A Background In Locating Issues For Small Business Funding

In fact, 57 percent of them chose a six-month loan over a nine-month loan (with a lower APR) in order to minimize the total fees and expenses. While APR is a reasonable way to compare two loans of the same term, it does not provide the total dollar cost of the loan. The business owners in the survey additionally reported they expect an average return of $5 for every $1 borrowedwhich may be why they are so focused on total cost. The two most common reasons for borrowing were to purchase equipment (54 percent) or to purchase inventory (51 percent); both purchases are very dollar cost sensitive.

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