Key takeaways
- Compare offers on APR and total payback, not the payment or the “rate.”
- Check fees, payment frequency and what happens if you pay early.
- Shopping through a form that sells your data leads to dozens of calls. Choose a service that limits who sees it.
To compare business loan offers, put each one on the same basis: the APR, the total amount you will repay, all fees, how often payments come out and whether paying early saves money. The offer with the lowest payment or the smallest-sounding rate is often not the cheapest. And where you shop matters as much as what you compare.
The five numbers to compare
| Number | Why it matters |
|---|---|
| APR | Interest plus fees as a yearly rate, the fairest single comparison |
| Total payback | Everything you will pay back, in dollars |
| Fees | Origination, closing, draw, underwriting or broker fees |
| Payment frequency | Daily or weekly payments hit cash flow harder than monthly |
| Prepayment terms | Whether paying early saves interest or triggers a penalty |
Watch for these terms
- Factor rate: used by cash advances and some short-term loans. A 1.25 factor on $40,000 means repaying $50,000. Convert it to APR before comparing. See merchant cash advance vs business loan.
- Origination fee: often taken from the loan, so you receive less than the loan amount.
- Personal guarantee and liens: what you are putting on the line if the business cannot pay.
- Confession of judgment: a clause that lets the lender get a judgment without a lawsuit. Avoid it where you can.
Why shopping can backfire
Many loan websites are lead sellers. You fill out one form and it is sold to a list of brokers within minutes. The result is a week of calls, texts and emails, often pushing the highest-cost products first because they pay the biggest commissions. Multiple full applications can also mean multiple hard credit pulls.
A better approach is to get matched with the lender that fits your profile in the first place, then compare that offer against anything else you already have.
Questions to ask every lender
- What is the APR and the total amount I will repay?
- What fees come out at closing, and how much will I actually receive?
- How often are payments, and are they automatic withdrawals?
- Is there a prepayment penalty or an early payoff discount?
- Is this a loan, a lease or a purchase of future receivables?
- Are you the lender, or a broker who will place my file elsewhere?
Frequently asked questions
Is APR the only number that matters?
It is the best single comparison, but also look at total payback and payment frequency, since they decide how the loan feels on your cash flow.
Why do short-term loans show a high APR?
APR is a yearly rate, so a fee paid over a few months annualizes to a large number. Total payback helps put it in perspective.
How do I stop loan broker calls?
Ask each caller to put you on their do-not-call list, and avoid forms that do not say how many companies will see your information.
One best-fit lender instead of twenty calls
We vet every lender in our network and match your request to the one most likely to approve you, never more than 2. You get their details, they get yours, and you skip the broker runaround. Get a Loan.