In our ongoing series of lending factors that affect interest rates, let’s (finally) talk about credit scores and related risk factors. I say “finally” because to many people, the credit score is the be-all, end-all of borrowing. And it is true that credit scores and related risk factors are important, but not always in the way people think. … Read More »
Next up in our series on lenders and interest rates, let’s take a look at collateral and how collateral will affect the rate. At the risk of being a bit basic, let’s understand what collateral is – it’s something of value that a borrower puts up to “secure” a loan. And if the borrower defaults, the lender can… Read More »
Let’s answer a question or three, shall we? Hey Fletch, I know you always tout getting equipment when you need it but aren’t rates coming down soon? Wouldn’t it be better to wait? Dave P. Hi Dave, Honestly, assuming the equipment will earn you revenue, no, it is not better to wait. There are three reasons for this.… Read More »
The last few posts were all about bank business loan restrictions, and how harmful they can be to your business operations and financial flexibility. Clauses like blanket liens, compensating balances, and annual requalification are common and written into almost every bank business loan. They may or may not be clearly discussed, and it’s up to the borrower to… Read More »
Next up in our bank loan restrictions comes compensating balances. And it’s something nearly all banks use when loaning a business money for equipment financing. A compensating balance is when a bank requires a business to keep a certain balance amount in an account with them. This balance amount is typically 80% of the equipment loan. The key… Read More »