The truth is, small business owners don’t have endless access to money. The first months of any company are the most crucial, and some businesses don’t start making a profit for years. Money may be tight, but with just enough capital, business owners will survive the toughest months and years of their company. That’s why it’s important to understand the true cost of a small business loan. Many traditional lenders will have you believe that interest is the only fee. However, there are many other fees that may look insignificant on paper, but that can really add up.
Depending on the type of financing you want, you’ll face different miscellaneous charges, however, many are essentially the same. If you’ve ever applied for a business loan, line of credit, or business credit card, you may already be familiar with these fees:
This fee is applied across the board as an initial fee to process your loan request. Application fees are charged on equipment and vehicle financings, short-term business loans, cash-flow lending, and Merchant Cash Advances (MCA), to name a few. The cost of an application fee depends on the lender, but it’s usually a flat rate.
Please note that Greenbox Capital does not charge an application fee on small business loans.
An origination fee is charged for the loan application and approval. It is either charged as a flat fee or a percentage of the loan amount. The typical percentage of an origination fee is anywhere between one and six percent. You’ll commonly find this fee when applying for:
Please note that Greenbox Capital does not charge an origination fee.
This type of fee is also called a non-sufficient fund (NSF) or unsuccessful payment fee. You may be familiar with this type of fee in your personal bank account when your account does not have enough funds to cover a withdrawal amount. A returned payment fee is not an automatic fee, but a penalty. In order to avoid returned payment fees, always make sure to have enough funds in your account for automatic withdrawals. Multiple failed attempts to withdraw payments can end up costing more than the withdrawal amount.
If ever you see these fees attached to your loan offer, it means that the lender is charging you a fee for reading over your application. It also entails pulling up your credit score, reading over business assets and other documents, and any other third-party fees. In other words, these upfront fees cover the general cost of underwriting your account.
Greenbox Capital is unlike traditional lending institutions. We accept all business loan applications for companies that have been in operation for at least six months. Our loan structure is simple and straightforward, and our application process takes only a minute. And unlike many other lenders, we don’t charge an application fee or an origination fee. Our fees include only the cost to set you up on our platform! Apply today or contact us to find out more about our fee structure.