Deprecated: mysql_connect(): The mysql extension is deprecated and will be removed in the future: use mysqli or PDO instead in /home1/haradeep/articleside.com/configdb.php on line 8

Deprecated: preg_replace(): The /e modifier is deprecated, use preg_replace_callback instead in /home1/haradeep/articleside.com/article.php on line 88
How Interest Rates are Determined on Business Loans

Article Side

Online Article Directory!

Hello Guest! Login or Register to submit articles!

How Interest Rates are Determined on Business Loans

By Vikash Kumar Subscribe to RSS | April 28th 2012 | Views:
loading
 
  



If you ever have applied for a business loan, you would have wondered how and what criteria they use to calculate the rates and terms. When it comes to business loans, they rarely go with the prime lending rate, and so it gets more mysterious how they calculate your interest and how long they allow you to stick on to your borrowed money. All the factors that credit unions use to analyze and take decisions on your business loans are what we call potential risk assessments, and these assessments are made based on who you are, and your capacity for payments.

Most of the loans on small businesses would need a personal guarantee, and every bit of your credit report has an impact on their decision. If it appears to be sketchy, then they would probably charge you with a high interest rate. Banks calculate the interest rate of your business loans by certain benchmarks, such as prime interest rate. That means banks charge you based on how they have charged their most credit worthy customers. While this might not be the case always, this is the base rate accounted by 75% of the banks.

Prime interest rate is highly influential and important for small businesses, because it’s sort of a base rate from which they decide on what interest, they should loan out the money to you. Most of the time, small business owners are charged a few points to the existing prime rate. In times of economic crisis, businesses even have to pay a higher rate of interest. Even the size of the loan is taken into account, and the interest rates fall steeply over a particular slab. For example, loans above a hundred grand have low interest rates than a loan below it.

Monetary and security regulations also determine the interest rates for business loans. For example most foreign banks have a lower rate, of about 6% to 7% whereas domestic banks would offer loan on an 8-9%. But the interest rates usually vary from institution to institution, so a general market enquiry is very useful before committing to a loan that comes in front of you. If the business has a good credit reputation and is an established one, then they charge a lesser interest, compared to a start up. It all depends on how well the small business can convince its lenders- that it is a safe investment for them..

Vikash Kumar - About Author:
This article posted by Vikash kumar about of Mantra4money is offer best insurance plans, home insurance policy and Invest your money in insurance, cancer insurance policy , investment online and more information viste at mantra4money.com/

Share on Facebook Tweet It Stumbleupon this post This post is delicious !

Article Source:
http://www.articleside.com/finance-articles/how-interest-rates-are-determined-on-business-loans.htm

Related Finance Articles Subscribe to RSS

Car insurance and its benefits.
Published by Robert King on January 26th 2012 | Finance
Car insurance is an understanding between the insurer and the insured where the insurer promises to ...
 
Its possible to have low cost Alabama auto insurance
Published by Alabamaauto Insurances on January 14th 2012 | Finance
It’s possible to have low cost auto insurance Alabama especially if they search online for such of...
 
How to win the right auto insurance packages in New Hampshire
Published by Alabamaauto Insurances on January 17th 2012 | Finance
Auto insurance is definitely a necessity to anyone who owns a car in the modern day. If at all you ...
 
Getting best deals on cheap auto insurance in Nevada
Published by Alabamaauto Insurances on January 17th 2012 | Finance
There are hundreds of resources that can help you to win that much desired cheap auto insurance in N...
 
Availing benefits from cheap California auto insurance
Published by Auto Insurances on January 14th 2012 | Finance
In this period of inflation who doesn’t want to save money? Every one seeks to save money from eve...
 
Securing your vehicle with Arkansas auto insurance
Published by Auto Insurances on January 14th 2012 | Finance
Who doesn’t want his or her vehicle to be secured from every kind of accident or incident? Of cour...
 
Eligibilities for Classic car insurance
Published by Ashish Pandey on February 2nd 2012 | Finance
In order to get classic car insurance, you should ensure that your car is eligible for it or not. He...
 
New York auto insurance attract high rates
Published by Alabamaauto Insurances on January 17th 2012 | Finance
Residents of New York are some of the people who have to pay high rates in auto insurance policies. ...
 
Why to get mobile phone and iPad insurance
Published by Ashish Pandey on February 7th 2012 | Finance
Getting mobile phone insurance or iPad insurance can be a great tool to avoid unnecessary expense an...
 
Get a car insurance to protect your asset
Published by Robert King on January 20th 2012 | Finance
Car insurance is an instrument which covers for all the unforeseen dangers associated with a car. Ca...
 
Several categories of Group health insurance
Published by Morgan001 on March 27th 2012 | Finance
The Group health insurance makes individual insurance coverage’s accessible on a member of group b...
 
Save your property through Landlords insurance
Published by Ashish Pandey on February 3rd 2012 | Finance
Having landlords insurance can be very advantageous for all the landlords and can protect the proper...
 
Comparable New Mexico auto insurance rates requires a keen eye
Published by Alabamaauto Insurances on January 17th 2012 | Finance
New Mexico has many sources of information regarding the best auto insurance quotes which includes t...
 
Maryland the state of expensive auto insurance
Published by Insuranceindian Aauto on March 5th 2012 | Finance
Maryland is famous for its expensive auto insurance unlike other states; the state is rated as the t...
 
In Nevada information about auto insurance is crucial
Published by Alabamaauto Insurances on January 17th 2012 | Finance
It’s not very hard to get cheap rates for auto insurance in the state of Nevada as there are a lot...
 
Looking for the best Colorado auto insurance quotes
Published by Auto Insurances on January 16th 2012 | Finance
There are many Colorado auto insurance companies that are offering great deals for insurance policie...
 
Auto insurance – the ultimate choices
Published by Auto Insurances on January 13th 2012 | Finance
Insurance for persons might be optional according to the well and wish of the individuals. Some migh...
 
Finding cheap Arizona auto insurance
Published by Auto Insurances on January 13th 2012 | Finance
Let’s not take more risks with our valuable autos. While applying for Arizona auto insurance make ...
 
The best insurance packages live in Maryland
Published by Insuranceindian Aauto on March 5th 2012 | Finance
Auto insurance is something that any motorist in Maryland needs to have. Many people would try to ov...
 
Choosing an insurance policy for Hawaii
Published by Auto Insurances on January 16th 2012 | Finance
Just like in other states in the United States, it is a mandatory for the residents in the state of ...