At The Nest

Regardless of the state of the economy, all entrepreneurs, either new at their trade or old hats in business, when seeking financing, tend to get caught up in haggling over the lowest possible interest rate that they can achieve.Who can blame them? Cost savings ? especially while we are still experiencing recession like economic symptoms ? may be the key to their business’s survival and their personal financial future.But, sometimes, merely basing a financing decision on just its cost (its interest rate in this case) alone can be even more detrimental. All business decisions should be taken in the whole ? with both benefits and costs consider simultaneously ? especially with business loans.Let me explain: In today’s market, any offer of a business loan ? regardless of its costs ? should not be taken lightly given the fact that these business transact student loan calculator ions are hard to come by. Thinking that this interest rate is too high and that a better one will come along tomorrow may just be destructive thinking as nothing may come along tomorrow ? especially in this continued sluggish economy and all lenders being overly cautious.Further, if the business owner’s decision hinges so much on the rate of the loan, then maybe a business loan is not something the business truly needs at this time or may be a decision that just spirals the business further along an unhealthy path.Example: Let’s take a simple but common business loan situation. A $100,000 loan for 5 years with monthly payments at 8% interest. This loan would require monthly payments of $2,028 for the next 60 months. Now, let’s say the interest rate was 12% instead of 8%. This would result in a monthly payment of $2,225 ? nearly $200 per month higher.