The Cost to Borrow Money in Today's Market

The Cost to Borrow Money in Today's Market

What would your interest rate be today, if you were to borrow money for your business?  Rates have not been this high since the 1970’s.  If you are a well-qualified borrower, the lowest rates start at 8%.  If you are not a well-qualified borrower, rates are as high as 30%. 

If you opened a $200,000 loan for 10 years, the monthly payment at 8% will be about $2,450.00 per month.  If your rate was at 30%, your monthly payment will be about $5,275.00.  It is no longer affordable to open a bank line of credit. 

Bank lines of credit used to be around 4%, which is manageable, now it is double that, assuming you are a well-qualified borrower. 

So… what are the alternatives to a bank line of credit?  You take a merchant cash advance (MCA), but the cost of this is much higher than a bank line of credit and you will pay many points to obtain this loan.  MCA lenders pull the money out of your bank account every day.  This method of financing is the most expense way of borrowing money.  MCA Loans are easy to qualify for but you will regret it. 

There is factoring, you can sell you invoices at a discounted rate for immediate cash.  While factoring rates have gone up as well, the factoring fee is only ½ of a percentage point higher now than years ago.  Factoring fees were typically 2.5% in 2020 and today factoring fees are 3%.  When you sell you invoice you are not taking on any additional debt, there is not loan to pay back.  We the factoring company will purchase your invoice and we advance you the money.  We wait to get paid by your customers.  Factoring is easy to qualify for and your credit score, good or bad has nothing to do with your rate.  We are paying you and your customers will be paying us.  Complete our non-binding factoring application today.