Get Schooled: A Primer for Small Business Loan Fees

Get Schooled: A Primer for Small Business Loan Fees
If you’re thinking of taking out a loan to grow your business, there’s plenty to think about. Here are some of the common small business loan fees associated with a loan’s borrowing cost.
by Square Jan 12, 2018 — 2 min read
Get Schooled: A Primer for Small Business Loan Fees

If you’re thinking of taking out a loan to grow your business, there’s plenty to think about.

You want to ensure that you take out an amount of money that will allow you to make upgrades to grow your business; you want the organization from which you borrow to be trustworthy; you want to make sure payback is in line with what your business can support. Something you may not have taken into account? Additional fees charged by your lending institution.

These fees along with your regular payback make up the “total borrowing cost” of your loan.

What’s the difference between total borrowing cost and interest payments?

The total amount that you will pay back is a dollar value representing the principal amount of the loan plus interest and all fees (including origination fees, credit reporting fees, application fees, etc.). This is the borrowing cost.

Interest is an amount charged as payment for use of the money and is also a portion of a loan’s total borrowing cost. The annual percentage rate (APR) is the annualized cost for borrowing money averaged over the full term of the loan.

Let’s learn a little bit about some of the common small business loan fees associated with a loan’s borrowing cost.

What are small business loan fees?

Small business loans can enable business owners to grow and expand their businesses. Some lending institutions may charge a variety of fees.

Loan fees vary by institution, but they may include:

 

If you’re considering taking out a loan for your business, be sure to do your homework to understand all of the associated fees. A few questions you might ask include:

You can find more information on evaluating a loan offer here.

For eligible Square sellers, Square Capital offers access to business loans to grow your business. Square Capital also features no hidden fees, and clearly shows the total amount you repay and the total cost of the loan. You’ll know exactly what you’re paying before you apply. Learn more about Square Loans.

Square Loans, LLC and Square Financial Services, Inc. are both wholly owned subsidiaries of Square, Inc. Square Loans, LLC d/b/a Square Loans of California, LLC in FL, GA, MT, and NY. All loans are issued by either Celtic Bank or Square Financial Services, Inc. Square Financial Services, Inc. and Celtic Bank are both Utah-Chartered Industrial Banks. Members FDIC, located in Salt Lake City, UT. The bank issuing your loan will be identified in your loan agreement. The individual authorized to act on behalf of the business must be a U.S. citizen or permanent resident and at least 18 years old. Loan eligibility is not guaranteed. All loans are subject to approval.

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