So, let’s consider the true cost associated with different short-term funding options, specifically;
- - Business overdraft
- - Invoice discounting
- - Single invoice discounting
- - Online business loans
- - Factoring
- - CFF working capital facility
Small businesses must be aware that the tradeoff for the convenience and speed of a typical online loan is its high true cost. An online business loan might look like a great deal—until you factor in the fees, costs, and penalties you didn’t know to look out for. Before committing to an online loan ask the following;
- - What is the interest rate?
- - What is the annual percentage rate (APR)?
- - What is the setup or establishment fee?
- - What is the late payment fee?
- - What is the early repayment fee?