It is already known that the higher the risk involved in business loans higher is the interest rate. Lenders want to get assured that they are going to get their money back. There are certain factors that affect the interest rates on online business loans.
Credit score- Yes, it is true “higher the credit score lower the interest rate”. Credit scores and your credit history indicate how risky you are to lend the money. If you have a low credit score it shows you are less likely to pay back the loan. At Pineapple funding, you can get credit repair service that will help you to improve your score which will benefit you in the long run.
Industry- Lenders put higher interest rates on industries they find riskier as compared to others.
Time in Business- Interest rates can also depend on how long you have been on business. It shows how stable you are and how risky it is to lend the money you want. If any business is less than two years in operation, lenders can charge comparatively higher rates.
Existing Debt- If you have less or no debt at present then you can get lower interest rates as compared to if you have more debts in hand. Lenders put higher interest rates when they think there is more risk in lending you money.
Annual Revenue and Profitability- Businesses that generate higher annual revenue and profits can easily get approved for online business loans and can negotiate for lower interest rates.
Lender- Different online lenders can have different requirements and even interest rates for online business loans. You have to do your research and find out which lender suits you best. At Pineapple Funding, we will provide you will all the good options available for you to choose and apply for the loan.
Collateral- Based on collateral there can be secured and unsecured loans. Secured loans require personal or business assets as collateral. While unsecured loans do not require any collateral. Interest rates are higher for unsecured loans as compared to secured business loans.