MY BUSINESS LOAN By Cheyenne McMillin. THE THREE LOAN CHOICES SBA Business Loan Start-up Loan ...
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Transcript of MY BUSINESS LOAN By Cheyenne McMillin. THE THREE LOAN CHOICES SBA Business Loan Start-up Loan ...
SBA BUSINESS LOAN
Is a loan for a small businesses from a private-sector lenders (banks, etc.) which
are guaranteed by the SBA. The SBA has no funds for direct lending or loans to small
businesses with long-term, fixed-rate financing for major fixed assets, such as
land and buildings. CDCs work with the SBA and private-sector lenders to provide the
financing.
TERM LOANIs a loan that has monthly principal and
interest payments. The outstanding principal amount decreases each month. Generally, term loans are established to
assist in financing long term assets such as computers or equipment. The amortization period should closely match the useful life
of the asset purchased (a term loan for computers should have an amortization period of not more than 3 years). Most
term loans have an amortization period of 5 years or less (but there are exceptions).
MY FIRST OPTION
Value of Loan - $20,000
Interest Rate - 10.99%
Monthly Payment - $516.81
Term 48 months - 4 years
MY SECOND OPTION
Value of Loan - $20,000
Interest Rate - 9.99%
Monthly Payments- $645.25
Term 36 months – 3 years
MY THIRD OPTION
Value of Loan - $20,000
Interest Rate – 8.5%
Monthly Payment - $631.35
Term 36 months – 3 years
THE ONE I CHOSEI chose the third interest loan because it
has the lowest interest rate of all three of my loan options, and the monthly payment is also lower than my other options as well.
THE TOTAL
This is the total amount of money I would have to pay back for each of the three loans.
First Option - $24,807.08
Second Option - $23,197.21
Third Option - $22,715.34
CHANGE IN THE INTEREST RATE
My interest rate is 8.5%
Decreasing the interest rate to 7.5% would bring my total interest rate down by about $9.23
Increasing the interest rate to 9.5% would bring my total interest rate up by about $9.31
EXTRA LOAN PAYMENTS
If I would pay an extra $100 for a total of 6 months my loan could be paid of in 34 months instead of 36.
It doesn’t matter if I pay the extra $100 in the beginning, middle, or end of the term.