Business loan rates offered to a Palestine, TX business are set by each funding partner, and the factors a partner may weigh include credit history, time in business, revenue, collateral and the term. The rate is only part of the cost: fees and the length of the schedule change what an owner pays. This post compares two invented offers for a dental office's intraoral scanner on total dollars.
The rate factors a partner may weigh, then two invented offers on a $34,600 dental scanner: 9.6% with a 3% fee taken out of the funding against 10.85% with no fee, compared on interest plus fees; the fees to find in any offer; and an advance's dollar cost. The dental count is real 2023 Census data; the offers are invented.
Business loan rates and the record a Palestine, TX dental office brings to the call
County Business Patterns counted 9 offices of dentists with paid staff in Anderson County, TX for 2023. ZIP Code Business Patterns placed 7 offices of dentists at ZIP 75801 addresses that year.
No rate is set before a funding partner reviews a request, and each partner weighs the factors its own way. Three of them come from the office's own record:
- Time in business, entered on the request form
- Revenue, both the yearly total on the form and the pattern of deposits a partner may ask to see
- Credit history, which a funding partner may check as part of its own review
Revenue can enter a review in two ways: the yearly total and how steady the monthly deposits are. An office cannot change its history before a call, but it can know these figures and have them ready.
Business loan interest rates, collateral and the length of the term
An offer backed by the equipment it buys may be priced differently from one with no collateral, and a longer term may carry a different rate from a shorter one. Neither works the same way at every partner, so the only reliable comparison is between offers in hand.
Equipment such as a scanner can back its own schedule through equipment financing; a term loan or a line of credit may be set up with or without collateral, depending on the offer.
Term length changes the cost even when the rate stays put. Illustration only, invented figures: the $34,600 scanner at 10.85% over 36 months instead of 48 would mean $1,130.30 a month and $6,090.80 of interest, $2,112.72 less interest for $238.56 more each month.
Comparing two offers for a dental office's intraoral scanner on total cost
Illustration only, invented figures: a dental office prices an intraoral scanner with its cart and laptop at $34,600. Offer A charges 9.6% for 48 months and takes a 3% fee, $1,038.00, out of the funding, so the office receives $33,562.00 and covers the rest of the price from its own cash. Offer B charges 10.85% for 48 months with no fee.
| Offer | Monthly payment | Total of payments | Interest | Fee | Interest plus fee |
|---|---|---|---|---|---|
| A: 9.6%, 3% fee | $870.91 | $41,803.68 | $7,203.68 | $1,038.00 | $8,241.68 |
| B: 10.85%, no fee | $891.74 | $42,803.52 | $8,203.52 | $0.00 | $8,203.52 |
In this invented comparison, offer A's rate is lower and its payment is $20.83 smaller each month, yet with its fee counted it costs $38.16 more than offer B over the 48 months, and the office has to find the $1,038.00 gap in the price from its own cash on day one. A smaller fee would tip the result the other way, which is why the fee column belongs in every comparison.
Fees to find in every offer, and a cost that is not a rate
- An origination or funding fee, and whether it is taken out of the funding or added to the balance
- Documentation or closing fees charged at signing
- Late fees and when they start
- Prepayment terms; the term length post lists the questions to ask
A merchant cash advance quote shows a factor instead of a yearly rate. In an invented quote, $18,000 at a 1.24 factor means $22,320 is remitted, a $4,320 cost. That dollar figure, not the factor, is what to set beside a loan offer's interest and fees. The advance is not a loan.
Ask for every fee in writing, as a dollar amount, before setting two offers side by side.
By Eaglerock Business Capital · Updated
