass regulatory requirements for the state of California.
Not only was the newer technology mandatory, but the investment would also propel their business forward. A business associate suggested they used an online business loan calculator to assess how much money they could afford to borrow. The financial tool lets them input the amount of the loan, choose repayment terms between 24-60 months, and select an interest rate. They could create what-if scenarios to determine their monthly payment, closing fees, and the total interest paid. James and Helen decided to borrow $20,000 spread over 5 years to pay off debts and purchase the necessary equipment. By doing so, they will not only stay compliant with state regulations but they estimate monthly profits will increase by $650. Closing fees were $1,400, interest amounts to $10,472 and their monthly payment is $508.
What Else Did James and Helen Consider?
Knowing specific business loan costs helped James and Helen know their options to get a loan that suited their business needs. They should also confirm the following before they applied for funding.Monthly payments don’t exceed 80% of the monthly net profit.Total loan costs don’t exceed the total return expected after the investment.
Their monthly payment of $508 didn’t exceed their estimated monthly profits of $650 and once the loan is paid off they will realize a total profit of about $7,000. So yes, they did move full steam ahead and applied for a loan.
Business Loans Aren’t Unsolved Mysteries When You Know How Much You’ll Pay
As you can see above, James and Helen knew the real costs of getting a loan beforehand so they could move forward confidently. Not only were they comfortable with their monthly payments, they saw a way to make profits each and every month. So, they took steps to secure a business loan. They made an informed decision before they ever borrowed the first dollar. A business loan could make a difference in your business too. Are you still on the fence and have doubts about whether a loan is right for your business? Then, use a business loan calculator and answer your questions before you ever walk down the street to a local bank or approach an online lender. You’ll know, in advance, whether a business loan makes sense.