Loan Terms and Rates  -- Unsecured SBA Small Business Loans

What are the monthly payments? These are variable rate SBA loans. Our home page has the “up to date” interest rates and monthly payments.

Interest rate? These small business loan amounts are based on a set rate of 4.5% (never changes), plus Wall Street Journal Prime (may fluctuate). For example, if the rate is a total of 9.75%, that would equal 4.5% plus 5.25% Wall Street Journal Prime. You can get the up to date WSJ interest rate at the: www.bankrate.com/brn/ratewatch/leading-rates.asp .

Will the monthly payments go up? No one can give you a definitive answer, but we can tell you the history thus far. Approximately five years ago, the rates were $84.00 per $5,000.00 borrowed. The interest rate for a number of years rose steadily, but it has been falling lately. As of April of 2008, it is $64.00 per $5,000. Thus, in the last five years, it has gone down approximately $20.00 per month. There’s a real benefit in having a ten year note. Even if the interest rate goes up, the rates are spread over this long period of time and do not increase dramatically. So, for example, if one had a two year note, an increase in the interest rate would have a more significant effect on the monthly payment.

Principal and interest fully amortized: The loan is fully amortized, with principal and interest payments each month.

What is the term of the note? Ten years. However, as seen below, you can pay it off at any time without a prepayment penalty.

Is there any prepayment penalty? There are no prepayment penalties on these loans. When a bank loans you money, they are counting on you paying the interest over the term of the loan. If you pay it back earlier, they will not get as much interest. For this reason, some lenders have what is called a prepayment penalty. It penalizes you for the lost interest. So, for example, if you had a ten year note and you paid it off in five years, the bank would be getting only ˝ of the expected interest. You would have to pay the interest as a penalty. You simply pay the current principal and interest up to the date of payoff. Once again, you can pay off the loan anytime and stop the interest.

How much notice do I have to give before paying all or part of the principal? You can pay off part of the principal any time without notice. You simply send a separate check and indicate you are paying on principal. If you want to pay off the entire loan, simply give them a call and they will tell you the interest and principal you owe to date. It is that easy.

How do we receive the funds? It is wired directly into your business account.

How is it paid? There are no coupons or mailings. The monthly payment is automatically debited (ACH) out of your business account on the first of each month.