What Will Financing Actually Cost You?
There's no single business loan rate — the number a lender leads with is rarely the number that matters. Here's how pricing actually works, and how to compare two offers correctly instead of chasing one headline figure.
There's no single business loan rate.
Cost depends on the financing product, your business profile, how much you're borrowing, the term, the repayment structure, and the individual lender — not one universal number. Two businesses can reasonably be quoted very different figures.
Rate ≠ Total Cost.
The number a lender leads with is rarely the number that matters. Two offers with the same headline rate can cost very differently once fees and term are counted — and two offers that look nothing alike on the surface can end up costing about the same. The rest of this page is about learning to see total cost, not just the headline.
Rates and fees vary by lender and by business, and any figures shown on this page are illustrative examples — not offers, quotes, or current market pricing. Your actual terms are determined during underwriting and disclosed in full before you accept.
Interest rate, APR, and factor rate aren't the same thing
These three terms get used loosely, but they measure different things — and mixing them up is the single easiest way to misread an offer.
Interest Rate
The rate charged on the amount you currently owe. On its own, it doesn't account for fees — so it can understate what borrowing actually costs.
APR
Annual Percentage Rate. Annualizes the cost of borrowing and, in many structures, folds in certain fees — which is why it's a better comparison tool than the interest rate alone. It doesn't necessarily capture literally every possible cost in every financing structure.
Factor Rate
A flat number like 1.20, multiplied once against what you borrow to get total repayment. It is not an annual rate, and reading it as one is the most common pricing mistake on short-term financing.
The origination fee doesn't lower your payment — it lowers what actually lands in your account. The same payment stream on a smaller amount received works out to a higher annualized cost than the stated rate alone suggests. That gap is the entire reason APR exists as a comparison tool.
Illustrative example only — not a Fundur quote, lender quote, or current market pricing. Actual rates, fees, and APR depend on the lender and your business.
How a factor rate actually works
Factor rates show up on working capital and other short-term products. The math is simple — but reading the result as an interest rate is where it goes wrong.
| Repaid over | Financing cost as a share of principal | Simplified annualized estimate |
|---|---|---|
| 6 months | 20% | ≈ 40% |
| 12 months | 20% | ≈ 20% |
The estimate above is (financing cost ÷ amount borrowed) ÷ (term in years) — a simplified way to see why timing changes the annualized cost of the same $10,000 charge, not a precise APR calculation. Daily or weekly automatic repayment can push the real figure higher still. It isn't a substitute for asking a lender directly what the APR-equivalent works out to.
Illustrative example only — not a Fundur quote or current market pricing.
A longer term lowers your payment — and raises your total cost
Lower payment doesn't necessarily mean cheaper financing. Higher payment isn't automatically worse. The trade-off is real — here's what it looks like in numbers.
Illustrative example: $100,000 at a fixed 8% APR, fully amortized. The 60-month term costs $8,847 more in total interest to save $1,106 a month. Neither is universally "better" — it depends on whether your business needs the lower payment more than it needs the lower total cost. Real rates, fees, and available terms vary by product and lender — see each product page for what's actually offered.
Daily
Common on some short-term and factor-rate structures. Fits businesses with a steady daily cash rhythm; can feel intrusive against uneven daily deposits.
Weekly
A middle ground between daily and monthly. Tends to suit businesses whose revenue collects in a weekly or biweekly rhythm rather than daily or monthly.
Monthly
The standard for traditional term loans. Fits businesses whose revenue collects mostly around once a month — many B2B invoicing and contract-based cycles.
No frequency is universally better — the question is whether the withdrawal rhythm matches how your revenue actually arrives. A company collecting mostly monthly can experience frequent withdrawals very differently from one generating steady daily deposits.
Fees you may encounter — and what to ask
Not every lender or product charges every fee below. This is what to check for when you review an offer, not a universal fee schedule.
| Fee | Where you may see it | What to ask |
|---|---|---|
| Origination fee | Term loans, working capital loans, some lines of credit | "Is this deducted from what I receive, or billed separately?" |
| Draw fee | Lines of credit, charged when you draw funds | "Is there a fee every time I draw, or only on the first one?" |
| Maintenance / unused-line fee | Lines of credit, on undrawn capacity | "Is there a cost to keeping the line open if I don't use it?" |
| Closing / packaging costs | SBA loans, larger term loans | "What closing costs are rolled into the loan versus paid upfront?" |
| Late fee | Most products | "What happens if a payment is late or missed?" |
| Prepayment fee or discount | Term loans, SBA loans | "Is there a penalty for paying early — or a discount for it?" |
| Factoring fee (discount rate) | Invoice factoring, charged for each period the invoice is outstanding | "Is the fee flat, or does it increase the longer the invoice ages?" |
| Government guaranty fee | SBA loans only, set by the federal program | "How does the current SBA guaranty fee apply to my loan size?" |
Origination fee
Draw fee
Maintenance / unused-line fee
Closing / packaging costs
Late fee
Prepayment fee or discount
Factoring fee (discount rate)
Government guaranty fee
"Which product has the lowest rate?" is often the wrong first question
The six products are priced and repaid differently by design — comparing headline rates across them isn't apples to apples. Comparing how each is priced and repaid is more useful.
Working Capital Loan
Business Line of Credit
Business Term Loan
Equipment Financing
Invoice Factoring
SBA Loan
If you qualify, what can affect the economics?
Business Loan Requirements answers whether you qualify. This is about what happens to your price once you do — the factors lenders weigh when setting your specific rate or fee, not whether you clear the door.
How heavily each factor counts varies by product — see Business Loan Requirements for how lenders weigh them.
Compare the economics, not just the headline rate
Before accepting an offer, put these side by side. If a lender can't answer one of them clearly, that's worth noting on its own.
- Amount actually received
- Total repayment amount
- APR, where applicable
- All fees, itemized
- Term length
- Payment amount
- Payment frequency
- Prepayment treatment
- Collateral or guarantee required
Illustrative example, both offers at $100,000 and a fixed 8% APR — only the term differs. Real offers usually differ on rate and fees too, which is exactly why comparing every dimension above matters more than comparing any single number.
Ask about prepayment before you need the answer
The right answer differs by structure — the only mistake is assuming one without asking.
- Is there a prepayment penalty?
- Does paying early actually reduce the interest I owe?
- On a factor-rate product, is the full financing charge still owed even if I pay early?
- Is there an early-payoff discount?
- Exactly how is my payoff amount calculated on the day I pay?
On most interest-based loans, paying early can reduce what you owe in interest. On a factor-rate product, total repayment is often fixed once the factor is applied, so paying early doesn't automatically save money unless the lender explicitly offers a discount. Don't assume either way — ask.
See what a specific amount and term would actually cost
Run your own numbers instead of eyeballing an offer.
A few more things people ask.
What is a good interest rate for a business loan?+
There's no single number that qualifies as "good" across every product, lender, and borrower profile — the honest comparison is total cost, not a headline rate in isolation. Instead of chasing one number, use the framework on this page: total repayment, APR where applicable, fees, and term together tell you what an offer actually costs.
Is APR the same as interest rate?+
No. The interest rate is the cost charged on what you still owe. APR annualizes borrowing cost and, in many cases, folds in certain fees — which is why a stated interest rate and the APR on the same offer can differ.
Is a factor rate the same as APR?+
No, and they aren't directly comparable at face value. A factor rate is a flat multiplier applied once to the amount borrowed, not an annualized rate. The same factor rate can represent very different annualized costs depending on how long you have to repay it.
Are business loan fees negotiable?+
Sometimes — it depends on the fee, the lender, and your profile. Origination fees in particular can vary between offers for the same amount. The reliable approach is to ask directly rather than assume any fee is fixed.
Does paying off a business loan early save money?+
It depends on the structure. On most interest-based loans, paying early can reduce the interest you ultimately owe. On a factor-rate product, the total repayment is often fixed once the factor is applied, so paying early doesn't automatically save money unless the lender explicitly offers an early-payoff discount. Always ask before you assume either way.
Are business loan rates fixed or variable?+
Both exist. A fixed rate stays the same for the life of the loan, which is what makes the payment predictable. A variable rate is tied to a benchmark and can move over time, which changes the payment or the total cost as the benchmark moves. Which one applies depends on the product and the specific offer.
Does checking my financing options affect my credit score?+
Checking your options is a soft inquiry and won't affect your credit score. A hard credit pull typically only happens if and when you move forward with a specific offer.
Keep going with the specific piece you need.
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Fundur is a financing marketplace, not a lender. We don't make credit decisions or guarantee approval, rates, terms, or funding times.